Case study

Finding efficiencies in ship loading times

Operations experts have helped an iron ore producer in Oman find a US$300,000 annual saving in ship loading procedures. They used the process-improvement methodology known as Six Sigma to find efficiencies.

Time is money

In commercial shipping, ports only allow ship operators a certain amount of time to load or unload their cargo. After this, ‘demurrage fees’ (fines) are applied. For a large producer of iron ore in Oman, this rule was becoming a problem. They were regularly exceeding the time limit, incurring fines and frustrating their customers.

At a time when the price of iron ore was falling and profits were already squeezed, the company couldn’t afford to make these mistakes. Something had to be done.

Calling in the experts

Professor Jose Arturo Garza-Reyes, our Head of the Centre for Supply Chain Improvement, and Mustafa Al-Balushi, a Certified Six Sigma Master Black Belt, led a team of operations and logistics experts focused on resolving this issue.

“We knew what we needed to do,” explains Professor Garza-Reyes. “We would use elements of the Six Sigma quality programme to improve the company’s port operations, particularly the five-stage method known as DMAIC — define, measure, analyse, improve, control. This can be used for improving process problems with unknown causes, as was the case here.”

Mustafa adds: “This opportunity was strategic to the company, as it was aligned with Cost Reduction and Customer Satisfaction strategic pillars”.

an industrial port

Working methodically

The team worked alongside staff at the company, leading them methodically through the five steps of DMAIC. In stage one (define), they formed an improvement team, defined the project scope and conducted high-level analyses of the cargo loading/unloading process. For this, they used Six Sigma tools such as SIPOC (Supplier-Input-Process-Output-Customer) and VOC (Voice Of the Customer).

In stages two (measure) and three (analysis), they quantified the magnitude of the problem and, with the help of company employees, explored what the root causes were. They used  more Six Sigma tools to do this, including advanced statistical techniques such as normality tests, value stream mapping and a cause-and-effect analysis.

It was then time to select improvement actions (stage four). “We recommended ten simple initiatives that we felt the company could implement quickly and affordably,” explains Professor Garza-Reyes.

Mustafa adds: “These included revising operational definition of commercial loading time, utilising a second berth in the jetty to prepare immediate loading for the next vessel and reducing some operational related time in the process such as draft survey.”

In the last stage of the project, control measures were put in place to ensure the initiatives were sustained, including standardised processes and documentation, training and control charts. “Setting up the control measures were most important once improvement has been validated,” Mustafa explains. “Standard operating procedures (SOP) were updated and employees were trained on these changes.”

Professor Jose Arturo Garza-Reyes

Professor Jose Arturo Garza-Reyes
Professor of Operations Management and Head of the Centre for Supply Chain Improvement

Jose Arturo Garza-Reyes is Professor of Operations Management and Head of the Centre for Supply Chain Improvement at the University of Derby. He is actively involved in industrial projects, combining his knowledge, expertise and industrial experience in operations management to help organisations achieve excellence in their internal functions and supply chains.

Email
j.reyes@derby.ac.uk
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Clear savings

Analysis showed that the initiatives had led to a reduction in ship loading time by more than 30%. This saved the company around US$300,000 per year in fines compared to previous years. Customer satisfaction levels had increased too.

“This was a very successful international project for our research centre,” says Professor Garza-Reyes. “It demonstrates the tangible benefits that can be realised from collaborations between universities and industry. I look forward to working on more initiatives like this.”

Mustafa adds: “Definitely, collaboration between industry and universities has its unique advantage in solving complex problems in an optimum way, through value-added results gained at the end.” 

A container ship on a waterway

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