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Take Stock of This

Published by , Editor
Dry Bulk,

Good inventory management, stock control or accountability is core to any income statement and balance sheet and is an often neglected yet effective means of achieving efficiency and adding profitability to the business.

A successful inventory management system requires several components, including:

  • A clear business approach to inventory management, its structure and rules.
  • The accurate measurement of stores and stockpiles and the user’s confidence therein.
  • The regularity of and period between measurements.
  • The time involved in the correlation of data and report generation.
  • The accuracy of correlating data.

Most bulk commodity businesses, be it either hard or soft related, operate very efficiently within their separate silos of operation, yet somehow these efficiencies do not transfer through to the income statement or balance sheet. Each one of these units has an organic inventory reconciliation/accountability function, so that monthly production/processing/distribution is measured and assessed internally by each unit.

Usually, this function is performed by an element of the business which performs another more vital function and as such the stock count/reconciliation function is considered a secondary or lesser function, or as a nonessential task, as not being part of the ‘main effort’ and therefore where the least amount of effort and resources are expensed.

Inventory management systems

A successful inventory management system needs to be operated as a core business function. It should be operated by a dedicated small team of experienced personnel, responsible to the whole businesses, with a clear strategy, strong management support and defined acceptable margins of error (AME).

As a solutions provider, Ronin does not focus solely on accuracy. The company aims to have the system user trust the information presented to them via the system. Therefore, accuracy is a byproduct of trust and the businesses inventory management team determines the requisite accuracy that ART® – the company’s inventory management system – must produce. If the user has trust in the system, then the focus of the user is on resolving inventory problems that the system has pointed out to them, rather than spending time and effort confirming that the data is correct or incorrect.

Some diagnostics and configurations allow ART to not only be accurate but to also create trust with the user by evaluating the information before it has processed to the user. These include the following:

  • Standard and bespoke configurations for the creation of any storage vessel or platform be they vertical or horizontal stores, to irregular outdoor stock and stock piles, to regular silo complexes, to remote strategic stores, there is either a standard configuration or one can be made to suit.
  • As part of this configuration, all unnecessary static structures like walls, roofs, conveyors and pillars are removed so that they are not confused with stock.
  • Similarly, stores can be virtually separated into separate virtual stores within stores or alternatively separate and report dead stock or sacrificial beds, as well as inactive stock.
  • In order not to respond to temporary structures like vehicles or people in the loading area, a profile conformity and spike filter is operated.
  • Finally, the resulting information is diagnosed so that it is sufficiently representative of the product profile before it is processed to the user.

Instrument accuracy

Accuracy is also dependent upon the measuring instrument, selecting the correct instrument depends upon several factors:

  • Is the store vertical or horizontal?
  • How is the store filled and discharged?
  • Is the store under roof or open air?
  • What product is being measured?
  • What area does the store cover?
  • How dense must the scan be?
  • What is the required scan frequency?
  • What is the target scan time?
  • How many instruments per store?
  • Can instruments be shared between stores?

Bearing in mind that the denser the scan, the more representative the scan is of the profile and the better the accuracy, it is also worth noting that, the greater the can density is, the longer the scan will take.

Depending on the application, the system also integrates with third-party instruments such as ultrasound and radar. Additionally, ART accepts third-party survey data, with a large library of conversions, allowing for photogrammetry/LIDAR data to be utilised as well.

The measurement period

Equally important are measurement frequency and reporting period. The reporting period is the time period between stock reconciliations, if the system is reconciled against a facilities receipts and dispatch tally, and this tally is available on a daily or per shift basis, then the reporting period in considered – in other words, the shortest period between reconcilable events. At the end of each reporting period a stock report is automatically generated and distributed, which details the following per store:

  • Date and time of the last measurement.
  • Measurement status.
  • Commodity type and grade assigned to the store.
  • Bulk density assigned to the commodity type and grade.
  • Constituent values assigned to the commodity type and grade (if available).
  • Tons per store and sub stores as per the commodity type and grade.
  • Surplus/deficit of the store and sub stores (sub stores are either virtual stores, or stores defined as dead stock, sacrificial beds or inactive/unreachable stores.

The measurement period is the time period between measurements per store and can range from 1 min. to 1 day. If a 1.5 million m2 facility is measured by means of a drone then it is only practical that, due to flight and process time, that one or two measurements per day can be achieved, similarly the measurement period is dictated by the scan time of the applied instrument.

Ideally the measurement period should reflect the percentage of change that can occur in a store in a given time period and should ideally be ±1.5% of the total store potential per unit of time. In that if an 8000 m3 store has a load rate of 80 m3/hr, then ideally the store should be measured every hour.

To read the rest of this article, please download the full Summer issue of Dry Bulk Magazine here.

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