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.

 

 

 

Stockpile Inventory for the CFO

We’ve written in this blog about several issues in the field that cause variances in stockpile measurement results. These include belt calibration, third-party volume discrepancies, changing material densities, pile grooming, varying stockpile sizes and safety concerns. 

It is no wonder that many companies are unable to regularly track inventory of stockpiled material.

Operations managers know that tracking inventory from month to month is a hard problem to solve, and an inexact science.

However, the CFO has a completely different perspective on the inventory problem. Writing off millions, or tens of millions, at the end of a fiscal year is extremely painful.

Never Again

Enterprises are writing off millions of dollars due to inaccurate inventory numbers each year. Isn’t it time that our industry adopts modern, streamlined approaches similar to retail and automotive industries?

To mitigate painful write-offs, the CFO needs data: inventory measurements done regularly, and performed company-wide.

Explain a request for regular inventory measurements to people outside our industry, and they often assume that gathering and sharing company-wide measurements is an easy and standardized practice.

However, there are a variety of ways companies currently measure: by walking wheel, GPS, laser, drones, aerials and by ‘thumb’. The chances of being able to taking monthly stockpile measurements by one— or a combination of these methods— regularly, and consistently, seems to be wildly optimistic. Add to this mix the logistics of measurements across multiple sites, cities and states.

There’s more: how about adding the challenge of how to enter and reconcile all that data, from varying sources? CFOs get results via multiple emails, spread sheets, and application softwares.

It is no wonder that both the CFO and the Operations teams get very grumpy sometimes.

What if a stockpile measurement method…

  • Was easy enough to use that anyone could measure stockpiles with minimal training?
  • Didn’t have to be outsourced, and someone was trained how to do it at every site?
  • The results met the consistency and accuracy requirements of the company.
  • The results were automatically processed and available to corporate with no data entry?
  • Could be used on the majority of piles on a site?

Consider the iPhone

Many of you may have the measurement solution already in the palm of your hand! Accurate stockpile measurements with an iPhone is a current reality, and being utilized by clients in 12 countries. Notable domestic clients include the Texas DOT, Pete Lien and Sons and Knife River. Our domestic and international customers have measured more than 115 million tons of material so far using our platform!

Did you know that beyond the point of measurement, the Stockpile Reports platform also supports online reconciliation? This provides the data to the CFO quickly and consistently. Here is a shortcut to more information about our custom reports.

Production — Sales = Inventory

Remember that every stockpile is cash on the ground. Do you know how much cash is sitting on-site each month, or by quarter?

Don’t be surprised by what little you know at the end of the year. Start tracking and measuring your inventory now. Contact us today for more information about our subscription-based service and reconciliation features.

 

Measuring Stockpiles From The Sky

Stockpile Reports is proud to offer aerial measurements to our clients, augmenting our ground-based stockpile measurement and inventory management solution.

The Best of Ground and Air

Aerial photography is the perfect solution for measuring stockpiles in dangerous or difficult to access areas such as mines, quarries, landfills and infrastructure project works. It is especially useful for monthly stockpile inventory measurements, especially in large quarries when it is more efficient to quickly measure from the air, with zero man-time needed on the ground.

Dense point cloud result from a recent aerial measurement.
Dense point cloud result from a recent aerial measurement.

Our clients receive the fastest results in the industry.  Subscribers get online access to site and stockpile reports, which are typically available within hours after the flight. There is no action needed from clients other than tagging the outlined stockpiles with materials after the flight.

Exclusive benefits for subscribers: 

  • Orthographic imagery included
  • Turnkey solution — no action needed from you other than outlining mapped stockpiles
  • Online access lets you eliminate the need to mail photographs or manually edit in Excel
  • Easily download, view and share results with you or your team online
  • Download, save and review archived reports

Customers have the opportunity to get 12 monthly measurements for the typical price of only one fly-over by other services. This enables your team to review how a site changes over time, and make future planning easier. Simply review current aerials and compare those to archived results from previous months!

We have a great team of trained and certified aerial photographers, who are located throughout the US. Each one is very knowledgable about how to capture optimal images for accurate results, have appropriate equipment, and are extremely responsive to client requests.

One of our clients recently said, “I want to thank the team for all the effort to get the flight scheduled and make the data available on such short notice. We didn’t have a confirmed time until Monday and we were able to get the flight scheduled for Tuesday and have the data available by Wednesday morning. The effort to make this happen is greatly appreciated. Thank you again.”

Aerial stockpile measurements are included in a Stockpile Reports subscription with a nominal fee for flights. For information about our subscription-based service please navigate here or call direct at 425-285-4303.