Mining Procurement and Supply Management: A Hatch & Associates Perspective
Contributor:
Mining IQ Editorial
Posted: 10/08/2012 12:00:00 AM EDT | 0
1. Evaluate the benefits and risks associated with local versus overseas content
If you would like to learn more about how to maximise mining capabilities with effective procurement and supply strategies, join Paul Wang and other leading industry professionals at Mining Procurement and Supply in Queensland, December 2012.
Posted: 10/08/2012 12:00:00 AM EDT | 0
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Following the peak of the mining boom, the levels of production and number of projects in the market is still high and the industry is facing severe supply backlogs. To further compound the problem, equipment and skills shortages are still causing further procurement and supply challenges. Now, more than ever, it is critical to reduce costs and streamline overall procurement processes.
Ahead of the Mining Procurement and Supply Queensland Conference, Mining IQ spoke to Paul Wang Procurement Hub Director, NEA, Hatch Associates and Paul Joy, Contracts and Procurement Manager, Hatch Associates about the fundamental; elements all mining companies should consider when working towards an effective mining procurement and supply management strategy.
1. Evaluate the benefits and risks associated with local versus overseas content
Paul Wang: Global sourcing definitely provides alternative procurement solutions in better delivering mining projects by reducing capex and schedule.
I believe a larger portion of our equipment and materials, which is required for mining projects, can be sourced from emerging countries or low cost countries, as long as you manage your immediate risks properly.
There are a lot of risks associated with global sourcing such as technical compliance, quality and schedule, IP protection and also working across different cultures. We have taken a risk management centric approach to evaluate and to assess the risks and characterise mitigation methods and modernise qualified, capable resources to managing.
2. Define and understand your customer
Paul Joy: The importance of customer needs is really about defining who our customers are. Sometimes your customers are your clients and we all become the customer. Within an engineering group and a design engineering group, we work closely with them every day on a project. We become part of that project rather than part of ‘procurement.’ I think it’s important that when you work on capital projects that you’re part of that team and you’re not just part of the procurement team and there is no differentiation, which ultimately helps you to understand your customer’s needs and wants.
3. Create awareness about supplier competitiveness
Paul Wang: There is no one size fits all, so you need to differentiate supplier competitiveness by geography, the project location and also the supplier product range. I think this is a very challenging exercise, especially nowadays in a various dynamic and rapidly evolving market. If you get it right, you can make the right sourcing decisions, which eventually impact the project delivery strategy.
4. Manage contractor relations and metrics effectively
Paul Joy: Engineers are good designers. They always have been. But engineers don’t understand the procurement process, so they need to create a design so that you can procure what they want – understanding what they’re designing, understanding what they actually require at the end can drive them to design slightly differently then what they normally would of. For example, you may have an item that you designed and in fact you can’t find somebody to make it. As a result you really need to understand what they are designing so you can package accordingly and possibly break it up to a point where you can get a supplier to make all the parts and then design accordingly. At times, designers will give you a specification that says ‘here’s a spec go and get it for me.’ In that spec there are a whole lot of disciplines, there are a whole lot of suppliers involved, it’s not just one package, it’s 10. So you need to design it so it’s provided to you in a way that you can go and procure it. By working closely with all teams, you’ll get there.
5. Develop an effective packing and contracting strategy
Paul Wang: There are some very important elements in developing a procurement strategy for your project, an at Hatch we have a few groups in procurement function.
We have a group of people who are responsible in developing a strategy globally and also we have a regional procurement operation team and also a project procurement team. These four groups of people work together seamlessly to develop a procurement strategy up front as early as possible and also execute procurement projects by implementing our best practices and also applying lessons learned to our projects.
Paul Joy: Mainly the areas of actually getting the strategies and sorted out and standardising your packages is critical to a successful procurement process. In other words developing those packages in the early stages so the customer understands what they are buying and applying different strategies to different packages - because no package is the same. You may choose to offshore fabricated items, you may choose to buy locally for commodities; there are a whole range of strategies you can adopt depending on what the packages are. So you help to develop those packages and then you can make the strategic decisions with good knowledge.
If you would like to learn more about how to maximise mining capabilities with effective procurement and supply strategies, join Paul Wang and other leading industry professionals at Mining Procurement and Supply in Queensland, December 2012.
Mining Procurement & Supply QLD 2012 will include:
• Case studies and best practice examples by Australia’s leading mining organisations
• Interactive discussions including expert led panels and roundtables
• Presence of prospective providers
• Networking opportunities
• Interactive workshops to help you work through the most pressing challenges and develop key strategies you can implement back on the job
• Interactive discussions including expert led panels and roundtables
• Presence of prospective providers
• Networking opportunities
• Interactive workshops to help you work through the most pressing challenges and develop key strategies you can implement back on the job
For more information, to register or to request a brochure please visit www.miningprocurement.com.au. Or call 61 2 9229 1000 or email enquire@iqpc.com.au.
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