1. BENEFITS ACHIEVED AT OSISKO
MINING CORPORATION,
MALARTIC THROUGH
OPTIMIZATION OF INVENTORY
MANAGEMENT
CIM 2014 - VANCOUVER CONVENTION
By Robert Lamarre, B.B.A., M.A.Sc. &
Roch Trépanier
May 13th, 2014
CIM Convention 2014
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2. Agenda
Presentation of Osisko Mining Corporation
Portrait of the situation
Challenges
Results
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3. • Osisko Mining Corporation is a mid-tier gold producer
• Osisko operates the Canadian Malartic gold mine in Malartic, Quebec,
and continues its exploration work in Canada and Mexico
• One of the biggest gold reserves in production in Canada
• The first gold bar was poured on April 13, 2011 and commercial
production began in May 2011
• Proven and Probable Reserves of 9.371 million ounces of gold
CIM 2014 - VANCOUVER CONVENTION 3
Who is OSISKO?

4. • Osisko faces the same challenges as all industial organizations trying to
manage spare parts
• First objective is to maintain continuity of operations
• Intermittent demand
• Critical parts
• Large number of multi-references families
• Difficulty to forecast demand
• Variable lead times
CIM 2014 - VANCOUVER CONVENTION 4
The challenges of inventory optimization

5. CIM 2014 - VANCOUVER CONVENTION
• Manual Min-Max on more than 17,000 items
• The operations context is evolving
• Maintenance requirements in continual evolution
• Nobody dedicated to inventory analysis
• Not enough service on critical spares
• Not enough service on A items
• Too many small orders in purchasing and at receiving
• Limited use of scorecard
• No use of exception reports for inventory management
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Portrait of the Situation - May 2013

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• One dedicated inventory analyst
• More than 75% of Min-Max now dynamic and calculated
scientifically by IMAFS
• Management of inventory by product family and product
class
• Bigger focus on service for critical parts and A items
• Constant follow up of inventory management scorecard
• Continual use of exception reports for inventory
management
Major changes since May 2013
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7. CIM 2014 - VANCOUVER CONVENTION
Some results
Family Month Class
A C D S
Consumable May-13 91.7% 95.2% 82.4% 90.5%
Consumable Mar-14 97.0% 98.6% 98.6% 97.9%
Mine/Mobile May-13 94.5% 94.9% 91.9% 94.2%
Mine/Mobile Mar-14 99.2% 97.8% 96.2% 96.0%
Plant May-13 95.8% 93.5% 97.0% 93.5%
Plant Mar-14 98.7% 97.6% 99.7% 97.8%
Globally, the product availability has increase by 3,5% from 93%
with a 5% increase on critical items
Evolution of service
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8. CIM 2014 - VANCOUVER CONVENTION
Some results
Globally, the inventory went up by 6,9%.
The inventory of items manually controlled went up by 14,2%.
The inventory of items dynamically controlled went down by 7,5%.
Evolution of inventory for all items
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Evolution of inventory for items
dynamically controlled
Evolution of inventory for items
manually controlled

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Some results
Mine/Mobile was the first family implemented
Results in about a year
Evolution of inventory and service for Mine/Mobile
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Mine/Mobile
Class A
+ 5%
Class S
+2%- 24,5%

10. Identify product family and demand stream
Critical
or
not
Stock
or
non stock
New
Inactives
(no usage for X
months)
A B C D
Based on Hits or
usage value
Reparable
or
not
Obsolete
or
not
Classes
CIM 2014 - VANCOUVER CONVENTION
Parts classification - Process
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11. CIM 2014 - VANCOUVER CONVENTION
Osisko parts
classification for
mobile equipment’s
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Parts classification - Process

12. • The reason we keep inventory
• Analyzing our performance is important
• Ability to supply the parts when needed
• Ability to reduce downtime on equipment’s
• Estimate parts availability
• Service goals to be determined for each product class, each
product family and each warehouse
• The system has to adjust Min-Max to service goals
• 80 – 20 Rule -> Focus on important items
CIM 2014 - VANCOUVER CONVENTION
Managing service
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13. CIM 2014 - VANCOUVER CONVENTION
Measures existing levels
Allows service goals on part’ criticality level
Allows service goals by class, by family, by warehouse
Safety stock set in line with service goals
Simulations
to measure impact of service goals variations
Dashboard to track service results
Tools to take corrective actions
Managing service
Osisko now tracks parts availability compared to goals
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14. • Historical Information
• More data = more accurate you can be
• Demand flows regular, project, planned maintenance
• Demand patterns: planned or emergencies
• Regular demand or intermittent demand
• Manage on demand data; not shipping
CIM 2014 - VANCOUVER CONVENTION
Managing demand
Osisko uses the automatic data cleansing and have effective
tools to manage parts with intermittent demand
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15. CIM 2014 - VANCOUVER CONVENTION
Better data for accurate forecasts
Managing demand
At Osisko, we have 2 demand
flow, 1% of items are seasonal,
87% of items are intermittent
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16. CIM 2014 - VANCOUVER CONVENTION
Good solid
statistical
forecasts
Forecasting
methods that
account for
demand trends,
seasonality and
intermittence
Best fit by
item
Possibility
of manual
adjustments
Filters &
alerts
Osisko is now using forecasted demand to dynamically adjust Min-Max
Better forecasts = better service + less stock
Forecasting demand
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17. CIM 2014 - VANCOUVER CONVENTION
Bad lead time information result in stock outs or surplus stock
Osisko now have a closer management of both vendor
lead times and internal lead times
Lead
time
Dynamic
calculation
By vendor and
transport mode
Cleansing of
extreme delays
Internal lead
time managed
by components
Possibility of
manual control
Compare real
lead time with
vendor promises
Managing lead times
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18. CIM 2014 - VANCOUVER CONVENTION
$
Ordering Stocking
costs costs
DATA BASE
ERP or
CMMS
Calculation
SS Lead time
Min Max
Forecasting
Lot sizes
FINAL
PARAMETERS
Service
objectives
per class /
family/
warehouse
AdjustmentsSimulation
Optimizing inventory parameters
Osisko now uses IMAFS’ calculated Min-Max on 75% of items
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19. CIM 2014 - VANCOUVER CONVENTION
Key Performance Indicators
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20. • Parts availability up by 3,5% overall and 5% on critical items
• More availability of production equipment’s
• Inventory of items dynamically controlled by IMAFS went down by 8%
overall with 24% on parts for mobile equipment, the first product family
that Osisko implemented
• Improvements in maintenance effectiveness related to service
improvements
• Improvements in Supply chain effectiveness related to a reduction in the
number of orders to vendors
• A complete toll box to continue inventory reduction with high service
levels. There is still a potential to reduce inventory by 20%
• A complete set of KPI’s with the tools to manage service
CIM 2014 - VANCOUVER CONVENTION
Key results at OSISKO
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21. CIM 2014 - VANCOUVER CONVENTION
Thank you
Questions?
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