Summary—104
As the expiration date on a contract for a global sourcing initiative loomed, a major gold producer struggled to achieve stakeholder buy-in for contract renewal from 10 participating companies with 31 local mines. While the current agreement was effective at the corporate level, linkages with operations failed to achieve cost reduction and organizational synergy. Dissatisfaction with the current agreement by both mine operations and equipment dealers was prevalent. If the contract was not renewed, there was a strong risk that the producer would lose the opportunities for knowledge, innovation, and cost reduction that would keep it ahead of its competitors.
We engaged the COOs of all 10 participating companies to achieve consensus on structuring a new agreement to ramp up project participation at each of the 31 mines. To increase project engagement, the agreement included a set of standardized metrics to measure improvement and performance across all sites. It also included a shared cost reduction goal of 20% to be realized over 10 years.
Challenges
- Lack of project buy-in across 10 companies from COOs and operations management personnel Lack of project buy-in across 10 companies from COOs and operations management personnel
- Unable to implement the best service model
- No linkage between a strategic sourcing initiative with production and cost reduction goals
- The best technologies to increase production and utilization (e.g. routing and measurement systems) were not employed
- Lack of a consistent, optimized services platform at every project site
Results
- 20% shared cost reduction 20% shared cost reduction
- 100% COO project engagement with a shared vision and common operating philosophy
- Global planning protocol adoption; continuous improvement platform and funding model implementation
- A framework for equipment management optimization and logistics services at every site
- 200+ personnel trained
- Designed the framework for an automated system and built a reporting platform to capture metrics, measure results, and prioritize improvement opportunities
- $400 million targeted annual savings