In my experience with many companies and different industry sectors globally, I have found mining companies to be among the best in dealing with the impact of cyclical markets. They scrupulously examine return on investment for the life of the mine and the NPV (net present value). They scrutinize all costs, keep close watch over a volatile market and competitors, and respond quickly to changing market conditions.
Interestingly though, what’s eluded most mine operations is a method hundreds of the most successful companies have used to increase revenue by tens of millions of dollars. A solution that delivers results in good times and in bad.
The $10 million-dollar move
Unlike market changes, one of the biggest threats to margins is within your company’s control. It means making the very profitable move from “silo” planning and scheduling – using separate planning systems to plan different operations or resources – to integrated value chain planning.
Why most companies haven’t done it yet
Thinking about and acting upon the value chain as an integrated whole is still fairly new to the mining industry. Years of working with mining companies has revealed three main reasons for this:
- Most mining companies don’t own all the supply chain assets
- Different business units have their own unique competencies
- Most mining companies shy away from the perceived technological complexity of integrating and optimizing a diverse group of connected operations
One thing is very clear: If you plan, schedule and execute all these operational activities individually – in silos – you are losing money. Why? Because silo decisions in a complex, dynamic supply chain operation simply aren’t optimal decisions. You can’t respond effectively to performance variation and disruptions unless you can see the impact, across the whole supply chain, of potential decisions before you make them.
Common and uncommon sense
Sure, volatile market prices and shipping costs for commodities make a huge difference to the bottom line. But neither pushing as much product out as possible regardless of cost, nor belt tightening has produced sustainable performance and profitability for mining companies.
You may not be able to control commodity prices, but you can run your mines much more effectively simply by planning, scheduling and executing your mining operations as a dynamic value chain. Why is this important? It’s really common sense.
Supply chain throughput is determined by the main constraint operation. This means you have to know which operation in your value chain is the constraint since the constraint will dictate the total throughput of your operation. Therefore, you need a mechanism, and tools, for modelling your unique value chain in order to plan and execute around the constraint operation to maximize throughput…and revenue.
How to do it
You need to make these decisions, across all time horizons, with a clear understanding and visibility of the supply chain implications. That’s not easy for complex, dynamic mining operations – for example, at one site, a tier one mining giant produces 2.4 terabytes of data per minute!
The most effective way to achieve maximum throughput is with an integrated dynamic planning and execution system that aligns the activities of each operation to maximise throughput and revenue.
The key word here is dynamic. The system must be able to give you immediate performance feedback, and empower your team to make sound supply chain decisions when variation and disruptions impact your operation’s performance.
Gain more insights into increasing your mine’s productivity and revenue, regardless of current demand or economic times. Learn how dynamic planning with DELMIA Quintiq integrated mine supply chain systems can benefit your mining operation.
