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Indian Railways improves rake utilization by 300% – What can Indian Logistics Managers and 3PLs/LSP learn from this? July 27, 2007

Posted by Ramnath Rangaswamy in Business, Indian Economy, Logistics.
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prcl.jpgThe initiative by the Indian Railways and Pipavav Rail Corporation Ltd [PRCL] to design special containers for Maruti cars to increase container and rake utilization, is a smart move!

The Indian Railways and PRCL customized the containers, so that each wagon now carried 300% of the cars it carried previously in standard containers!!

This idea can be re-applied, by logistics and transport managers to road transportation.

Weighed-out versus Cubed-out

The space in a truck can be either weighed-out or cubed-out.

On loading a product if the truck reaches it permissible maximum weight before all the space is utilized, it means the product has weighed-out. Steel billets, paper rolls, laundry powders would be examples of products that weigh-out.

If a product reaches it’s maximum cubic space available before the maximum permissible weight of the truck, it is called cubed-out. Hay, diapers, wafers would be examples of products that cube-out

What can logistics or transport managers do to maximize truck utilization?

  • Send mixed products: The key is to balance products which cube-out with those that weigh-out. This is usually possible for a company which produces multiple products, like FMCGs. It is possible from Distribution Centres [ DCs] where multiple products are stored and mixed loads [ of weigh-out and cube-out products] can be formed.
  • Customize the dimension of the trucks: For a single product company or for despatches from a plant which produces a single product, the solution lies in customizing the dimensions of the truck [ similar to what the Indian Railways and PRCL did for Maruti cars]. To customize the trucks, logistics managers or transport managers will have to enter into a long term contract with transporters. The transporters will incur expenditure to customize their trucks and they need to be given time to recover their investments.

How do logistics managers and transport managers implement this?

1. Gather data on all the products: The skus of the company will have to weighed and measured.

2. Gather data on the truck dimensions: In India there are no standard truck dimensions. However, it is possible to narrow down to about 5-6 truck sizes.

3. Get a truck-building software: A software, usually called truck building software, many of which are readily available of-the-shelf will have to be bought. Or a smart programmer can develop one in-house. If the company runs a ERP package, this will have to be ‘bolted-on’ to the ERP package.

4. Include truck-sizing as part of the dispatch or deployment process: For acceptability by the team members, include the truck-sizing as part of the dispatch or deployment process.

What can 3PLs/LSPs learn from this?

For 3PLs/LSPs to move up the value chain and become supply-chain solution providers, this is one easy solution that they can provide to their customers.

What savings can be expected from the exercise?

In my experience, savings of 8%-10% are possible.

We combined diapers, which cubed-out with shampoos which weighed-out and got savings of 8%-10%.

We changed the dimension of the boxed/container trucks from our DC and got savings of 10%.

The PRCL initiative, listed above gave a 300% improvement in utilization!!

The Indian Railways is really progressing! This is one time when the Indian Railways has taken the lead.The road transporters/ 3PLs/LSPs can learn something from the Indian Railways.

For the complete story see the url below;

http://www.thehindubusinessline.com/2007/07/20/stories/2007072051971000.htm

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