OnaSundaymorningat10o'clock,ArunKumar'sintercomsuddenlycamealive,breakingintohisthoughts.ItwasthelastweekofSeptember2014,andthestaffatJSWSteelLtd.(JSW)wasfranticallyfocusedonlast-minute efforts to achieve the company's quarterly targets. Kumar was the senior customer relationshipmanager to Jindal SAW Ltd. (JSAW), a long-time client of JSW, and he found himself in a difficult spotbecause he had only a short window of time to decide whether to transport finished materials to JSAW bybarge(searoute)or,instead,usethefasterbutmoreexpensivemethodoftransportingitbyrake(railroute).

On a routine day, Kumar would have had no second thoughts on the matter, but today was an exceptionbecauseJSAWneededthematerialurgently,andKumarcertainlydidnotwanttoshutdownhiscustomer'sproductionprocess.TheJSWlogisticsteamwasputtingpressureonKumartoreleasethematerialandsendit by rake to JSAW; however, Kumar thought that shipping the materials by barge would still ensure thattheyreachedtheclientintime,withadditionalsavingsforhisowncompanyduringthecrucialquarter-endperiod.Kumarhadlessthan12hourstodecideonthemodeoftransportationandreleasethe material.

THECOMPANY

JSW Steel Ltd. was a steel giant that operated five manufacturing units in India. The company generatedannual revenues of512,196.2¹ million in 2013-14 (see Exhibit 1) and was the nation's leading privatesteel manufacturer. JSW produced a variety of steel products, including hot-rolled coils, cold-rolled coils,thermo-mechanicallytreatedsheets,wirerods,galvanizedsteel,andgalvalumesheets.Italsomanufacturedspecial grades of steel that were used extensively in high-end applications, such as the manufacturing oflarge-diameter pipes, prefabricated metal structures, and components for auto sectors. The company'slargestplanttheBellaryplantinthevillageofToranagallu,KarnatakawasstrategicallylocatedinsouthIndia,close to the portsofGoa, Chennai, and Mumbai.

Intermsofitscorporatevision,JSWaimedtobecomeagloballyrespectedorganizationthroughsustainableindustrialandbusiness-developmentpractices.Thesteelmakerhadreceivedseveralawardsforitsinitiatives in cultivating a green philosophy among its employees, processes, and products. One suchinitiative involved the operation of a responsible supply chain that assessed the benefits to people, planet,andprofitthroughoutitscorporatedecision-making.Thus,apartfromtheregularrailwayroutes,thecompanymadeeveryefforttosupplyitsclientswithmaterialsthatwereshippedbybargetolocationsthatwere close to ports (see Exhibit 2). Shipping by barge reduced the time needed to transport material andofferedan additionalbenefit of reducingin the company'scarbon footprint.

STEELMAKINGANDLOGISTICS

JSWmanufacturedsteelusingironore,coke,andlimestone,eitherinablastfurnaceorinaCorexfurnace,which was a more environmentally friendly alternative to the blast furnace. The end products of reductionand melting were hot metal and slag. The hot metal was processed further, by blowing it with oxygen toremove the unwanted carbon. Finer elements, such as vanadium, nickel, cobalt, and titanium, were addedto enhance the features of the steel and to make it suitable for specific applications. The steel slabs wererolledthroughacriticalmethodtomanufacturehot-rolledcoils,whichwerethenshippedtocustomerswhomanufacturedpipes and tubes.

Thecustomerputthehot-rolledcoilsthroughaflattenerandusedaspecialtechniquecalledsubmergedarcwelding to manufacture pipes. This process required clean coils to avoid strains on the pipes and tubesproduced.Thepipeswerefurtherprocessedandusedtoconnectwaterresources,naturalgas,andfuellinesaround the world. The timely supply of these hot-rolled coils to the customers was obviously an importantconcernfor JSW's logistics department.

The logistics team used different transportation modes for different locations. The customerin this case,JSAWwas located in the Mundra region of Gujarat, so the closest port was Mundra, and the closestrailwaysidingwasGandhidham.ThematerialforJSAWproductshadalwaysbeentransportedbyrailroutefrom the time the two companies started doing business together; however, with JSW's recent focus on aresponsiblesupplychain,thesearoutewasalsoconsideredasaviablealternative.IndianRailwayschargedJSWbasedonapricelistthatwasapprovedeveryyear,andJSW'saccountingdepartmentsharedthispricelist with all other departments within the company so they could refer to it to make cost-effective shippingdecisions(see Exhibit3).

The Indian railway system classified its rake services based on the number of rail wagons attached. Forexample, 45 wagons constituted a BOXN rake and 59 a JUMBO rake. A JUMBO rake could carry 3,500tons(3,175tonnes),²whileaBOXNrakecouldcarry2,500tons(2,267tonnes).IndianRailways'monopolygave it the authority to sanction the type of rakes it supplied. The chance of attaining a JUMBO rake onrequest was just 30 per cent since the railway operated only a small number of JUMBO rakes andavailability was limited. Prior to 2014, Kumar's experience had taught him that the railway authoritiesusually gave permission for the requested number of BOXN rakes 80 per cent of the time, and 20 per centof the time, the allocation was one BOXN rake less than the number requested. Also from experience,Kumarknew that,for arailshipment, theoddsoflatearrivalwereapproximately30per cent.

SouthWestPortLtd.,Goa,operatedthenearestporttoBellary.Thisportwasmostlyusedfortheexportofhot-rolledcoils,cold-rolledcoils,steelplates,andsteelsheetstointernationalcustomers;itwasalsousedforthe import of raw materials such as coal and iron ore. Gates 1 to 4 were used for exports, gates 6 and 7 fordomestic activity, and gates 8 to 10 for imports. Because South West Port Ltd. was owned by JSW Group,Kumarhadalwaysenjoyedtheavailabilityoftherequirednumberofrakesbetweentheplantandtheport.

Most of the barges that entered this port for domestic purposes were carrying coal shipments, and thus, asignificantamountofcoalandirondustcoulddamagethesurfacesofthecoilsthatwerebeingtransported.

Thevendorswhosuppliedbargetransportationthatofferedcleanstoragespace(ClassI)chargedapremium(30 per ton) beyond the normal delivery charges, but the availability of such clean-storage barges wasonly30 per cent.

KumarknewthathecouldplacearequestwithportofficialstohaveClassIIvendorsprovidecleanstoragespace on their barges. In such a case, the vendors would charge an additional25 per ton, and Kumarestimated only a 75 per cent chance that the cleaning would actually be done. He remembered that Class Ivendors had a record of 80 per cent timely delivery, whereas the Class II vendors had a record of only 35per cent. The combined cost of transporting coils to the port in Goa by rake and then to the Mudra port bybargewasapproximately22percentcheaperthanthatoftransportingthecoilsdirectlybyrail.JSW'spastrecordsshowedsomevariationin activitytimesacrossboth modesoftransportation(seeExhibit 4).

KUMAR'SPROBLEM

ThequantityofsteelorderedbyJSAWwas7,000tons(6,350tonnes),ofwhich5,000tons(4,535tonnes)hadalreadybeenproduced;theremaining2,500tons(2,267tonnes)wasunderproductionandwasscheduledtobereadyfordispatchby10p.m.thatsameday,Sunday.Theconditionsfordeliveryofthecoilsweredecidedthroughamemorandumofunderstanding,andanegotiationdocumenthadbeendrawnupbetweenJSWandJSAW.Alltermsandconditionswereclearlydefinedforeveryproject(seeExhibit5).

The intricacies of this logistics problem were growing with every minute that passed, and Kumar knew heneeded to make his decision in less than 12 hours. He was under tremendous pressure since this was thelast week of the quarter. As well, timely delivery to JSAW was high on Kumar's list of priorities, but thelogistics department could not confirm the availability of JUMBO or BOXN rakes until the next day,Monday,at10 a.m.

As he pondered the situation, several important questions ran through Kumar's head: Would it be best towait until Monday morning to get confirmation on the rail rakes? What if he could not obtain the requiredtypeornumberheneeded?Shouldhetalktotheport officialsnowandatleasttrytogetaconfirmationonthe availability of a clean barge? JSAW shipments had always been transported by rail. Would it be riskytorelyonarecentlydevelopedsearoutetomakearushdeliveryforanimportantcustomersuchasJSAW?Wouldthe final decision affect thegoodwill betweenJSW and JSAW?

AsKumarconsideredthepossibleanswerstothesequestions,hefelthecouldnotagreemorewiththewell-knownadage,"Too tired tostayup,yet too awake to fall asleep."

Questions

What are the existing challenges facing kumar( decision Tree)

how much money should JSW make if kumar chooses to send the material to jsaw by rail

keeping all the possibilities in mind what should kumar do ?