ALROSA has launched a project designed to reduce the extraction-to-market time lag which it estimates will help reduce its work-in-process inventories by more than $100 million this year.
As part of the initiative to boost operational efficiency and improve business processes, ALROSA intends to streamline the distribution of rough diamond flows among its business units. The Boston Consulting Group was engaged to advise on the project.
The project will generate proposals on how to improve the distribution of rough diamond flows inside the company, with pilot projects launched before year-end to reduce the cycle time, and a dispatch control system rolled out in the sales unit, the miner said.
The measures will enable ALROSA, by as early as the end of 2018, to decrease its work-in-progress inventories by over $100 million as compared to the beginning of 2018 and increase the value of ready-for-sale goods.
"As of the beginning of 2018, the value of work-in-process diamonds stood at approximately $700 million. Currently, it takes an average of three months to complete the pre-sale diamond processing cycle, which encompasses all the stages from diamond delivery from the processing plant to the preparation of diamond boxes and the customer offering."
Yury Okoyomov, ALROSA's Deputy CEO, commented, "We joined forces with our advisors to carefully study all the movements of diamonds within the company and find an opportunity to reduce the required time and labor inputs. The successful completion of this project will help us remove a significant portion of marketable goods from inventories to freely sell them in 2019."