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Optimising quarry product production and delivery across the Boral Quarries SA metropolitan portfolio

Boral CMG SA Ltd

Moderators: David Sier (CSIRO) and Patrick Tobin (Swinburne University of Technology)

Background

Boral Quarries SA has a portfolio of 7 quarries in the metropolitan area. Para Hills, Salisbury, Kapunda in the north, Linwood, in the south and Stonyfell, Lobethal and Murray Bridge in the east. The combined metropolitan quarries sell in excess of 2 million tones per annum to the Greater Adelaide market. The quarries provide a total of 160 products broadly grouped into 4 types - Aggregates, Roadbase materials, Fill materials and Sands. The performance criteria for each product type varies from quarry to quarry falling into 2 main rock types, dolomite and quartzite.

Quarry production is basically divided into a number of elements; drill and blast - to provide fragmented rock for crushing; load and haul - to move the rock from the quarry to the crushing plant; crush and screen - to process the rock to the required product size and specification product dumping - to move the rock from the plant to the final product stockpiles; and finally load and dispatch - to move the final product from the stockpiles to the customer via the weighbridge.

Historically the quarries were run as stand alone entities in terms of personnel, fixed plant and mobile plant. This meant that the smaller quarries were resourced with small workforces and small fixed and mobile plant to achieve the capacity required for the annual sales targets. Operating 7 quarries in this fashion required large expenditure in repairs and maintenance as well as capital replacement. Site fixed costs were high and flexibility during market downturns was restricted.

Boral Quarries SA have recently restructured the organisation, processes and systems under the '721' Strategy to further enhance the company's lowest cost producer status. Under the strategy the 7 metropolitan quarries are resourced in terms of personnel and mobile equipment as if the quarries were one large quarry. Teams of personnel and mobile equipment are moved from quarry to quarry producing product as required at each site. Requirements for equipment as well as personnel numbers has been significantly reduced, greatly reducing the fixed costs in the operation. The work flows within the quarries have been split into discrete elements allowing individual elements or combinations of elements to be run at any site at any time. The use of intermediate stockpiles within the system where appropriate has aided this split into discrete elements.

Boral Transport provides the majority of the delivery capability through its fleet of 50 trucks, made up predominantly of tandem truck and 3 axle trailer, semi trailer and tandem truck and 4 axle trailer configurations.

The quarries themselves have evolved over many years and feature individual fixed plant and mobile plant configurations. These individual plant combinations, rock types and rock characteristics provides a varied range of production costs for each quarry and product. This is further compounded by delivery variables and price variation due to market forces that make the optimisation of product profitability a complex question.

Operationally this optimisation is performed by producing nearly all the products at all the quarries, simplifying the problem so that the closest quarry to the customer will deliver the product. This will obviously lead to many cases of total delivered cost being sub optimal in terms of product profitability when the problem is assessed on a total portfolio basis.

The Problem

The task that the work group will be addressing will be to provide an interactive model that can be used operationally to assist in optimising the product production to delivery system in order to maximise the margin available from the product sale. It is envisaged that the model be available for use by both the production personnel as well as the sales force to assist in the effective management of pricing and margin control. In the future it would become a strategic planning tool for use by management in the development of strategic plans and budgets, however it is vital that the system be developed and proven operationally in the first instance.

The Variables

The complexity of the problem will be found in the significant number of variables that impact on the solution. These variables would include but not be restricted to:

• Product specification (160)
• Product source (7)
• Production rate (40 - 500 tonnes / hour)
• Product cost ($3.80 - $6.20 / tonne)
• Delivery mechanism
• Delivery distance
• Delivery cost
• Asset value / depreciation cost ($22 M / $200 000 per year)
• Selling price ($6.50 - $21.50 / tonne)
• Personnel (68 total)
• Equipment

The Solution

The complex nature of the problem may make it necessary to develop a pilot model based on a smaller, more discrete sub group of the quarry portfolio. A natural group made up of Para Hills, Salisbury and Kapunda may provide this smaller group for pilot model development and testing. The pilot model could then be extended to include the complete portfolio.

The team would have a significant amount of flexibility in its scope of work and methodology of approach under the guidance of Boral Quarries SA operational and technical staff.

Boral Quarries SA are extremely committed to developing a solution to this problem and resources will be available or supplied as required under the direction of the Boral/MISG team.

References

Epstein, R., Morales, R., Seron, J. & Weintraub, A. 1999, `Use of OR Systems in the Chilean Forest Industries', Interfaces vol. 29, no. 1, pp. 7-29.

Martin, C., Dent, D. & Eckhart, J. 1993, `Integrated Production, Distribution, and Inventory Planning at Libbey-Owens_Ford', Interfaces vol. 23, no. 3, pp. 68-78.