Bitumen logistics

Bitumen Logistics

1. Introduction

TRANSPORT: Transport is a system in which passengers & goods are carried from one place to another.
Modes of Transport: Transportation is generally divided into three modes-LAND, WATER & AIR.
The Land Transport consists of roads and railways.
Water Transport is also divided into two types:
(a) RIVER OR INLAND TRANSPORT
(b) SEA OR OCEANIC TRANSPORT.
The latest and the fastest mode of transport is Air Transport.
IMPORTANCE OF TRANSPORT
Transport is over whelming mechanical now days. Transport routes or channels are the basic arteries
of our economy.
They provide important links between producers and consumers of goods.
The well unit transport system brings people very close to one-another.
They promote independence among people, in a greatly diversified economic, social and cultural life.
Transport network includes various means of transport.
MEANS OF TRANSPORT IN INDIA:
Þ ROADS
Þ RAILWAYS
Þ PIPELINES
Þ WATERWAYS
Þ AIRWAYS

2. Products & Means of Transport

1. Bulk Tankers to carry products like Diesel, Petrol, Bitumen etc.
2. Open Body Trucks Transport to carry General Goods, Dry raw materials etc.
3. Trailers to carry Huge Machineries, Over Dimension Cargo etc.
4. Tippers used in Mines
5. Cement Bulkers, Transit Mixer.
6. LPG & CNG Bulk Tankers
7. Closed Body Carrier used to carry Like Cars, Bikes etc.
8. Specials Vehicles to carry explosive items, Chemicals.
9. Cold Chain Logistics or Refrigerated Transport.

Services

Transportation of the Bulk & Packed Bitumen and allied products with efforts to give more comfort
to customers and increase visibility among all other road construction customers by providing
quality service. There should be comprehensive agreement with most of above mentioned
products producers and suppliers, within India and across Globe. There has to be capacity to
procure any of the above mentioned products within a very short and stipulated time.

Objective

Emphasize to provide services of Best Quality, Right Quantity & In time delivery and hence readily
available with cost effective operations in Supply Chain Management Bitumen and aliied products
to Esteemed Customers.

There has to be sincere and constant endeavor to put best efforts on maintaining consistency in
quality, quantity and in time delivery to customers.


The Aim: Our best effort to deliver-
 The right product
 The Right quantity
 The Right Quality
 At The Right Place
 At The Right Time
 At The Right Cost
Supply Chain Management
 Time passes, but the basic law of supply and demand remains unchanged. What has
changed, however, are the events that occur during this cycle. A complex myriad of

3. vendors, customers, products and transactions make it more challenging to manage and
optimize the supply chain.

 We wish to help you address the challenges you face in the “Supply Chain Management”
by way our strategies and best practices for delivering services smarter as well as faster
- and improving operational efficiencies.
Procurement procedures in General:
 Customer Negotiating with Oil Companies for Product Price & Discount.
 Ascertaining the distance from Source Location to site location.
 Ascertaining Transportation Rates from existing transporter.
 Ascertaining the landing cost.
 Signing of MOU with oil company.
 Ascertaining list of transporters, their profile.
 Calling Quotations for Transportations
 Negotiation of Rate
 Allocation of Work Order to Transporter of L1 rate or to the transporters who accept L1
rate.
Basic difficulties in above process:
 Difficult to decide the source locations due to changing policies of oil companies.
 Depending on approximate distance (Using Google Maps etc.)
 Difficult to decide about
 Transporters capacity.
 His sustainability
 His Integrity
 His Service Quality
 His availability
 Landing cost is mostly devoid of unforeseen expenditures like increase in operational
expenditure due to late supply of product, Non availability of product etc.

4.  Difficult to check transporter credentials. Mostly they are inflated with un-relented
documents.
 Difficult in deciding about number of transporters to be kept.
General practice for procurement of Bitumen at Sites:
 Indent is raised by site to Purchase department.
 RTGS is done to Oil company for Required Quantity by Purchase.( In case of Bank
Guarantee necessary document is raised)
 Raises indent with oil company.
 Same time authorized transporter is asked to lift the product and transport to site.
 Transporter Places the vehicle incase vehicle available.
 Product is transported by Transporter to site.
 Vehicle is received by store in-charge.
 Vehicle is taken to weigh bridge for gross weight.
 Product is unloaded at tank.
 Vehicle is again taken to weigh bridge for tare weight.
 Net weight is calculated.
 Vehicles receipt is given to Tanker driver.
We observe that mostly the below mentioned is ignored:
 Availability of product.
 Maintaining BG Limit.
 Transporters vehicle availability.
 Standard Un-loading Procedures.
 On site vigilance.
We have observed that many times project cost increases due to sheer ignorance of above
mentioned.

5. Our Proposal:
 Complete Supply Chain Management of (across the country) :
 Bulk Bitumen
 Emulsion
 FO
 CRMB
 PMB
 Diesel
 Petrol
 Supply of Bulk Bitumen by sourcing cost competitive packed from Overseas melting the
same and supplying to designated Customer Site.
 Mobile Emulsion Plant
 Mobile PMB Plant

Mission:
Presently there are no transporters Port Location where Bitumen is imported in Bulk like Kakinada,
Kharwar and Mundra.
We should have at least 4-5 tankers in each loading location or to begin with two to three
locations.
In India there are number of fleet owners who are presently having on an average 15-20 tankers
each and having their presence near refinery locations. They should not be our target transporter
as they will most likely dictate the terms where we will be left with no profit.
Our efforts should to organizing owner of one to two tankers, providing the optimum business,
fulfilling their basic requirement like fuel and enroute advance which approximately 45% of total
billing. Equip there vehicle with GPS, continuously monitor their performance.
The study the small truck owners prefer to work under one umbrella if there basic requirement
is fulfilled. Once worked for a year or so they tend to remain with same group.
Journey Management policy and time to time conducting drivers training on Health, safety and
maintenance will reduce the operating cost substantially.

Strength:
Inelastic demand for Bitumen as Govt. has given top priority to Infrastructure Development.
Door to Door Availability

6. Major contributor to Supply Chain Managemen
Weakness:
Inadequate Logistics Infrastructure.
No Stable Demand
Driven by Fuel Prices
Cannot reach in Remote areas
Shortage of skilled drivers
Opportunity:
NHDP is planning to award 10000 KM of new roads this year. More than $45 Billion of projects
are in pipeline.
Computerised Exchange Network
Improve Mileage
Central Toll Plaza
Stable Government

Threats:
According last priority to transportation by many infrastructure developers.
Brokers
Fuel Prices
Toll Plaza
Political Environment
Accidents

7. When customer will choose us?
 Our Overseas Presence
 Our overseas presence and able to coordinate with all the Refineries Present in
that reason.
 Our Presence in India

 Our Exclusive Branches at all the refinery locations.
 Our Experience:
 Dedicated and experienced staff and customer care executives.
 Sustained supply above products by arranging third party finance during financial crunch
on both sides.
 Our Experience can be useful in getting input for better rate negotiating with oil
companies.
 Our Knowledge:
 We have expertise in anticipating demand, supply and price of Product.
We can give prior information about availability of product, possible increase/
decrease in rate of product, and best alternatives.
 Our Associations:
 Our Customers
Our association with major road construction customers is proof of our
credentials of providing best services.
 Our Relationship with Overseas refineries well speaks of our credentials.
Our relationship with overseas refineries can be useful in getting priority during
shortage of product.
 Our organisation structure:
 Structured Departments
 Marketing
 Operation

8.  HR
 Admin
 Accounts
 24 X 7 Customer Care
 Dedicated round the clock working staff.
 Our Commitment:
 We offer dedicated vehicles and committed delivery.
 Our Capacity
 Our Strong Financial Back ground, and endlessly supported by our Banker to
meet any challenge in competitive market.
Supplier Intelligence
We offer to cut procurement costs, assess procurement strategies and minimize supply risk with
various solutions.
Gain the insights to transform procurement from tactical to strategic
Today, procurement organizations can’t only rely on automating processes and favoring the least-
cost suppliers to be competitive. Instead, they must develop comprehensive sourcing strategies,
optimize supplier relationships and proactively plan risk mitigation – which all require greater
visibility of the supply chain.
Our Planning – Strategic – for Entire Projects
Tactical – Monthly Requirement
Operational – Frequently or Daily Basis

Prevent, detect and manage malpractices /Pilferages in Bitumen Supply
Malpractices /Pilferages in Bitumen are on the rise at an alarming rate. To fight malpractices
/Pilferages effectively, organizations must continually improve the monitoring of un-loading
system. There are various ways and few among them are listed below:
 Extra Diesel Tank- Filled with water.
 Extra compartment within tank.
 Mixing of special powder.

9. We wish to provide complete supply chain management across the country. We propose to
provide complete supply chain management by entering in to agreement for entire country
projects by quoting one time rate form all the supply locations.
We are also in process of re-engineering our internal process to suit customers’ requirement.


Pricing:
Since with modern communication capacities world has shrink into laptop of many top
management executives.
Management is well aware of price and its variation time to time.
Here we propose transparent price police by taking all the factors and their cost in to account
and arriving a figure which gives enough return to either parties and win win situation for both.
We all know that mostly all the factors of pricing are fixed and can come to common
understanding and devising for fixed profit for which one side compromises and other accepts.
We are open to any pricing policy so long it takes care of our interest i.e fixed margin of profit.

The above proposal needs to be elaborated in details. We seek yours’ few hour presence to give
complete presentation about our above proposals.

Cost Factors of Bitumen Logistics: As per Annexure-I.
Process flow of Bitumen Logistics: As Per Annexure-II
Note: Transportation is profitable so long as all transport vehicles are running minimum 6500
KM per Month anticipating 8 months of continuous business and continuous monitoring of all its
aspects.
Failure to monitor even a simple aspect may result substantial loss as in transportation profit is
meagre. So one loss can grab the profit of 4 -5 vehicles.

Regards,
CH Janardan Rao

10. Annexure –I
Projections
A Tanker Truck can operate 6000 KM per month .i.e 48000 KM during seasons,
considering Bitumen Supply last for 8 months in a year.

Cost of Truck 20 MT Capacity : 2200000.00
A) Fixed Cost :
1) Interest on Investment @12%: 264000.00
2) Depreciation @15% : 330000.00
3) Maintenance @3% : 144000.00
4) Taxes & [email protected]% : 99000.00
837000.00
B) Operating Cost
1) Fuel 48000 KM X
Rs.52 per Ltr/4.5KM per ltr : 554666.66
2) Route Exp. Toll/RTO etc : 120000.00
3) Cost of Tyres/ Bateries.
Accesorries : 270000.00
4) Salary Driver/Cleaner : 264000.00
1208666.66

Total A + B : 2045666.66

Cost Per Ton Per KM : Rs.2.13/MT



Projected Income/ Expenditure from Own Trucks

Income From own Trucks = Rate X Qty X RTKM
=2.40 X 20 MT X 48000.00
=2304000.00

11. Total Income – Total Exp = 258334.00 Per Tanker
Income for 5 years = 1291670.00
Resale Value of Tanker = 900000.00
Total Income in 5 years =2191670.00

Projected Income from Attach Vehicle
=2.40 X 20 MT X 48000.00
=2304000.00
Expenditure =2.10 X 20 MT X 48000.00
=2016000.00
Income =288000.00
Less Interest on
Investment =22680.00 (Interest considered for 3 months)

Net Income from Attach Tankers =2655320.00 Per Tanker

12. Annexure –II
PROCESS FLOW OF BITUMEN LOGISTICS

Creating a relevant profile
Making a plan.
Identification of Target Area
Identification of Transporter
Identification of Potential Customers
Man Power Recruitment
Budget
Marketing Plan
Billing & Recovery
Analysis

1. Identification of Target Area.
a. All refinery locations.
b. Existing road Projects.
c. Products –Bitumen/Furnace oil
d. Importers.
e. Dealers.
2. A. Identification of Transporters.
a. Name of the Transport
b. Type: Proprietor, partner, Limited or Agent.
c. No. Of Vehicles with Details.
d. Financial capacity
B. Identification of Potential Customers.

13. a. Customers Details
b. Requirement of Product
c. Present consignee
d. Present Transporter
e. Routes
f. Financial Capacity
g. Address
h. Key Person Details
i. Other Information
3. Man Power Recruitment: Initially all will be on probation for Six Months to One Year. Based on
their performance they will be absorbed in our Consultation team.
a. Marketing Executive
I. Bangalore
II. Indore
III. Mumbai
IV. BHOPAL
V. KOLKOTA
VI. Vizag/Kakinada
VII. Bhubneshwer
VIII. Bijapur
IX. Raipur
b. Coordinator -1
4. Budget
a. Salary.
b. Travel Expenditure. Train/Bus fair, Lodge & Boarding, Local Conveyance.
c. Mobile Phone Expenditure.
d. Conveyance Exp.
e. Promotional Expenditure.

5. Marketing Plan.
a. Tour Plan for 3 Months- Monthly 15 days Holidays 4 days can be taken at a time. 2 days
extra for Arrival & Departure.
b. Maximum Soft Calls
c. Targeting Minimum 10 customers /Transporters a day.
d. Targeting One Refinery Locations in a week.
e. One Location staying Minimum 2 days Maximum a 3 days.
f. Target from Biggest customer first to Smallest Customer.
g. Target Single vehicle owner to Maximum 5 vehicle owner.
h. Assessment of all the aspects relevant to our Project.

14. 6. Data Management & Analysis
a. Collect all relevant data from Marketing Team
b. Tabulate the data under proper head.
c. Analyse the data with proper tools.
d. Identify customers.
e. Identify Transporter.
f. Identification of Most Profitable Area.
g. Identification of Loading Locations.
h. Identification of Cost Effective routes.
i. Proper Grading of Customers, Transporters and Projects.

7. Action Plan
a. Customer Negotiation and Work Order.
b. Allocation of work to our own vehicles as well as to attach vehicles.
c. Schedule Requirement of Customers.
d. Ascertaining for Best Supply Location. Coordinating with Oil Companies for Product
availability and deliberating for Best possible rates on behalf of customer.
e. Coordinating for necessary Customer Code, DO , all relevant en-route forms etc.
f. Collection of Required BG, DD etc.
g. Placement of Vehicles.
h. Tracking of vehicles
i. Optimum utilization of available vehicles.

8. Billing & Recovery.
a. Billing & Reconciliation.
b. Recovery
c. Payment to Attach Vehicles.
9. Analysis
a. Route wise Profit
b. Customer wise profit
c. Refinery wise profit.
d. Turn over Period calculation.
e. Balance sheet, Profit & Loss