Glencore PLC located in Baar, Switzerland, is a globally integrated commodity producer, marketer and trader. Its portfolio comprises over 90 commodities including metals and minerals, energy and agricultural products. The corporation’s operation encompasses over 150 mining and metallurgical sites, oil production assets and agricultural facilities – spanning 50 countries.
Glencore-Sudbury Integrated Nickel Operations (Sudbury INO) consists of underground mines, a mill and a smelter. The organization’s employee’s mine nickel-copper ores from the Sudbury Basin which is located in Northern Ontario, Canada. The Basin has been operational since 1929. The Sudbury assets were purchased by Glencore in 2013.
Glencore’s corporate team, including Daniel Sauvé, Procurement Director for Glencore Canada, contracted Xtivity to assess the cost benefit of Inventory Optimization. As a result of the initial analysis, Glencore implemented a global MRO Inventory optimization program. The Sudbury Integrated Nickel Operations was selected as the pilot site because of its committed management team and their desire to improve its inventory management. The program would be driven by Chris Courtemanche, Inventory Management Specialist.
During Xtivity’s analysis of Glencore-Sudbury’s MRO (Maintenance, Repair and Operations) inventory, an escalating trend indicated that slow moving inventory was representing an increasingly large share of its total inventory investment. “While previous attempts at improvement delivered some benefit, it did not represent the scope of improvement, nor time to value that Glencore was seeking”, stated Courtemanche.
Due to the volatility of commodity prices over the past 3 years, efforts to enhance shareholder value precipitated the need to reduce operating costs and increase working capital efficiency. To achieve this, Glencore is incorporating inventory optimization as a core business strategy.
Executing this strategy is especially consequential at the Sudbury site because of its need to expand warehouse space to accommodate the growing MRO inventory. Furthermore, the increase in Glencore’s warehouse space, along with burgeoning physical inventory, is driving an increase in administrative costs.
In addition, the implications of an increasing risk associated with out of stocked parts relating to critical equipment is huge for Glencore – specifically at Sudbury Integrated Nickel Operations. If the impacted equipment is production related, an out-of-stock part can represent hundreds of thousands of dollars an hour in lost revenue. The factors leading to Glencore Management’s decision to engage Xtivity for Inventory Optimization include:
• Corporate pressure to reduce growing MRO inventory
• Costs associated with the increasing warehouse space
• Increase warehouse personnel workload
• Management and costs associated with the lack of storage space
• Risk associated with out-of-stock parts
Sudbury’s adoption of Xtivity’s xIO™ Inventory Optimization Service immediately brought stock back into balance. As a SaaS solution, xIO’s rapid installation and seamless link to transactional systems provides time sensitive stocking recommendations. Its web-native reporting draws attention to priority areas, allowing Sudbury to optimize stock, and more importantly, increase service levels.
The implementation of the Inventory Optimization’s Service is easy and allows for an efficient deployment. The xIO software tool is web based, therefore, it is non-invasive to Glencore’s IT system. The SAP certified, automated utility was implemented in a matter of days, inclusive of the testing process. Sudbury’s Operation team considers the xIO implementation a smooth undertaking, generating output that translates into actionable and preemptive stocking decisions.
To get started, an Xtivity field analyst facilitates a 3 day on-site workshop with key Glencore business experts identifying ways to tailor the solution to Sudbury’s specific business drivers. Following the workshop, two staff analysts use xIO’s intuitive User Interface to work through inventory optimization recommendations. In just three days, working with key users and management, the xIO solution is fully implemented and operational.
The MRO Optimization Program, powered by xIO, is generating the following results:
Glencore plans to continue to partner with Xtivity to extend the benefits of using xIO. “Based upon the impressive results at Sudbury, we are setting the bar high”, said Courtemanche. “Our next organizational inventory optimization target reflects this optimism.”
“We were expecting the number of Xtivity inventory recommendations to drastically reduce after the initial review of all our materials”, Courtemanche explains. “Surprisingly, we discovered that inventory levels need to be fluid. Xtivity allows us to achieve the optimum stock levels by constantly monitoring and providing the ability for us to adapt to the dynamic nature of our business.”
Glencore recognizes that these benefits are mission critical and directly impact their business goal to reduce the inventory investment and free up cash flow. An added bonus is the ability to utilize xIO to view inventory levels across the organization. By creating Joint KPI’s, valuable insight is gained as the data displays inventory optimizations opportunities across a number of other sites.
“With Xtivity xIO, achieving ROI occurred after the first workshop, before we even paid our first invoice. The solution provides a fast return and the decision to implement is an obvious good choice.” Glencore is achieving its stretch targets and continues to realize benefits from the service.
“Glencore PLC is on the path forward towards a fully optimized inventory”.
On the horizon, Xtivity and Glencore PLC are broadening their partnership by tackling non-moving inventory. The partnership is mutually rewarding for both organizations. Xtivity is collaborating with Glencore’s Maintenance personnel to develop a custom add-on by incorporating recommendations and approvals. Conversely, Glencore-Sudbury is utilizing Xtivity’s Adoption Phasing methodology, targeting faster and greater ROI by reducing the amount of time spent reviewing re-order mechanics for parts.
A global provider of MRO Inventory Optimization Services, Xtivity’s unique service identifies and audits inventory operations activity. We improve productivity and reduce inventory value – offering immediate payback with little disruption to your organization.