Inventory Management at North Bay Product Company – Atlas Copco’s Geotechnical Drilling and Exploration Division (GDE) : Improving inventory management and stock allocation of mining and underground exploration products to increase customer satisfaction l

Abstract:

This thesis project has been conducted in partnership with Atlas Copco and its, Geotechnical Drilling and Exploration Division (GDE). The subject matter covers inventory management in one of the division’s product companies based in North Bay, Canada. The products in question are known as Diamond Bits and ITH (in-the-hole) products used for mining and underground exploration applications. The current challenges outlined in this thesis relate to ineffective inventory management of the products mentioned above. The result of this is that

GDE is having difficulties in meeting customer demand on time as order to delivery leadtimes are quite long in many cases. Hence, a Proof of Concept, or strategy, has been developed to tackle the current challenges faced by North Bay in overcoming its inventory woes.

These difficulties in managing their inventories stem from the financial crisis and canceled

orders leading to tied up capital and finished goods remaining in stock for long periods of time. Furthermore, there are apparent weaknesses within North Bay’s supply chain(s) and inventory management practices. GDE’s Divisional management has decided to approach the problem by developing the capability for North Bay to forecast future sales and improve the parameters by which products are manufactured and stocked to anticipate customer demand.

The Proof of Concept (PoC) centers on the implementation of an inventory management system with the capacity to forecast product demand based primarily on historic sales. GDE is deciding between two systems, the SO99+ and the SCC (Supply Chain Concept). One of which will be selected and implemented in the near future based on comparing forecast results and suggested stocking parameters.

This thesis report will outline the inventory management problems and reveal four findings: 1) The current situation at North Bay and how Diamond Bits and ITH products are managed in terms of how they are stocked. 2) How and where the PoC fails to properly improve and instill better control of inventory management and address all the problems in the supply chain that allow for improved inventory management performance. 3) Identify the main problems within the supply chain and demonstrated how they dilute any gains achieved by the PoC to forecast sales and suggest which products to stock, in what quantity, when and where. 4) Suggest how to add value to the PoC to properly tackle the problems in the supply chain which impact North Bay’s ability to effectively manage inventories.

The findings demonstrate that North Bay, even if it implements the Proof of Concept, will not be in a much better position to manufacture products in the right quantity to meet forecasts. The suggestions part of this thesis provide actions that should be taken to improve North Bay’s supply chain, particularly on the supply side to support the Product Company’s inventory management and customer satisfaction levels.