Sales & Operations Planning and EOQ Model to Increase Dispatch Effectiveness: Explosives Company

Abstract

The strong influence of the mining in the national GDP and that explosives companies are part of the extraction industry and mineral processing supply chain, drive the analysis of the finished product dispatch process of an explosives company to ensure its profitability and to supply the mining industry. According to its performance during 2019, low effectiveness of the dispatch process is defined as the main problem, at 66.03% whereas the target value is 90.25%. Deficient dispatch planning, stockouts and the non-existent control of transportation providers were identified as root causes. Based on the literature reviewed, a Plan-Do-Check-Act model is proposed to increase the effectiveness of the dispatch process by applying the Sales & Operations Planning (S&OP) methodology in main collaboration with Sales & Operations Execution (S&OE) and the Economic Order Quantity (EOQ) model, thus improving dispatch plan compliance rates by 5%, the service level of transportation companies by 39% and stockouts by −20%, to ensure the effectiveness of the proposed model. Unlike other studies, this one is focused on the use of resources and not on dispatch execution. The implementation of this model generated an increase in process effectiveness of 86%.