Silos full. Conveyors humming. Trucks on time. What could go wrong? Inventory measurements could—and often do—cause trouble. A cost controller says, “there is no way your material measurements are right. You said we had 120,000 cubic feet of material at the end of May. Based on sales and deliveries, you should have been closer to 7,700 cubic feet."
Dropping a tape to measure bulk material may result in incorrect bulk volume estimates. Bad measures can be costly. Inflated bulk inventory measurements could mean operators oversell material, not having enough volume to deliver an order.
How does bulk inventory affect financial planning?
An accurate statement of inventory can eliminate the need for an abundance of physical inventory and allow the CFO to anticipate the need for short-term funding and improves a company’s ability to create accurate and timely financial reports. Inventory affects profitability and, therefore, taxes. Companies often project year-end profitability and are surprised by losses when physical inventory reveals a wide discrepancy between records and physical inventory counts.
Does sales planning require good bulk material measurement?
Accurate bulk inventory pound-by-pound, gallon-by-gallon, is the best way to know exactly what can be sold to customers. Marketing plans can focus their activity on specific products.
Case Study: Acme ‘Bean Counters’ Not Happy
Acme Beans* was improperly measuring levels in their large storage bins over a 5-month period from November to March. Undertrained seasonal workers visually estimated bin levels instead of using proper measurement tools and techniques, leading to inaccurate inventory records being entered into the company’s systems.
Underestimated levels led to purchasing too much bulk inventory, tying up $1.4 million in working capital on excess soybean inventory. Bean counters (aka accountants) discovered the problem after several months of measurements just didn’t balance. The discrepancy led to a $1.9 million overstated cost of goods sold and gross profit.
In all, several months of inaccurate measurements meant lost revenue, excess inventory costs, overpaid taxes, fines, and other expenses. If Acme Bean installed a 3D Level Scanner, accountants would have access to level measurements based on technology that reads conditions of material in their vessel. Accurate measurements bring transparency of material inventory and data for great business decisions.
*Company name changed.
Accurate bin measurement: 3D Level Scanner
Many measure bulk material using the closest access door atop a vessel, They drop a weighted tape and hope one single point reveals an average volume in the vessel. However, in big vessels, material sits in hills and valleys. One point of measurement won’t do it. BinMaster has exclusive worldwide rights to provide the ATEX certified 3D Level Scanner. This sensor uses acoustic technology to read the topography of material inside a vessel and account for buildup, cone up or down conditions.
3DVision software accounts for irregular material surfaces when calculating volume. The 3D Level Scanner’s acoustics-based technology penetrates dust ensuring reliable measurements. This non-contact technology accurately measures solids and powders, including low-dielectric materials. It is hazardous location certified for CFM Class I & II and IECEx/ATEX.
