Case Study 1 1 Qmont Mining
CASE STUDY 1-1 Qmont Mining
Qmont Mining, headquartered in Vancouver, is a major metal producer with 17 remote locations across northern Canada. The distance between these locations range from 5000 to 300 km, crews and supplies are flown in by plane or helicopter. The largest expense for the mines was for air transport at $420K, $170 K of this was for crew flights.
Alice has been tasked with gathering data to determine how Qmonts’ supply processes can be improved, resulting in improved cost effectiveness and efficiency. While gathering this information, the following deficiencies have been recognized:
-Invoices were paid without confirmation from the remote locations that the goods/services were actually received.
-Duplication of orders was a common occurrence in an effort to avoid any downtime. This resulted in multiple deliveries of the same item within days, sometimes from the same supplier.
- There were several instances in which the cost of the air freight was at least 10 times higher than the actual cost of the item shipped.
I would recommend that Alice gather specific information on each site to determine spend trends, and to analyze supplier details and orders. Based on this information, the following recommendations could be considered:
-Implement a centralized Distribution Center, from which all supplies will be ordered from the remote locations. Constant communication between the Accounting Dept and the DC through a computerized system will eliminate communication gaps (ie: whether goods were received or not).
-Implement purchasing controls, where the individual mines are to issue requisitions to the DC, rather than individual suppliers on their own.
-Maintain a basic inventory at each site (for emergency repairs).
-Inventory and miscellaneous supplies could be flown in with crews on a regular basis, reducing rush orders and expensive transport costs.
-Construct an approved Vendor/Contractor list, based on availability and cost
Qmont Mining, headquartered in Vancouver, is a major metal producer with 17 remote locations across northern Canada. The distance between these locations range from 5000 to 300 km, crews and supplies are flown in by plane or helicopter. The largest expense for the mines was for air transport at $420K, $170 K of this was for crew flights.
Alice has been tasked with gathering data to determine how Qmonts’ supply processes can be improved, resulting in improved cost effectiveness and efficiency. While gathering this information, the following deficiencies have been recognized:
-Invoices were paid without confirmation from the remote locations that the goods/services were actually received.
-Duplication of orders was a common occurrence in an effort to avoid any downtime. This resulted in multiple deliveries of the same item within days, sometimes from the same supplier.
- There were several instances in which the cost of the air freight was at least 10 times higher than the actual cost of the item shipped.
I would recommend that Alice gather specific information on each site to determine spend trends, and to analyze supplier details and orders. Based on this information, the following recommendations could be considered:
-Implement a centralized Distribution Center, from which all supplies will be ordered from the remote locations. Constant communication between the Accounting Dept and the DC through a computerized system will eliminate communication gaps (ie: whether goods were received or not).
-Implement purchasing controls, where the individual mines are to issue requisitions to the DC, rather than individual suppliers on their own.
-Maintain a basic inventory at each site (for emergency repairs).
-Inventory and miscellaneous supplies could be flown in with crews on a regular basis, reducing rush orders and expensive transport costs.
-Construct an approved Vendor/Contractor list, based on availability and cost