Mine Maintenance Inventory

Issue

A North American copper mine’s Maintenance Inventory has steadily grown over the past five years to in excess of $100 million. Three years ago the Procurement organization was charged with establishing a regional warehouse to better service the Mine, Concentrator, Smelter, Refinery, and Power Plant and better control moving inventory. The corporate goal for 2009 was to reduce inventory by $10 million; however, inventory continued to grow. Moving inventory accounts for less than 30% of the total on hand inventory. The vast majority is comprised of non-moving and insurance spares inventory. Leadership engaged The Highland Group to help define what the correct level of inventory should be for the business and what level of control was required to attain the correct level of inventory.

Highland Approach

Standard operating processes and procedures were developed to create changes in Inventory Controllers roles and responsibilities. The changes resulted in optimized inventory levels with a corresponding $1.9 million reduction by mid-year and $9 million by year end. The project included the development and delivery of scorecards and dashboards to monitor and track the improvements.

 Actions Taken

The Highland Group partnered with the client team to develop and implement a strategic program to have the Procurement organization manage active inventory, including:

• Agreeing on inventory rules;
• Targeting high-value and high-use items;
• Ensuring risks are managed through contingency plans;
• Improving service levels;
• Optimizing inventory levels.

The team also implemented a System For Managing Maintenance Inventory that includes new tools and scorecards to monitor and sustain the process.