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 )

 

 

 

 

Our Customers have Measured Over 25 Million Tons!

Stockpile Reports is proud to announce that our customers have measured over 25 million tons of aggregate material, using our system!

You may remember that our customers measured over 1 million tons in just one week very recently. Clearly, customer usage hasn’t slowed and we expect stockpile measurements to continue apace while weather permits. 25 million illustration

To put this into perspective, the estimated TOTAL annual output of construction sand and gravel produced for consumption in 2013 was 848 million tons25 million tons represents roughly 3 percent of 2013’s annual output of construction sand and gravel.

However, the U.S. output of construction sand and gravel produced and shipped for consumption in Q4 of 2013 was 212 million tons. Our customers would have measured almost 8.5 percent of that amount!

Did you know that sand and gravel is the only mineral commodity produced in all 50 states? The leading producing states for sand and gravel are: Texas, California, Minnesota, Michigan, Arizona, Washington, Colorado, North Dakota, Ohio, and New York.

The ‘Lone Star State’ is #1 on the list. It is a BIG state. But– if you review every state’s production by quarter (available here) you would see that the total of stockpile tons that our customers measured is just slightly less than Texas’s Q3 numbers— 25.4 million tons! (No insult is meant to the ‘Buckeye State’, but customers measured twice the size of Ohio’s Q3 output of 10,400 million tons.)

25 million tons is more than the 2012 production totals for construction sand and gravel by many states. This includes Alabama, Alaska, Arkansas, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia and Wyoming.

Our customers’ stockpile tonnage was measured by more than our patented Stockpiles Apple® iPhone® App. The Stockpile Reports system also works with GPS, Walking Wheel, Laser and even by UAV (in Australia, Mexico and Canada.)

Stockpiles are not uniform in size, shape, by material, nor uniformly easy to access. Enabling various measurement methods is not only sensible, but business-friendly. This enables our customers to reduce risk, save money and make more money.

If you are excited about getting accurate measurements and want to find out how our system will benefit your business, please contact us and discover what our service can do for you.

 

A Day of Accuracy Testing

We regularly conduct accuracy testing with the same types of measurement tools that our customers utilize. This past week we tested a variety of stockpiles with GPS, Laser, by Aerial and with an iPhone.

The stockpiles measured at the site ranged in size—some looked to be over 100 tons each— with varying shapes, steepness and material types.

Faro Laser Scanner and Trimble GPS, and iPhone 5S
Testing equipment: A Faro Laser Scanner, a Trimble GPS, an iPhone 5S and of course two construction traffic cones.

Planning for this type of accuracy testing can be challenging. First one has to ensure that safe access is available onsite. Next the equipment needs to be available—including having flight plans in place. Then there are the logistics of getting equipment and everyone ready (we used a Faro Laser Scanner, a Trimble GPS, a flyover from Skytech Aerial, and iPhone 5S.)

However, the most important challenge is usually the weather. Stockpile Reports often conducts testing in the Pacific Northwest. Last week’s weather was more unpredictable than usual. There were a few days of heavy rain and wind—and yet the forecast predicted there would also be sunshine and warming temps.

We made our plans, crossed our fingers and waited.

Luckily, we were able to test on a sunny day. The pilot was able to fly multiple altitudes. There were many puddles on the ground, but no high winds or rain, so we were good to go!

Here are a few photos we took at site during testing. If you are also excited about getting accurate measurements and want to find out how our system will benefit your business, please contact us and discover what our service can do for you. We are also happy to talk about the results of our testing!

Site Panorama View
Site Panorama View
Puddles, mud and wet boots, but that's ok-- no rain predicted  for the day!
Puddles, mud and wet boots, but that’s ok– no rain predicted for the day!
One of the more challenging steep piles that we measured.
One of the more challenging steep piles that we measured.
If you look closely you'll see the Skytech flyover to the right of the photo's center.
If you look closely you’ll see the Skytech flyover to the right of the photo’s center.