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Blog

Integrated procurement efficiency in the mining industry

16-Sep-2012

 

As Australia's mining industry gears up for some major challenges, an opportunity to continue thriving can be developed through innovative thinking – forward thinking.

Innovation doesn't just mean new technology. Very often the best innovations are simply new and better ways of doing things you already do.

Integrated manufacturing (IM) is one of those innovations.

IM offers solutions in consideration of more accurate processes for manufacturing, more value for money, and less downtime from machine failure and repairs, which are an important focus for the mining industry.

The recent global financial crisis brought cost management back into focus. Procurement Managers will now have foremost in their mind the cost to business of downtime and repairs to production, machinery or plant as well as efficient supply. The aim, to reduce unit and production costs whilst balancing an increase in production volume without compromise of operational efficiency is imperative.

Australia is an international leader in mining production

Australia is the world's leading producer of bauxite and iron ore; the second largest producer of alumina, lead and manganese; the third largest producer of brown coal, gold, nickel, zinc and uranium; the fourth largest producer of aluminium, black coal and silver; and the fifth largest producer of tin.

Speculation on the future of mining suggests the industry is on a precipice of exciting change, change which will drive us to become smarter.

“Volatile and emerging markets, new technologies, increased customer demand and business model change poise the modern miner to become different, to become smarter. Mining companies will have critical choices to make about every aspect of their business. They can either innovate or stagnate.”
– IBM White Paper Envisioning, the Future of Mining

The paper continues…

The grievances and issues of the day begin to paint a picture of what is needed going forward. Too often, mining professionals focus on the mine itself, wondering how to dig more product out of the Earth rather than look at the big picture. Others resort to the same old, tired levers of traditional cost cutting that only provide short-term benefits. Smart leaders are thinking about their company's path forward.”

“We must recognise that the landscape has changed and that we need to reinvigorate our focus on cost management and operational efficiencies. Importantly, efficient and predictable operations underpin our cash generation capability and establish the foundation to support further growth.”
– Marius Kloppers, CEO Message, FY2010, BHP Billiton

The advice is for mining companies to collaborate with suppliers, to work on common issues, improve relationships and improve productivity. The suggestion is that new sources of innovation should be discovered, nurtured and leveraged.

In conclusion, the paper reports that the challenges facing mining enterprises today are pushing leaders to abandon traditional ways of thinking about their business, to explore new practices that will improve the business of mining.

Integrated solutions provide accuracy in procurement

Industry trends announced by the World Mining Equipment to 2015 (The Freedonia Group 2012) predict the world market for mining equipment alone is projected to increase 8.5 percent annually through 2015 to $92 billion. The Asia/Pacific region will remain the fastest growing market.

In order to address such growth and recognise the changes this will bring, a progressive integrated component and assembly supplier, Fountainline IMS, has spent the past two years researching and detailing the concept of integrated service in the production industry. The integrated service creates innovative component and assembly production solutions – precisely the type of new practice beneficial to the mining industry.

The integrated manufacturing capabilities create an opportunity for the mining industry to make use of 70 years of established skills and experience in developing project-specific solutions.

Importantly, keeping manufacturing procurement with one company ensures a continuity of product and service, an immediate reduction of variables associated in liaising with multiple companies, and an increase of opportunities for component production – saving time and money.

 

In downturns, such as that facing the mining industry, integrated manufacturing provides opportunity for growth fuelled by innovation and procurement efficiency. Mining companies can flourish by consolidating their resources.

The government and industry sources agree…

The government report embraces manufacturing changes

The prime minister's manufacturing taskforce has just released its report on the future of manufacturing in Australia (August 2012) and concludes that integrated services offer viable manufacturing into the future.

The report highlights Australian manufacturing has proven capabilities to develop current and emerging opportunities as suppliers of machinery, equipment and consumables, particularly to the mining and construction sectors, and it is positioned to make a dynamic contribution to Australia's economic development.

A key point of the report recognises that modern manufacturing has strong vertical and horizontal links with associated services including in applied research, engineering, industrial design, process improvement, through-life client support and product stewardship.

The Prime Minister’s Manufacturing Task Force helps create a picture of future manufacturing possibilities and CSIRO has contributed its analysis of worldwide concepts that can shape the future of manufacturing in Australia including an emphasis on sustainability and the need to produce more from less.

Within this framework is the opportunity to develop, adapt, adopt and integrate the technologies that can create a new direction for Australian manufacturing companies, which in turn will benefit industries such as mining and building.
Manufacturing experts believe design will become an increasingly important part of the manufacturing value chain. Better design can lead to products with superior functionality and sustainability. Manufacturing companies making the transition from pure production to more service based suppliers see design and design management playing an important role in innovation.

A solution driven by integration modelling

Commercial Manager, Terry Ibrahim, says "We've been around since 1927 and while we pride ourselves on the continued good craftsmanship that has kept us firmly established in the industry, we realise that we need to keep reinventing our services to suit the ever-developing marketplaces”.

"Market research shows that our consumers who are dealing with a variety of companies to produce one set of requirements believe this is the very thing contributing to their service dissatisfaction.”

"Integrated service is an easy solution. As one company producing all the manufacturing needs for an industry, we can build strong alliances, understandings and business relationships, helping develop specific solutions each time, and create a customer-focus on every project.”

"In addition, if all the components for a project are manufactured in one place there is less margin for error or defect in final delivery. If something changes at any stage of the process, we are in an excellent and immediate position to ensure that any relative changes are made to other components within the order. If companies are dealing with a variety of organisations, for differing components, this continuity is hard to wrangle and sometimes can result in costly delays or defects.”

"The integrated component and assembly supply system guarantees simplicity.’’

How integrated manufacturing works

The mining industry (among many) generally buys components from a variety of suppliers: shafts and sprockets from a CNC machining suppliers, elevator buckets and chutes from a sheet metal suppliers, brackets and frames from a fabrication suppliers, for example.

The types of componentry that the mining industry buys from a variety of suppliers: 

CNC machining suppliers Sheet metal suppliers Fabrication suppliers Metal stamping suppliers
  • Shafts
  • Specialised Fasteners
  • Bearing housings
  • Helical gears, Sprockets
  • Flanges and Fittings
  • Tie Bars
  • Elevator Buckets
  • Chutes
  • Ducting
  • Enclosures
  • Guarding 
  • Brackets
  • Structural Supports
  • Frames
  • Repairs
  • Material Handling
  • Specialised Washers
  • Latches
  • Chain Links
  • Conveyor Components

Consolidating supply through one manufacturer, ensures on-time delivery and reduces the waste of possible incompatible components and rework. The production advantage lies in having one company solely responsible for all components such as tool making, CNC machining, metal fabrication and sheet metal. 

 

FountainLine IMS delivers all stages of manufacturing from design to delivery – from prototypes, research and development through to design and drawings, to suit the project's specifications.

Having manufactured the components, FountainLine IMS supervises the packaging, labelling, barcoding, assembly and finishes (coating, platings). Then oversees the logistics, supply chain, project management and end solution.

The single point of contact for procurement managers ensures efficiency, consistency and quality through the process.

Integrated manufacturing is already used by a number of Australian industries

IM addresses service and componentry needs across a significant number of different industries in Australia. Fountainline IMS alone supplies more than 30 different industries:

  • Mining – precision components
  • Agriculture – hardware
  • Building and Construction – building fixtures
  • Health Care – medical devices
  • Transport – vehicle components and part solutions
  • Occupational Health and Safety – safety systems and environmental solutions 

For Fountainline IMS to continue to be one of Australasia's leading integrated component and assembly suppliers, Terry Ibrahim believes that “IM is about investing in emerging technology and creating dynamic customer-focused services”.

“Customers benefit from a capacity to react quickly to dynamic project needs and industry landscapes. This flexibility offers and maintains more customer-control over processes and componentry improvement.”

The benefits of integrated manufacturing
SAVE TIME
  • One supplier relationship
  • On-time delivery
  • One invoice
REDUCE WASTE
  • Reduce rework and defects of incompatible components
  • No need for unnecessary in-house capital expenses
  • No need for unnecessary in-house specialists – engineering or production staff
  • Increase output by working with the very people that make the componentry
  • Redirect in-house resources to more efficient activities
  • Better ability to dynamically adjust to your operational needs
Reducing waste + saving time = increase output (more with less)

The future of manufacturing

The prime minister's taskforce concluded that manufacturers must face the future by bundling products and services, to sell solutions rather than just tangible products, and they should have the capability to identify, design, develop and make products that reflect current industry needs.

As a component supplier throughout Australasia, FountainLine IMS has developed its integrated system to meet new product development and component supply requirements, as and when identified, in keeping with this recommendation.
For the mining industry (and beyond), this development in manufacturing is the opportunity to consolidate resources for greater operational cost efficiency. Using integrated manufacturing and related innovation in procurement management, will project industry forward and result in nothing-less than procurement efficiency.

Manufacturing Industry Changes – Attention Employers and Employees

13-Jun-2012

A decade ago Manufacturing was Australia's largest employing industry—now it is the fourth largest, despite the fact it still employs almost one million people. Manufacturing jobs have reduced Australia-wide by 3.3% in the last five years while, across all industries, there has been an increase of 13.1%.

The Australian Government's new Australian Jobs-2011 publication highlights the changes we have all felt in the manufacturing industry in recent years, together with projected job prospects for the future.

For more detailed information and relevant statistics are available to download from http://www.skillsinfo.gov.au/