LKAB – strengthen and improve the logistics

Challenge:

Luossavaara-Kiirunavaara AB (publ) is abbreviated LKAB. It is a high-tech international minerals group, world leading producer of processed iron ore products for steelmaking, and a growing supplier of mineral products for other industrial sectors.

The LKAB group works on global markets and in recent years the group has been affected by the declining prices in ore. LKAB wanted to review their logistic supply flows to find out if they could strengthen their position and reach improvement goals concerning service, sustainability and costs by obtaining greater transparency in incoming flows.

Assignment:

A review of all incoming deliveries from company suppliers to different storages. Investigate possibilities to change processing of incoming deliveries to improve accuracy, reduce environmental impact, stabilise transport lead times, reduce the transportation cost part of the total purchasing price by changes in terms of delivery, improved traceability and work flow planning. Present a business case endorsing change, and implement changes if applicable.

Approach:

The statistics available was used as a foundation for the analysis. It was completed by estimates to create a holistic picture describing arrival flow from the largest suppliers in terms of frequency and weight. An assessment of the current situation for all areas was conducted and a target ambition on percentage improvement for each KPI was formulated.

Since the Business Case showed a possibility to reach targets formulated, a decision was made to implement the changes suggested. A procurement of transport services and essential administrative services was conducted. Purchasing agreements were renegotiated and an implementation plan was created. The new concept was extended gradually when more suppliers were included, all to adjust the concept after volume of goods and minimise costs during the implementation phase. All KPI were followed up continuously to secure changes implemented led to targeted goals.

Result:

Implementation of the new logistics concept was very successful and all improvements targeted were realised by LKAB. Reduction of costs, Delivery accuracy, and environmental impact was improved by 30-40%. The implementation initiated a ripple effect and new areas of improvement have been reviewed internally.

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