Mining operational excellence…shoot for the stars, but be happy to land on the moon

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The mining industry has always been at the mercy of many different forces impacting the way in which mining companies operate.  Commodity prices, labor costs, consumables, and diminishing ore grades all impact the bottom line.  Safety and sustainability requirements require that mining companies operate in certain ways in order to protect their people, community and planet. The weather can also a affect operations, making it more difficult to get product from the mine to the final customer.  Even unforeseen geological conditions can influence a mine’s viability.

Yet through all of this some mining companies continue to operate safely, sustainably and profitably.  How can these mining companies continue to succeed while others have to fight for their very existence?  The answer doesn’t necessarily depend on the product they produce or the size of the company, it lies in the fact that successful mining companies have embarked on a mission to achieve Operational Excellence.

Operational Excellence (OE) is not a new term or concept that has all of a sudden found meaning within the mining segment.  The pursuit of operational excellence and its components has always been part of a shared set of outcomes which mining companies have been trying to achieve – improving safety, protecting the environment, increasing productivity and profitability, etc.  However, the approaches employed by companies to achieve these outcomes and the resulting successes have differed markedly, company by company and site by site.

As with all business and operational strategies and philosophies, it is difficult to pinpoint a specific definition of Operational Excellence that satisfies all criteria and conditions.  Therefore, in order to examine this topic in more detail (in a series of coming blogs), a broad definition will be provided as well as an outline of a set of common components shared by those currently engaged in the pursuit of Operational Excellence.

Operational Excellence can broadly be defined as a state when efforts and actions throughout the entire organization are aligned to achieve desired outcomes for all stakeholders and are supported by a corporate culture unified through a commitment to continuous improvement. From within this definition we can extract a number of key areas which form the foundation of any Operational Excellence program, namely:

  • An organization-wide strategy
  • Alignment of objectives and outcomes
  • Shared vision encompassing all stakeholders
  • Embedded within the corporate culture
  • Continuous improvement philosophy

As the definition says, Operational Excellence is the ultimate state in which a mining company hopes to continually operate, however, in practice this state is virtually impossible to achieve due to the dynamic nature of the industry and the many forces which shape it on a daily basis.  Given the possibility of not being able to achieve this ultimate state of Operational Excellence, or at best, maintain it over a prolonged period, why would mining companies consider its pursuit in the first place?  Answer: because companies who undertake the journey toward Operational Excellence end up transforming their organizations into one which is better able to master the dynamic nature of mining and outperform those companies who have pursued other paths, thus securing their future.Oper Exec

Watch for my next blog which will highlight how Schneider Electric is playing its role in helping mining companies along this journey.  I will explore the key components – namely Business, People, Assets, and Technology – which mining companies need to address as part of the transformation process in the pursuit of Operational Excellence.

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