Tata Steel is a leading global steel company with operations and commercial presence across the world, and is one of the world’s most geographically-diversified steel producers. While pioneering innovation and technology, the company also follows the philanthropic footsteps of its founder Jamsetji N Tata. The company operates an end-to-end value chain that extends from mining to finished steel goods, catering to an array of market segments. We had an intriguing conversation with their Vice President (Supply Chain) Peeyush Gupta, wherein the discussion revolved around managing the entire gamut of Tata Steel supply chain operations while holding hands with sustainability the entire time. Excerpts follow
Give us insights into the recent multi-modal transportation of TMT bars from West Bengal to Assam. How does Tata Steel further plan to leverage inland waterways to induce sustainability in supply chains?
Today, any steel company depends on rail or road for steel, but both have their own limitations. When you transport using rail, you are compelled to use the full rake, plus the availability of rakes to the north region is always a challenge. In the same way, road transportation takes lot of time and it is difficult to send large tonnages considering the number of vehicles plying on the roads, along with the added pollution factor.
Waterways have always been an attractive possibility as you can carry 500-1000 tons in the barges, which is also air/water-tight. This eliminates the possibility of any air/ water damage to the steel bars while in transit. Smaller barge size also meant that we could cater to customers who are not always willing to purchase a whole rake-full of steel bars. So, shifting to waterways solved two big problems for us. Operating on waterways also opens trade avenues in far ends of the NorthEast region and even Bangladesh, though the logistics part at their border still needs to be worked out. But it is an interesting window.
Today, we move around 20,000 tons of steel to the North-East and on successful trial & completion of inland waterways, as being proposed and developed by the Government of India, we would transport a major part of the tonnage on water. The savings and sustainability that inland waterways bring may not be very high as compared to the electrified rail routes, but better transport conditions for cargo and the option to work with small quantities is hugely beneficial, and a big reduction on account of carbon footprint as compared to sending cargo via road. Inland waterways is quite a sustainable model and the government is also developing much better cargo terminals across these inland waterways.
For example, our TMT bars are transported from Jamshedpur to Haldia by rail, then via inland waterways to Pandu Port and finally towards the last point of delivery by road. Similarly, from Jamshedpur to Port of Damra or Paradip, then using coastal shipment to the west coast of India and then local movement through road. These routes make the logistics process truly multi-modal.
How does Tata Steel’s inbound supply chain work?
In some ways, we are pretty unique in terms of supply chain advantages as well as challenges for a 20 million TPA operation, for which the raw material needed is 60 million TPA. If you are Japanese or Korean, logistics is completely outsourced. However, in our case, we are a curious mix of in-house as well as outsourced raw material – some can be traced back to our own mines and some is outsourced. For example, coal and limestone is outsourced. And the best part is that we use multi-modal logistics i.e. road, rail and water, to bring these 60 million TPA raw materials to the manufacturing plants – Jamshedpur, Kalinganagar, Hiramandi and Ghamariya.
As the number of plants spread around the country, the supply chain complexities have increased and demand for better management of inbound logistics – an ‘enabled’ supply chain. We also have to work with ports for our outsourced raw materials. We run a pretty tight supply chain schedule each day and it is not possible to make it work even with a single part being dysfunctional. Another challenge is that the stock holding capacity of each location is different. For instance, the 100-year-old Jamshedpur location does not have much stock holding capacity in contrast to what the recent plants at Kalinganagar or Hiramandi possess. This also is a very important point to be considered while in the planning stage.
In simpler terms, our inbound supply chain is multi-dimensional. One aspect is cost and value, the second is servicing the plants according to their respective stock holding capacity, and the third is the required infrastructure to manage it all.
How do you think organisations can make use of Indian Railways as an instrument for cost-effective long-haul freight movement?
We as an organisation have been urging the Indian Railways to allow private train operators to run, enabling transportation between port to plant or plant to market, reducing the idleness of the already laid tracks – and the Railways has been quite forthcoming towards this idea.
Secondly, just like the golden quadrilateral on roads, there should be a dedicated freight corridor for railways, connecting the entire country. Because for such long-haul trips, truck trailers are not the most viable option. Though there are rail routes available, a dedicated freight corridor would benefit in many other ways, making it even better than the option of coastal shipping.
So, there should be a way to enable running more trains, carrying more quantities and dedicated track lines to shorten the distances and make operations cost-friendly. The Eastern Dedicated Freight Corridor can be a game-changer, depending on where it starts and the locations it covers.
This is an abridged version of the original interview that was published in the May edition of the Logistics Insider magazine. To read the complete article, get your copy of the magazine.