ALROSA has engaged the Boston Consulting Group to enable it to reduce its extraction-to-market time lag and reduce its work-in-process inventories by more than $100 million.
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 project will generate proposals on how to improve the distribution of rough diamond flows inside the company, with pilot projects launched until the year-end to reduce the cycle time and a dispatch control system rolled out in the sales unit.
ALROSA says these measures will enable it to decrease its work-in-progress inventories by over $100 million by the end of this year and increase the value of ready-for-sale goods.
As at 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.
"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 labour 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," said ALROSA Deputy CEO Yury Okoyomov.