Procurement: Less fire-fighting, more planning and greater value
Ask a mining procurement professional about a typical working day, and she or he is quite likely to say much of it has involved a race against time to get a hold of urgently-needed parts for different areas of the site. This response sums up the dilemma of a function that wants to bring more insight and value, but, more often than not, ends up responding to ad hoc requests.
In recent years, mining companies have made considerable strides towards strategic sourcing, by centralizing supply functions, standardizing and rationalizing equipment, initiating category management processes, establishing preferred supplier lists and categorizing purchases. Despite these advances, an inordinate amount of attention still seems to be devoted to purchasing, in part because procurement has yet to win a seat at the executive table in many organizations, and is often seen as a tactical function charged with reacting to short-term problems. Some of the challenges include: a large number of ad hoc purchases that breach procurement rules; a lack of official purchase orders, with approvals often made after the purchase has been completed and incidences of loss such as duplicate payments for the same item.
Enforcing the procure-to-pay process
For a procurement protocol to be efficient, and deliver the planned savings, users must be encouraged to carry out operational demand planning and be guided to the appropriate supplier contract and price for each item, and implement the order in the prescribed manner. Suppliers, in turn, should meet the specific contractual demands in terms of quality and delivery, and provide supporting documentation.
By automating the procure-to-pay process, mining companies can enjoy considerable savings, with faster transactions, more efficient processes, reducing lead times and inventory optimization leading to improvements in working capital.
Although this sounds simple and straightforward, much can go wrong if either party fails to process information and capture data correctly, or misinterprets instructions. Every stage of the sourcing process needs to be monitored, recorded accurately, and subsequently checked, to ensure that buyers are getting full value for money from contracts.
Strategic multiple categories, executed across entire organization, will help achieve genuine range purchased making most global deals suppliers.
Generating and protecting value in Procurement
Strategic sourcing for multiple categories, executed across the entire organization, will help to achieve genuine economies of scale, by reducing the range of items purchased and making the most of global deals with suppliers. It’s equally important to engage ‘internal’ customers and win the buy-in of the general business, to gain adherence to procurement processes.