Queensland Alumina Success Story

The Company | The Challenge | The Solution | The Result

  • Mining
  • Queensland, Australia

The Company

"Queensland Alumina has realized a 14% net reduction in inventory holding while mitigating the risk of production loss due to stockouts using Ventyx Critical Inventory Optimization."

Queensland Alumina Limited (QAL) was built in March 1967 with a (then) production of 600,000 tonnes of alumina per year. Today QAL is one of the world’s largest alumina refineries producing some 4.0 million tonnes of the world’s best smelter grade alumina per year. The replacement value of QAL is estimated at $6 billion USD. The refinery occupies 80 hectares of a 400 hectare site on the southern outskirts of the city of Gladstone. QAL is a tolling operation owned by Rio Tinto Alcan (80%) and Alumina & Bauxite Company Limited (20%).

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The Challenge

The Supply Group now manages a Maintenance Repair Operating (MRO) inventory valued at approximately $60 million to support the operation of the site. Records clearly show that this inventory would have had a value of $68 million had it not been for the impact of managing stock levels using Ventyx Critical Inventory Optimization. This net $8 million overall reduction was achieved at the same time as reducing the risk of potential production disruption due to certain stock items being stocked at too low a level. Prior to implementing Ventyx Critical Inventory Optimization, QAL had no way of accurately measuring and monitoring this risk.

Ventyx Critical Inventory Optimization went “live” at QAL in May 2005. The Statistical Inventory Analysis Module (SIAM) and the Vendors Module of the suite have both been activated at QAL. QAL is running multiple licences of Ventyx Critical Inventory Optimization with the Inventory Controller responsible for general inventory and equipment spares while the Rotables Controller is responsible for repairable materials.

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The Solution

The main criteria for QAL choosing the Ventyx Critical Inventory Optimization solution were as follows:

  • QAL wanted a system that was flexible so they could apply inventory management strategies that reflected their experience along with those supplied by an analytical tool.
  • QAL needed a vendor with wide experience, and a reputation for commitment to customer service. VCIO, with its modern software platform, easy to use screen layout, readily customizable reporting tool and the fact that you could see how the recommended settings were calculated, made it an obvious choice .
  • Comparatively, VCIO can be implemented and operating at less cost and in a shorter timeframe than its competitors. The VCIO rollout was a very smooth process with completion on time and within project budget.

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The Result

QAL staff has confidence in the solution’s recommended settings based on consistent demonstrable results over many years. “Today QAL has realised a net 14% reduction in inventory holding using Ventyx Critical Inventory Optimization. This has freed up capital and significantly reduced inventory whilst ensuring stocks of production dependent spares have been boosted,” said supply superintendent Brian Warner.

QAL has also been able to improve vendor management and performance by using the solution to review vendor delivery performance at the SKU level. This has been possible through the use of inherent functionality of the system, which was further enhanced by the Six Sigma methodology devised by the QAL Supply Group and speedily implemented into the product design by Ventyx.

Overall benefits include:

  • Effective inventory reduction of $8 million, a reduction of 14% over 3 years
  • All critical items identified and stock levels optimized to prevent stock-outs
  • Global control of stock levels over the entire inventory making adjustments easy to suit changing circumstances
  • A site wide understanding of the concepts involved and a lexicon of terms enabling site wide buy in on the process
  • Accurate planned delivery times calculated over each and every order cycle for each material to improve reliability of maintenance scheduling and stock level calculations
  • Vendor performance improved by allowing for review of delivery performance at low levels
  • Fully integrated with SAP to enable materials to be constantly readjusted to optimal levels through simple monthly automated process

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