Coal Supply chain management

Coal is an important source of energy. After burning the coal, electricity and heat is produced. Coal finds its importance in the industrial purposes. About 40% of the world’s electricity comes from coal.

Coal is the biggest cost constituent for the thermal power generators. Also, managing the coal is a complex task. Here, the players face innumerable problems across the supply chain of the coal right from the sourcing to the logistics management, bulk handling, yard management, and overall quality management. In our India which is an emerging market, the loss is about 7% to 10% of the total cost of coal across the entire supply chain.

The value starts getting lost firstly with the coal sourcing. Many thermal companies are not able to suffice to the requirements from the long-term contracts with domestic sources and rely on short-term coal contracts or imports. This creates logistical challenges due to the constraint in the capacity. Bad infrastructure leads to quantity losses too. Moreover, quality loss in the supply chain is a tough challenge which gets tougher due to poor quality measurement and incompetent yard and stockpile management practices.

The coal players should aim at the effective implementation of SCM policy with an objective to create, maintain and consistently better a fair, reasonable, transparent, viable and last but not the least a cost-effective Supply chain management system. The managers must make sure that the decisions should be made within a framework of financial efficiency that also supports the social and economic needs of their country. They must also deploy a uniform Supply Chain policy, purchasing cut-off values, easy procedures and templates and ways to manage the organization’s purchase business efficiently. The coal company often also negotiates for the right item at the right time and also in the right quantities to aim for a right quality at a right price. This brings a lot of benefit to the company. Setting the targets for a constant upgrade and continuous promotion, acceleration and support the procurement of goods and services with the codes of good practice is a wise idea too.

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