BHP Transport and Logistics, a division of BHP Billiton, offers logistics services and advice in the handling of the various commodities produced by the company. Prior to the BHP Billiton merger the division was a 1900-strong service arm of BHP, responsible for a range of transport and logistics functions including vessel chartering, ship management and supply chain analysis, redesign and optimisation. The latter was largely supported through an internal consulting group.
This group has since been restructured into the Logistics Solutions group, a 13-person team which reports through BHP Billiton’s marketing division in The Hague. Within BHP Billiton, three principal internal customer groups had been identified: marketing managers, chief development officers and asset managers, said logistics advisor for Transport and Logistics, Harry Sinko.
“Our focus is to assist in reducing supply chain costs and differentiating BHP Billiton market offerings,” he said.
About 18 months ago, BHP Transport and Logistics was asked to model the Northern rail corridor and port in Queensland, through which the BHP Billiton Mitsubishi alliance (BMA) moves some 30 million tonnes of coal a year. The company wanted to examine rail freight options, and in particular establish whether a “take-or-pay” rail regime would be worth considering. (This approach would have required BMA to commit to a set volume of production every year.) The modelling exercise found such a system would deliver improved rail freight costs, but that these would be offset by increased risk and demurrage costs, and some reduced service levels to BMA’s customers.
A key tool used to model the various scenarios was Planimate, a software package designed by Adelaide-based company InterDynamics. Tony Griffith, InterDynamics director, user and technical support, said Planimate offered a systems approach which allowed demand and supply issues to be considered with far greater precision.
“A discrete simulation model represents demand, resources, events and delays in a realistic manner. As a result it has a high level of congruence with how the organisation actually works. This is much greater than typical IT or relational database models whose emphasis is upon only static relationships,” Griffith said.
While the BHPB logistics group has had modelling capabilities for about seven years, Sinko said detailed modelling could be a timeconsuming and expensive exercise and as a result the logistics solutions group was constantly identifying ways to reduce costs associated with model development. One recent initiative was to jointly develop a generic model with Interdynamics to apply to other BHP Billiton customer sector groups, which would benefit the entire group as the cost of development could be spread across different operating units, Sinko said.
Most recently, the logistics group was approached by BHP Billiton project managers at the Goonyella underground mine development project in central Queensland, to model the effect of the project on designed production capacities and against future demand projections.
“It is the first time we have employed Planimate to model coal quality as well as system capacity,” Sinko said, and the first time coal handling had been projected eight years into the future. The model uses long-term marketing product demand forecasts which will generate ship arrival schedules, which in turn will drive mine production. It will be used to monitor a number of key performance measures that have been identified by the project team and are subject to cause and effect reviews.
Sinko said Planimate would be used to check the Goonyella project’s designed capacity and stockpile sizes. In addition, it would provide project managers with a more dynamic understanding of coal quality issues and identify “hot spot” clashes in the coal handling system.
Planimate was used recently to model and optimise the coal handling capabilities of the newly integrated Blackwater mine — combined with adjacent South Blackwater following BHP’s takeover of QCT Resources. “The company wanted to better understand their whole-of-system issues in bringing the two mines together, including rationalising and processing products and identifying any gaps between market demand and mine plans,” Sinko said.
He said Planimate had been used to examine the cost structure associated with rail freight, stockpile levels at the port, belt clashes, and rationalising product blends.
BHP Billiton’s coal operations in the Illawarra district in New South Wales are also using Planimate to examine their coal handling infrastructure design, while the software is used by Queensland Rail for capacity planning of the coal-supply chain in Queensland.
