How a Client is Solving Write-Offs, Via Technology and Frequent Physical Inventory Counts

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.

Technological advances are now shrinking the time needed to perform company-wide physical inventory counts from 3-5 weeks down to 3-5 days. Measurement methods include the iPhone, drone, and airplane.
Technological advances are now shrinking the time needed to perform company-wide physical inventory counts from 3-5 weeks down to 3-5 days. Measurement methods include the iPhone, drone, and airplane.

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 Savings

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 blog post is a continuation of  “The Case for More Frequent Physical Inventory Counts” and last week’s entry “Controlling Swings in Inventory with New Technologies.

We are always happy to share our success stories. Contact us for more details about how we can assist your company and reduce write-offs.

 

 

 

Achieving the Goal: Stockpile Inventory Management

2015 is already half over. You only have six more months left to achieve your year-end targets. If you made a resolution last January to lose 10 lbs in 2015, there is still time remaining to make your goal— if you make changes to your habits.

A combination of measuring by iPhone and by aerial methods is the solution for gathering stockpile measurements for inventory.
A combination of measuring by iPhone and by aerial methods provides stockpile measurements for inventory.

Speaking of losses… how are your inventory numbers tracking to your 2015 plan? Are you afraid that the company will need to write off millions of dollars again at the end of the year?

Maybe you are assuming that this year will be “different”, and inventory numbers will come close to reconciling, without making changes in current stockpile measurement methods.

Stockpile inventory management is often a real source of ongoing frustration for the companies that have approached Stockpile Reports for help. The challenges of measuring the volume of stockpiled materials are many.

Accessibility, safety, costs, schedules and competing priorities make it difficult for the quarry manager to measure stockpiles as often as the accounting department would prefer. We hear managers say, “Do they want me to make rock— or measure rock?”

The CFO wants to ensure that production levels remain in alignment with the year’s accounting plan. Accounting departments often struggle with various data entry sources from multiple people. Measurement information comes in from voice, email, paper and spreadsheets. Too often there are data error issues, and sometimes the information arrives late.

Is it unreasonable to want stockpile inventory tracking available on a real-time basis? 

No. Our clients have discovered that utilizing a combination of iPhone and aerial (airplane or drone) imagery provides a complete solution.

The benefits of using an iPhone and aerial combination include:

  • Measuring with an iPhone is easy enough to use that anyone can measure stockpiles with minimal training
  • Using an iPhone on the ground enables frequent measurements
  • Using aerial data by plane or drone provides regular quarterly measurements
  • Aerial stockpile measurements provides inventory information for hard-to-reach, or dangerous stockpiles
  • Stockpile Reports arranges and provides certified aerial photographers to fly your site, and are trained to collect optimal imagery
  • Stockpile Reports has the platform to process your data, regardless of aerial, drone or iPhone collection methods
  • Measurement results are automatically processed and available to corporate with no data entry
  • The measurement results meets the consistency and accuracy requirements of the company
  • iPhone and aerial measurement methods meet safety requirements
  • Competitive subscription pricing gives the company the freedom to measure year-round

Learn from what hasn’t worked before: don’t assume that this time things will be “different” when it comes to your monthly inventory results. Make an action plan that will get you to your target. Contact us today for more information and ask about a demonstration— we can help.