Before January 2023, one of our major mining clients faced a demurrage management nightmare. As many as 2 000 trucks are loaded and dispatched from site monthly, from 15 logistics service providers (LSPs). With no effective system in place to capture truck timestamps and automate demurrage calculations, the company was forced to rely on multiple data sources, including HR systems and manual weighbridge logs. Reconciling these different sources proved to be an onerous task, leading to limited visibility and transparency over the entire process.
Certain LSPs held GPS data, but GPS data only confirms arrival and departure, not the true processing time per vehicle and biased the demurrage calculation towards standing time, not processing time. It also provides no insights to the cause of bottlenecks throughout the loading process.
This lack of transparency led to an approximate average monthly demurrage bill of circa $830,000, with the total 2022 demurrage bill reaching in the region of a staggering USD $10 million.
During the month of January 2023 our client made a timely intervention to apply MMS’s WIRE Logistics Module to manage demurrage. WIRE Logistics is a game-changing solution designed to manage outbound logistics and settlement processes. WIRE captures all truck data in a single system, including arrival, empty, loaded, and dispatch timestamps. This system provided the mine with much-needed visibility and transparency, allowing the company to visualise demurrage costs in real-time, rather than waiting for the month end.
In February 2023, MMS, in collaboration with our client, used data insights from the WIRE Logistics Module to apply operational process optimization. The company introduced pro-active exception reporting to identify trucks approaching or exceeding demurrage, requiring urgent attention. This reporting also flagged trucks with incorrect information, likely to incur demurrage down the line. As can be seen in the bar graph above, demurrage fee totals dropped drastically from an average of $830 000 per month for 2022, to around $298 000 for February 2023, and then dropped further to only $31 500 in March 2023.
Thanks in large part to these enhancements, the WIRE-predicted demurrage bills for February 2023 to April 2023 have dramatically dropped to an average of $77 per truck, compared to the previous year's average of $620 per truck. This remarkable cost saving occurred even as the number of loaded and dispatched trucks increased significantly compared to the prior year.
It is clear that our client has taken control of the situation with WIRE. That is data-driven business intelligence, and value creation. MMS conservatively estimates savings of $9 million dollars for 2023, compared with the 2022 business-as-usual base case. This is also just the avoided cost for one business area, demurrage, but similar efficiencies are managed in the settlement and umpiring process.
The WIRE system has proven to be a game-changer for our client, revolutionising its demurrage management, and ensuring cost-effective operations. With unprecedented visibility and transparency, the company is now equipped with the necessary data to manage LSP claims and optimise its operational processes, saving millions of dollars.
The successful implementation of WIRE underscores the value of leveraging technology and data to address logistical challenges for significant cost savings.