Benefits acheived at Canadian Malartic mine through optimization of MRO inventory management

1. BENEFITS ACHIEVED AT
CANADIAN MALARTIC, MALARTIC
THROUGH OPTIMIZATION OF
MRO INVENTORY MANAGEMENT
OMOC, TORONTO 2015
By Robert Lamarre, B.B.A., M.A.Sc
October 8th, 2015
Optimizing Mine Operations
Conference 2015

2. • Canadian Malartic is one of Canada’s largest gold miners
• Agnico and Yamana operates the Canadian Malartic gold mine in
Malartic, Quebec, and continues its exploration work in Canada and
Mexico
• One of the biggest gold reserves in production in Canada
• The first gold bar was poured on April 13, 2011 and commercial
production began in May 2011
• Proven and Probable Reserves of 9.371 million ounces of gold
OMOC, TORONTO 2015 2
Who is Canadian Malartic Mine?

3. • Canadian Malartic Mine faces the same challenges as all industial
organizations trying to manage spare parts
• First objective is to maintain continuity of operations
• Intermittent demand
• Critical parts
• Large number of multi-references families
• Difficulty to forecast demand
• Variable lead times
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The challenges of inventory optimization

4. OMOC, TORONTO 2015
• Manual Min-Max on more than 17,000 items
• The operations context is evolving
• Maintenance requirements in continual evolution
• Nobody dedicated to inventory analysis
• Not enough service on critical spares
• Not enough service on A items
• Too many small orders in purchasing and at receiving
• Limited use of scorecard
• No use of exception reports for inventory management
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Portrait of the Situation - May 2013

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• One dedicated inventory analyst
• More than 75% of Min-Max now dynamic and calculated
scientifically by IMAFS
• Management of inventory by product family and product class
• Bigger focus on service for critical parts and A items
• Constant follow up of inventory management scorecard
• Continual use of exception reports for inventory management
Major changes since May 2013
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6. OMOC, TORONTO 2015
Some results
Family Month Class
A C D S
Consumable May-13 91.7% 95.2% 82.4% 90.5%
Consumable Mar-14 97.0% 98.6% 98.6% 97.9%
Mine/Mobile May-13 94.5% 94.9% 91.9% 94.2%
Mine/Mobile Mar-14 99.2% 97.8% 96.2% 96.0%
Plant May-13 95.8% 93.5% 97.0% 93.5%
Plant Mar-14 98.7% 97.6% 99.7% 97.8%
80% Reduction of backorders on A items
45% Reduction of backorders on S item
Globally, the product availability has increase by 3,5% from 93% with a 5%
increase on critical items
Evolution of service
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7. OMOC, TORONTO 2015
Some results
Mine/Mobile was the first family implemented
Results in about a year
Evolution of inventory and service for Mine/Mobile
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Mine/Mobile
Class A
+ 5%
Class S
+2%- 24,5%

8. Identify product family and demand stream
Critical
or
not
Stock
or
non stock
New
Inactives
(no usage for X
months)
A B C D
Based on Hits or
usage value
Reparable
or
not
Obsolete
or
not
Classes
OMOC, TORONTO 2015
Parts classification - Process
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9. OMOC, TORONTO 2015
Measures existing levels
Allows service goals on part’ criticality level
Allows service goals by class, by family, by warehouse
Safety stock set in line with service goals
Simulations
to measure impact of service goals variations
Dashboard to track service results
Tools to take corrective actions
Managing service
Canadian Malartic Mine now tracks parts availability compared to
goals
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10. OMOC, TORONTO 2015
Better data for accurate forecasts
Managing demand
At Canadian Malartic Mine, we have
2 demand flow, 1% of items are
seasonal, 87% of items are
intermittent
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11. OMOC, TORONTO 2015
Good solid
statistical
forecasts
Forecasting
methods that
account for
demand trends,
seasonality and
intermittence
Best fit by
item
Possibility
of manual
adjustments
Filters &
alerts
Canadian Malartic Mine is now using forecasted demand to dynamically
adjust Min-Max
Better forecasts = better service + less stock
Forecasting demand
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12. OMOC, TORONTO 2015
Bad lead time information result in stock outs or surplus stock
Canadian Malartic Mine now have a closer management of both vendor
lead times and internal lead times
Lead
time
Dynamic
calculation
By vendor and
transport mode
Cleansing of
extreme delays
Internal lead
time managed
by components
Possibility of
manual control
Compare real
lead time with
vendor promises
Managing lead times
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13. OMOC, TORONTO 2015
$
Ordering Stocking
costs costs
DATA BASE
ERP or
CMMS
Calculation
SS Lead time
Min Max
Forecasting
Lot sizes
FINAL
PARAMETERS
Service
objectives
per class /
family/
warehouse
AdjustmentsSimulation
Optimizing inventory parameters
Canadian Malartic Mine now uses IMAFS’ calculated Min-Max on 75% of items
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14. OMOC, TORONTO 2015
Key Performance Indicators
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15. • Parts availability up by 3,5% overall and 5% on critical items
• More availability of production equipment’s
• Inventory of items dynamically controlled by IMAFS went down by 15%
overall with 24% on parts for mobile equipment, the first product family
that Canadian Malartic Mine implemented
• A complete set of KPI’s with the tools to manage service
OMOC, TORONTO 2015
Key results at Canadian Malartic Mine
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16. OMOC, TORONTO 2015
Thank you
Questions?
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