| Mining House Strategic Sourcing
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Context / Scope of project
A large diversified zinc/hard rock mining company with assets across the globe had achieved significant growth through a combination of small and large acquisitions. While the company had achieved its growth targets, very little effort had been made to fully integrate the businesses. In response to the market downturn, and a significant drop in its share price, the company recognized the need to rapidly reduce costs and capture the benefits of its portfolio of assets.
In response to a request by the client, PIP agreed to help develop a center-led initiative to strategically source a select group of high-value categories, develop the systems and skills to allow the client to continue to address categories independently, and establish the wiring to ensure that categories are managed for value after PIP’s departure.
During the initial phase, over 20 categories were reviewed and four were selected as wave 1 categories. Each category team was led by a PIP expert and was supported by an operational and a commercial resource from the client. The categories selected represented both significant opportunity for value capture, but also an excellent opportunity for skill development as each category required a very different approach (e.g. large scale negotiations of equipment, serial contract with drillers).
Client achieved:
- Across the four categories sourced in wave 1, the client achieved $33 million of annualized savings locked-in made up of:
- Drilling Services – 22%
- Explosives – 15%
- Equipment, Part & Maintenance – 6%
- Fuels & Lubes – 0.5%
- Dedicated teams established to continue to manage wave 1 categories after PIP’s departure. These teams have already generated an additional $2 million of savings on new contracts (all new contracts have successfully been managed independently since PIP’s departure)
- Embedded skills, processes, and infrastructure to independently prioritize and address additional categories.
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