World Coal’s March magazine was published this week, with an article from Stockpile Reports that states the case for more frequent physical inventory counts as the best way to control inventory swings.
Companies in the mining, construction, and aggregate industries strive to achieve and maintain an inventory +/-5%. However, the actual variation might realistically skew over/under in the range of 20 – 30% vs actual. For national or global companies with multiple sites and locations, any variation could easily multiply into the tens or hundreds of millions of dollars.
Unlike retailers and manufacturing companies, which perform physical inventory counts once or twice a year, materials companies must perform more frequent counts to reduce errors that build up over time. Historically, companies have performed annual inventory counts with quarterly or monthly estimates to help manage write-off risk. Some companies have now advanced to twice-yearly, or even quarterly counts.
The article has a brief overview of technological advances in photogrammetry, Software as a Service (Saas), and drones.
A case study includes information about a multinational materials company that manufactures and distributes cement, ready-mix concrete, aggregates and materials including coal, recently approached Stockpile Reports searching for a solution to reduce time and costs associated with inventory measurements across multiple sites.
A multinational materials company that manufactures and distributes cement, ready-mix concrete, aggregates and materials including coal, recently approached Stockpile Reports. They were searching for a solution to reduce write-offs, time, and costs associated with inventory measurements across multiple sites.
The materials company had been performing inventory counts on multiple sites and regions. They’d hired an expensive third party survey team, who’d utilized a truck-mounted laser for measurements. Using a truck-mounted laser was accurate, but the costs associated with the surveys only allowed for physical inventory measurements to be performed once yearly.
During the rest of the year, team members kept a perpetual inventory by performing self-reported monthly estimates of material on hand. They estimated these amounts monthly, and sent the totals to the Finance Department.
As a result of not using current, accurate measurement data, the company had been experiencing major write-offs every year. This also corresponded with large financial swings.
Stockpile Reports was engaged to perform monthly physical inventory counts, utilizing a mix of measurement technologies. These included using iPhones, drones and planes. It was determined that using a combination of collection methods was the most appropriate solution. The location of material’s company sites are wide-spread across multiple states in the US. Each site also varied in material types, safety, stockpile placements and stockpile sizes.
The Solution for Write-Offs
Since the materials company has a company drone, a portion of one location is now measured monthly via drone for tall coal piles. This is in a high-traffic area, making it unsafe for ground measurements.
Bunkered material and smaller stockpiles are measured monthly with iPhones using internal labor. This is to spot-check incoming deliveries, and also ensure that outgoing deliveries meet production expectations.
A physical inventory count is conducted quarterly at all locations on the same day if weather permits, using Stockpile Reports’ flyover service. This is providing a running perpetual inventory for the company.
The client recognized immediate costs-savings. There is no third-party labor needed to implement Stockpile Reports’ solution. The time-savings enables the company to perform company-wide measurements regularly. For example, the average time required using internal labor and Stockpile Reports’ flyover service was only 20 minutes per each site. Internal labor used for piloting a drone for site measurements averaged about 45 minutes per site. The average measurement by iPhone was 3-5 minutes per stockpile and bunker.
The materials company has successfully accelerated physical inventory counts, and are now performing monthly measurements. Measuring often, regularly, and accurately is the key to inventory control. They are making data-driven material handling decisions, and are greatly reducing financial write offs.
This has been a big year for UAVs. At the start of 2015, only about a dozen companies had been granted special exemptions by the FAA to fly drones, and most of those were for filming on a closed set.
Now there are well over 1000 commercial exemptions to fly drones, for varying businesses such as agriculture, construction, security services, mining, oil and gas, utilities, emergency and disaster responses, and more.
In fact, in early August of 2015 Forbes reported that the FAA was approving applications at a rate of 50 per week.
Here is an excellent series of maps illustrating the geographic spread of the industry. As you can see, drone usage and interest from businesses is widespread throughout the US.
As a further illustration of industry interest, Stockpile Reports has begun meeting with new Drone/UAV Managers. They work in several companies that use our iPhone as a stockpile inventory management tool. Our top aggregate, mining and construction customers are very excited by drone surveying technology. They are interested in how data from drones can be integrated into a safe and automated workflow for stockpile measurements.
These companies ask us a lot of questions.
The UAV is not a new a surveying tool for our team. We’ve worked with various drone models throughout the world, in many environments and business applications since 2013. Our clients have measured stockpiles of varying material ranging from coal to gravel via UAV. These sites around the world continue to have a range of challenges that include wind, water, are extremely busy, are highly regulated, encompass large areas, have visibility issues, etc.
In addition to our senior support team, we also have a Senior Engineer who used to work for Boeing Aerospace R&D on staff. He is also a pilot, and continues to test and research UAVs and works with aerial data and imagery.
Stockpile Reports is best known for our patented platform utilizing iPhone imagery for stockpile measurements. The platform is also available for imagery collected from drones for subscribers. This truly gives your business the best of ground and air for stockpile measurements.
We believe accurate monthly inventory measurements are derived from a combination of tools. Using a drone alone doesn’t work for every business need or measurement scenario, nor does the iPhone, nor aerial flight measurements. Do you have a drone strategy and want site measurements, or are curious about utilizing a UAV? Contact Us.
If you are a regular reader of this blog, you already know we enjoy sharing business information and customer insights. We regularly write about how great our customers are. In fact, Stockpile Reports had a new milestone recently— our customers have now measured over 150 million tons of material using our platform, with the iPhone, Aerial, and UAV!
“What do you measure?” is a common question all of us get asked. Everyone has seen stockpiles of material on highways and construction sites. Outside of our industry, most people assume the only materials measured are what they commonly see everyday. Ask my kids what gets measured and they’ll reply, “Rocks, gravel, and dirt.”
“Rocks, gravel and dirt” are important of course, but customers continue to surprise us with many other kinds of items that need to be measured often. Here’s a graphic of the top materials our customers measure, grouped by type.
Stockpile Reports was honored to be a conference speaker in the 2014 Coal Handling and Storage Conference. This was our first event in the coal industry that we’ve attended and it proved to be an enjoyable way to meet new people, share ideas and experience the exhibition in a historic hotel. It was also an excellent event to learn from industry experts with various disciplines.
The CHS Conference was held in the beautiful St. Louis Union Station Hotel– you’ll see from the photos we are posting that it was the perfect place for a coal conference.
The station opened on September 1, 1894, and was owned by the Terminal Railroad Association of St. Louis. At its height, the station combined the St. Louis passenger services of 22 railroads, the most of any single terminal in the world. At its opening, it was the world’s largest and busiest railroad station. In the 1940s, it handled 100,000 passengers a day. The famous photograph of Harry S. Truman holding aloft the erroneous Chicago Tribune headline, “Dewey Defeats Truman,” was shot at the station as Truman headed back to Washington, DC from Independence, Missouri after the 1948 Presidential election.
Our presentation “5000 Stockpile Measurements from the Field to the CFO in 24 Hours– with an iPhone?” was held the last day of the event, on Wednesday October 22. It covered 3D computer generation, with current and future cloud-based computing capabilities applicable to the mining industry. Measuring 5000 stockpiles and receiving accurate measurements within 24 hours is based in reality, and where the future and business is headed. Our demo included examples in the mining industry.
Our Support team has been traveling around the world again this week, meeting with, and training new clients from all over the US to India.
Stockpile Reports is pleased to share a few photos taken Tuesday, August 12th. Our team members are excited to be able to look at new sites and help solve our customer’s volume measurement challenges. Our customers measure large variety materials, from coal to gravel. They are interested in measuring piles in bunkers and how to measure their really BIG piles, too.
We are dedicated to making sure that each and every measurement is not only fast and safe, but also accurate. It doesn’t matter if we are assisting with small, accessible stockpiles or more complex, large piles– it’s all in a day’s work for the Support team.
We often post photos of our team visiting clients in the United States, although customers utilize our services in 9 other countries around the globe. We recently measured stockpiles using the iPhone in India.
Most of these stockpiles were of coal, with varying sizes. There was a light wind in the coal yard, so you will notice the dust masks being used.
India is currently the world’s third-largest consumer of coal, behind China. Recent news states that India may surpass China as the world’s largest coal importer for power plant usage. Coal is also used in steel production– in fact, 70% of the steel produced today uses coal.
Are you located outside the US? Please don’t hesitate to connect with us. You may qualify for a no-cost trial of our system– this offer also extends outside the US (excluding Australia).