The Hidden Cost of Too Much Inventory

Inventory is viewed as an asset with an assigned value, but too much inventory can hinder profit margins, reduce available cash flow, and end up costing you. As a bulk material (BM) company, it’s important to have the right amount of inventory on hand to meet the market demand, all while avoiding carrying excess inventory.

Excess inventory occurs when a BM company incorrectly orders inventory. If there is more inventory on hand than the market demands or market demands shift dramatically, a BM company could be left with more than they can efficiently sell.

Excess inventory has hidden, and not-so-hidden, costs. At Stockpile Reports, it’s our goal to help BM companies reduce risk and exposure, save time and money, and make inventory processes more precise and consistent. So, what are the costs of excess inventory?

Administrative Costs

We know that there are administrative costs associated with inventory management. From operation costs like rent, utilities, and payroll to inventory tracking and accounting, the buying, selling, transporting, handling and storage of materials is expensive. If BM companies are spending additional dollars on tracking and storing excess inventory, they are taking away from other revenue generating opportunities.

Reduces Available Cash Flow

BM companies need inventory on hand to meet the demand for the products they offer, but the more cash flow you have tied up in inventory, the less you have to spend in other areas. Companies that carry an abundance of inventory won’t have the cash flow to sustain digital improvement initiatives such as investing in new technology or process improvements. If companies order only the inventory they need and automate inventory ordering processes, funds will be allocated to the right areas at the right times.

Shifting Customer Demand

Having the right amount of inventory when it’s needed is essential, but having excessive inventory can be expensive and troublesome. The market drives demand for materials and products and tying up funds in excess inventory can be detrimental. If demand drops dramatically or goes in a different direction, companies could get stuck with inventory that no longer has the same value that it used to. BM companies must be agile and shift to meet market demands as quickly as possible without sacrificing profitability.

Inventory Takes Up Space

One major concern surrounding excess inventory is the cost involved with storing it. If the excess of one product is taking up valuable ground space, BM companies will lose out on being able to carry one or more profitable materials and products. Meanwhile, they are also measuring and managing low-turnover inventory that isn’t turning a profit or is experiencing decreased profit margins.

Reduced Profits

Excess inventory leads to reduced profit margins and year-end profitability. Companies with excess inventory often lose profit by carrying inventory in excess of what the market is demanding. This can happen as a result of human error or poor inventory insights and lack of best management practices.

BM companies may take a hit to their profit margins as well because they will be forced to sell excess materials at discounted prices to free up profitable space. If demand shifts away from the material entirely, a BM company is left with a material that is no longer worth what it was paid to produce, inventory, and transport it.

For example, as car dealerships near the end of the year and have the opportunity to bring new, higher value vehicles with significant profit margins onto the lot, we begin to see “end of the year flash sale” marketing. Why? Because last year’s models are taking up space on the lot and they need to be sold to free up space for the new models with higher demand. Dealerships discount these vehicles, making for a reduced profit margin, all for the sake of freeing up space and to make more money on high-demand vehicles. You won’t see a dealership holding onto a 2006 model in order to get full price when they could have the latest model on the lot.

Striking a Balance Between Inventory and Sales

Whether you are a ready-mixed concrete (RMC) company, an aggregates supplier, a state DOT, or a pulp & paper plant, finding the balance and the “sweet spot” for BM inventory can be an ongoing challenge and the cost of doing it inefficiently or inaccurately can hinder the profitability of a BM company.

It’s Easy, But Is It Accurate?

Some have a hard time believing that walking around a pile with an iPhone or flying a drone capturing pictures could possibly results in reliable information about the volume of a pile without touching it.   

Stockpile Reports ACCURATELY calculates volume.

What you really want to know is, “is my inventory right?”  Measurements rely on consistency, density, pile management, site condition, but system accuracy is usually the smallest variable in your assessment of accuracy.  So we’d like to broaden the discussion to include considerations affecting repeat-ability, consistency (getting the same measurement each time).

You probably know what it’s like to rely on different people to mark piles and get different measurements each time, so let’s review why, with our system, you WILL know your numbers when it comes to volume.

How do I know the measurement is true?  

Simple geometric equations on a broad scale result in high confidence.   Continue reading “It’s Easy, But Is It Accurate?”

Are Your Inventory Numbers Tracking to Your 2016 Plan?

How are your inventory numbers tracking to your 2016 plan? Q1 is almost over. Are you feeling confident?

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. We met with, and spoke with dozens of people about their challenges at the recent AGG1 conference in Nashville, Tennessee. They outlined many reasons for infrequent measurements.

CEO David Boardman discusses inventory challenges with booth visitors at 2016 AGG1 conference.
CEO David Boardman discusses inventory challenges with booth visitors at 2016 AGG1 conference.

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 CFOs who spoke with us wants production levels to remain in alignment with 2016’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.

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. Mark Crain, of Lane Construction, gave a testimonial at AGG1 describing the company’s success using many sources of imagery for accurate perpetual inventory.

Lane Construction’s Mark Crain speaks about success using iPhones, drones and airplanes for company-wide inventory management at AGG1.

The business benefits of using an iPhone and drone/airplane combination include:

  • Measuring with an iPhone is easy enough to use that anyone can measure stockpiles with minimal training, reducing outsourcing costs
  • Using an iPhone on the ground enables frequent spot-checks
  • Using aerial data by plane or drone provides ongoing quarterly, or monthly measurements
  • Aerial stockpile measurements provides material information for hard-to-reach, large, or dangerous stockpiles
  • Airplane flyovers are the fastest and easiest method to measure multiple sites across a wide geographical area
  • Stockpile Reports arranges flyovers and schedules them for your company
  • 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 your company’s third-party requirements
  • 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. Start now.  Make an action plan that will get you to your 2016 target. Contact us today for more information and ask about a demonstration— we can help.




It All Adds Up: World Coal Magazine

World Coal’s March magazine was published this week, with an article from Stockpile Reports that states World Coal Magazine Articlethe 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.

Read the online article here:

Note: This article first appeared in the printed March issue of World Coal.



Data, Not Distractions

The construction, agricultural, transportation and mining industries have welcomed the idea of using a drone for multiple business applications. Image of iPhone, drone, airplane data collection methods.

Stockpile Reports has been to several conferences and events during the recent months, and have noticed how many new drone exhibitors are appearing. In fact, it is very difficult for anyone NOT to notice how the interest in using drones is rapidly expanding.

We enjoy seeing technology change, and grow. During these conferences, we often ask attendees how their companies currently measure stockpile inventory, and if there is a drone strategy in place.

Some businesses already have a drone, or are in the process of purchasing one.

A few have already tried to utilize a drone, but decided that it was not a good return on their investment, in terms of both the cash spent, and the time needed to obtain accurate stockpile reporting. So they stopped using a drone.


Some companies and managers have told us that they don’t wish to make an investment in a drone just yet. A few reasons include:

  • Avoiding the need for instructional training
  • Don’t wish to make an investment in accompanying software
  • Their site location is not conducive to drones; such as being near an airport or in a windy area
  • Their stockpiles are messy: vegetation covers the piles, the pile materials touch, there are stackers and obstructions
  • They have multiple sites, spread out so far away from the other so travel becomes a factor
  • Not a clear, compelling ‘need’ to either purchase or lease a drone yet
  • Don’t want to buy more than one drone in case one becomes damaged or flies away
  • Not certain they will get a good ROI on a drone purchase in terms of labor savings vs. other survey methods over a period of time
  • Wary about FAA regulations

Generally, Stockpile Reports has found that the construction, transportation and mining industries prefer to avoid new investments that require massive training. Companies are interested in results that are accurate, safe, simple, legal, and of course, cost-effective.


To drone or not to drone? We aren’t able to answer that question. Every company has different needs and concerns. Drones can be a very good way to gather data for stockpile volumetric reporting!

We can, however, authoritatively state that our clients really want answers. They want accurate perpetual inventory, and want to avoid write-offs.

Stockpile Reports has a patented platform that processes data gathered from a drone, from an airplane or via iPhone. It also doesn’t matter what type of drone is flown. Clients have the choice to use one image collection method, or all three!

In other words, BYOD. Bring your own drone, we’ll process the data. Don’t want to do that? No problem, we’ll provide the most cost effective flight survey solution in the market— we’ll fly your site and process the data. Or you can use an iPhone and we’ll process the data from your smartphone.

As you can see, it doesn’t matter what solution you choose. If you want to invest in a drone in the future, we’re here for you. Your company won’t need to also invest in a system to process the data, or to warehouse it. Our subscribers already receive those benefits. And even better— our clients receive accurate reports in hours with minimal training, no extra hidden fees, and no other distractions.




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.




Controlling Swings in Inventory with New Technologies

Monthly Physical Inventory Counts are the First Step to Controlling Swings in Inventory

Companies that achieve a more accurate perpetual inventory through monthly or quarterly physical inventory counts receive several positive business benefits:Image of New Technologies in Stockpile Inventory Measurement

  • Reduced financial write-offs
  • Reduced stock outs by ensuring there is adequate material on hand to support the business needs
  • Better business decisions (i.e. investment in resources or equipment) and the ability to set more realistic performance goals (i.e. incentives) based on productivity or cost-per-ton metrics
  • Meet and exceed audit requirements

Accelerate the Speed, and Reduce the Cost of Physical Inventory Counts Through New Technologies

Technological advances are now shrinking the time needed to perform company-wide physical inventory counts from 3-5 weeks down to 3-5 days. The costs to perform multiple quarterly, or monthly counts are now comparable to the historical price of one annual count. Significant advances in image processing, Software as a Service, drones, and phones make this possible.

Manual photogrammetric processes of the past are now fully automated thanks to advances in image processing and computer vision. High quality cameras embedded in drones, attached to planes, and built into cell phones are more highly available and easier to use than traditionally higher cost GPS and Laser based measurement technologies. The combination of high-quality low cost cameras, combined with advanced image processing enable rapid low-cost 3D modeling from imagery. Volumetric measurements generated from imagery are now an accepted form of aerial survey.

Software as a Service (or SaaS) is a way of delivering applications over the Internet, as a service. Instead of installing and maintaining software, companies simply access it via the Internet, freeing themselves from complex software and hardware management. SaaS companies leverage cloud computing to cost effectively scale operations to meet customer demand.

Leveraging SaaS, image processing, airplanes, drones, and phones makes it possible to accelerate the speed, and reduce the cost of physical inventory counts. The time to perform an inventory count is now only limited by how fast the imagery of stockpiles can be collected. Airplanes can be used to quickly take aerial imagery of hundreds of sites across geographically dispersed operations. Drones utilized by trained professionals – internal staff or external service providers – can be used to obtain aerial imagery at localized sites. And now even your phone can be used.

Using a combination of SaaS and image capture methods makes it possible to complete a company wide inventory in 3-5 days. Thousands of stockpile measurements can be generated from millions of images in just 24 hours. Finance and operations employees quickly review and approve data via a common website, with no need to manual enter or transfer data.

Visit us next week for the final post of this series about Inventory Management for companies with stockpiles: Putting it All Together.

(This blog is a continuation of last week’s post. Read: The Case for More Frequent Physical inventory Counts )





Yes, You Can Still Be More Productive in 2015!

Have you kept your 2015 resolutions? It isn’t too late. verticalmeasurements

A common theme that we heard from our clients this year, is that they want to increase their productivity.

We understand, because we do, too!

Stockpile Reports put into motion several strategies beginning before January 2015, to increase productivity in 2015.

A Redesigned Stockpiles App

This past year we released a redesigned Stockpiles App for the iPhone, with more tools that makes ground-based stockpile measuring faster and more intuitive for users.

The updated App, in turn, reduced the amount of questions from our clients. The new tools and ease of use gave clients and executives higher confidence in successfully completing a stockpile measurement, time after time after time. That enabled them to be even more productive while measuring piles, in smaller sites and also across a large enterprise.

For example, the Texas Department of Transportation measured thousands of stockpiles during the month of June as part of their annual inventory. The people who performed the measurements weren’t surveyors. They ranged from front-loaders to executives. They were not only very productive (one team measured 185 stockpiles in an hour) but they were also confident in the quality of their report results.

Aerial Offering Takes Off

Stockpile Reports also launched our aerial capability for the US in early 2015. Our aerial offering has become quite successful since then! Subscribers are receiving monthly measurements for the typical price of only one fly-over by other services. This gives them an opportunity to review how a site changes over time, and make future planning easier.

Clients receive the fastest results in the industry — online access to site and stockpile reports are available within hours after the flight. There is no action needed from clients other than tagging materials to the already outlined stockpiles online after the flight. Labor time from clients is reduced drastically— to as low as 20 minutes after an aerial flight.

Debunking Difficult Bunker Measurements

A big source of frustration for our customers was trying to figure out how to get the volume of material stored in their bunkers and bins.

We listened to them, and put our engineers and team members on many different sites across the US, examining various bunker configurations and materials, both indoors and outside.

Typical material stored in bunkers includes:

  • DOT Approved Salt and Sand
  • Recycling- Utilized in the Scrap Metal Industry
  • Aggregates such as Gravel
  • Landscaping/ Nursery Mulches
  • Animal Food
  • Granular Fertilizer- Urea, Ash
  • Livestock Manure Storage
  • Scrap Metal storage
  • Grain

We released another new capability in 2015: bunker and bin measurements using an iPhone. Bunkers containing bulk materials can be located indoors, or outside. Material to be measured may be bounded by 1, 2, or 3 walls in bay areas of varying widths at a typical site.

BYOD: Bring Your Own Drone

All of us saw the explosion of drone usage and interest in 2015. UAVs are now playing an increasing role in company’s strategy for providing rapid turn production and inventory measurements.

Our engineering team has been working closely with drones and remotely piloted vehicles for nearly a decade.  We have seen the ease of use and capabilities increase – while the size and price has dropped dramatically during that time.

Stockpile Reports has been supporting Australian clients by providing stockpile reporting from drone/UAV flights in Australia for 2 years now.

Our US clients can process drone imagery using our company. We are experienced at piloting and operating various models and are also available for consultations. This includes helping you with flight patterns and camera angles. is the only solution to enable enterprise inventory measurements of thousands of geographically disparate stockpiles in hours.  Our support for phones, drones, and planes provides your company the ability to develop a Stockpile Measurement Strategy to meet your business goals and improve your productivity.

Connect with us today. 2016 is almost here. You still have time to achieve your 2015 goal to measure and manage your stockpile inventory more productively!

New Clients and How We Help Them reached a new milestone recently: We have over 100 international clients, measuring over 200,000,000 tons of material with our patent-pending platform!

We are extremely proud to assist clients with the challenge of gathering, measuring, and maintaining accurate inventory of stockpiled materials. We’ve helped our customers measure stockpiles at over 1200 locations. Although stockpiles come in a vast variety of shapes, sizes, materials, locations and challenges, we’ve found that companies all over the world aren’t hiring us to just solve measurements.

To be frank, clients are hiring us because they don’t want write-offs. They want the quarterly inventory arguments to end.

Businesses want to measure smarter, and manage their inventory confidently.

Stockpile Reports is the only company providing accurate inventory results and performance insights for materials management companies that is scaleable and push-button simple. We enable our clients to end the uncertainly and large write-offs. 

As 2015 draws to a close, clients all over the world are measuring thousands of stockpiles and preparing for year-end inventory.  Our clients are getting consistent results using an iPhone, plane, or drone— with a minimum use of their resources. They’re making rock instead of counting it, and feeling confident in their report results.

We greatly enjoy meeting and training clients in person, and helping them solve their stockpile challenges at each site. After we leave, we’re confident that we’ve also assisted them in solving the challenge of inventory management.

Contact us, and find out how we can assist you. We’ll also be exhibiting at the World of Concrete Show in February in Booth N3247, and at AGG1/World of Asphalt in March, Booth 2851. We look forward to meeting you, and demonstrating how our solution provides consistent, bankable results.

Client stockpile challenges from our training visits around the US this week.
Individual stockpile challenges from recent training visits around the US this week.
We're not ashamed to strap a GoPro to our helmet while training. This helps us to remember questions and site challenges.
We’re not ashamed to strap a GoPro to our helmet while training. This helps us to remember questions and site challenges.
Our team is always interested in what our clients say, and what problems they wish to solve.
Our team is always interested in what our clients say, and what problems they wish to solve.
Every site also has varying geographical and weather-related challenges, too.
Every site also has varying geographical and weather-related challenges, too.
Don't forget to visit our booths at World of Concrete and Agg1/World of Asphalt.
Don’t forget to visit our booths at World of Concrete and Agg1/World of Asphalt.

Aggregates Production and Physical Inventory

Rock Products recently published the news: Aggregates Production Rises in Second Quarter, stating “An estimated 607 million metric tons (Mt) of total construction aggregates was produced and shipped for consumption in the United States in the second quarter of 2015, an increase of 3 percent compared with that of the second quarter of 2014, according to the U.S. Geological Survey (USGS).”

However, further down into the article was some less-than-good news: “The estimated production for consumption of construction sand and gravel in the second quarter of 2015 decreased in five of the nine geographic divisions compared with that sold or used in the second quarter of 2014. The largest decreases in percentages were recorded in the West South Central and the Mountain divisions.”Sales Meeting Cartoon

Notice that the word used to describe both the positive and negative production measurements is “estimated“.

How many aggregates producers do you think estimate their production and sales every quarter? How many do you think were either pleasantly, or unpleasantly surprised when they recorded inventory numbers?

Aggregate Research states that the 2015 Q2 production numbers were gained by the USGS via state surveys, with the USGS Mineral Industry Surveys providing more detail.

Estimation and surprises (good and bad) are not new in the aggregates industry. Tracking the quantity of goods on hand has traditionally been difficult to do in dynamic or remote quarries and sites.

There are two types of inventory methods: a periodic inventory method, and a perpetual inventory system.

In a periodic, or physical inventory method, there is no cost of goods sold in an accounting period until there is a physical count.

Challenges with this method include:

  • Estimation errors. You must estimate the cost of goods sold during interim periods, which will likely result in a significant adjustment to the actual cost of goods whenever you eventually complete a physical inventory count.
  • Large adjustments. There is no way to adjust for obsolete inventory or scrap losses during interim periods, so there tends to be a significant (and expensive) adjustment for these issues when a physical inventory count is eventually completed.

If your company physically measures stockpiles weekly, monthly, quarterly, every six months, or by year, you use the periodic (or physical) inventory method. The more often you measure, and record the results, the more accurate your accounting will be.

Discrepancies or errors in accounting are difficult to investigate, if physical measurements are not completed often and accurately, as there are not enough physical inventory records to track through. Write-offs happen. Less accurate record-keeping makes it extremely difficult to set future performance expectations.

Aggregate producers assume degrees of  inaccuracy in measurements (such as density variations and belt calibrations.) For enterprises with multiple sites and locations, any variation could multiply into the millions of dollars.

Walmart knows exactly what is on their shoe shelves. McDonalds knows how many Big Macs a store sells every day, and management at Target has accurate numbers as to how many candy bars are available for events such as Halloween. They know this by constant physical inventory methods.

Perpetual inventory enables site owners and businesses to obtain real-time knowledge and confidence about existing inventory on hand, if measurements are made and recorded often and regularly.

Frequent, accurate measurements provides feedback into the success of production modes, and helps Senior Management team evaluate performance. The results are highly auditable too, because there are continual updates to either the general ledger or inventory journal.

Every stockpile is cash sitting on the ground.

Survey costs, production downtime, labor costs, tool accuracy, site locations and turn-around times have been barriers to achieving a state of accurate inventory.

Isn’t it time for Aggregates producers to finally update measurement processes to enable rapid physical inventory?

Stockpile Reports is the only measurement platform enabling large enterprises to have accurate inventory. We have the lowest costs, our results are highly auditable and available in hours, giving companies the fastest accurate physical inventory measurements available. Getting those measurements performed often, regularly, and accurately is the key to inventory control.

Think about it: if your inventory numbers were better, would it change your business? How would if affect decision-making?

Contact our team for more details about how we are currently solving accurate inventory problems for enterprises, and how we can help you.