Operational excellence is more than just a goal to improve the bottom line. It’s an absolute necessity if you want to survive and prosper in the challenging commodity markets of today. And there are four core areas miners have to address in their quest for operational excellence: Business, People, Assets, and Technology.
This blog will focus on the first of the four areas, the business transformation, which is necessary to start the journey toward operational excellence.
Mining companies are faced with critical business decisions that will determine if their existence is one of continuous struggle or one which will set them on a path to prosperity, and these decisions fall broadly into the categories of either cost reduction or value creation. All mining companies have already tackled the basics of cost reduction through the usual reactionary approaches, but few have considered the second category, value creation.
The pursuit of operational excellence needs to be driven from the top and become etched in the company’s psyche. Therefore, from the business perspective, mining companies need to consider the biggest questions of all – why are we here, what do we want to do, and how can we do it? The way in which these questions are answered can have a profound impact on any subsequent strategy, plans or actions, and ultimately on the success in achieving operational excellence.
This is the point where mining companies can redefine their business as one which can be continually successful and identify what operational excellence looks like to them. This change doesn’t need to be as profound as changing the entire company, such as from a bulk commodities supplier to one which can offer customized products for specific customers in new markets. It can be as straightforward as supplying the same product but with greater focus on lower internal costs, tighter quality control or better delivery times. Either way, once this has been defined, the next question which needs to be addressed starts to put into play the foundations for achieving the mission and pursuit of operational excellence, “How to do it”?
Addressing this question requires a level of unconstrained out-of-the-box thinking which may involve looking outside the industry for answers. If companies consider this question based on traditional approaches within the mining industry, then the path ahead is unlikely to deliver the expected results. Very different approaches to topics such as organizational structure and staff roles and responsibilities need to be considered along with operational topics such as maintenance strategies (break/fix, preventative, predictive), integrated operations, planning, scheduling and logistics management. These traditional approaches have been practiced in other industries for many years, whereas few mining companies have begun to break away from them. For those who have, their investments in areas such as remote operations centers, off-site centralized excellence teams, blended operational teams, complete mine to market supply chain visibility, workforce mobility, and advanced analytics for process optimization and predictive maintenance have already paid big dividends.
As with any change there will always be some pain and discomfort, and companies have to recognize that this is a normal, essential part of any organizational transformation, small or large. This is why such change requires complete, long-term, ongoing corporate endorsement to ensure that the journey is undertaken with the right levels of support and communication in place. It must also be acknowledged that this journey may be one which is never finished. Companies need to continually revisit the decisions made around “what do we want to do” and “how can we do it” in order to make sure that they are still relevant to the current mining industry or operational environment.
This does not imply that companies should make major changes on a regular basis – that can only lead to a confused and fragmented operation. However, an organization that embarks on a successful transformation strategy should become more agile and dynamic, and therefore better able to embrace change with as little pain or discomfort as possible.
Once a path has been identified then the mining company has to address the three other topics essential to operational excellence: people, assets and technology. It is from the decisions and actions taken across these three areas through which a mining company can make a reality of the questions and answers to “How can we do it?”
In my next blog I will cover operational excellence and the aspect of “people” and what actions or decisions mining companies need to consider, including reporting structures, roles and responsibilities, skills and training, decision making, and others.