ALROSA Improves Working Capital Management Efficiency.ALROSA, the world’s largest diamond mining company, announces the launch of a project designed to reduce the extraction-to-market time lag. The Company believes that in 2018 the initiative will help reduce its work-in-process inventories by more than USD 100 m.
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 until the year-end to reduce the cycle time and a dispatch control system rolled out in the sales unit. These measures will enable ALROSA, by as early as the end of 2018, to decrease its work-in-progress inventories by over $100 m as compared to the beginning of 2018 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 USD 700 m. 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 Yury Okoyomov, ALROSA’s Deputy CEO.