Australia’s mining industry, particularly that of Western Australia’s, experienced a very healthy period of growth (aka “boomtime”) between 2005-2011.
In that era, we’ve witnessed the rise of B2B systems and sophisticated ERP software as control over production and the supply chain became paramount. Safety and quality regulations tightened as production and employment continued to reach greater heights. Fly in Fly Out became commonplace and high wages attracted interstate migrations. Gold and other commodities prices kept their upward momentum. Business startups for parts, training, labour hire, maintenance workshops were multiplying as mining “boomed”, sustaining a large part of the economy.
Today, the scene has changed. With falling demand for commodities and decrease of prices in the Metals Index, economies of scale were less likely to be achieved and the boom eventually ground to a halt.
As a mining procurement officer or maintenance manager, relationships with suppliers have become even more scrutinised than in the past, with continuing pressure to cost-cut and retain quality. To stay alive in business and keep some profit margin you’ve had to keep an eagle eye out and become vigilant of any opportunity no matter how big or small to reduce costs.
With that in mind, what are some questions you can ask your mining parts supplier to help achieve this? Here are some suggestions:
1) Do you offer volume-based discounts?
Perhaps an obvious question, however, important nonetheless to ask. Where economies of scale kick in at a production of 100 for nuts and bolts, for example, a volume based discount could possibly apply in quantities as little as 10 for larger components or assemblies. If your supplier is worth their salt, they will let you know, but a good rule of thumb when ordering in volume is to ask.
2) What kind of agreements can you suggest based on my business needs?
If you don’t already have a supply agreement with your supplier, it could be worth asking what kind of options they would recommend given your current spend and maintenance requirements. Fixed price agreements, fleet cost reduction plans, stock holdings and more can be tailored to your needs and could save you $$ in times of price fluctuations.
3) Do you deliver locally for free?
Don’t waste time and costs organising pickups. If your supplier has their own local transport, it is worth asking if they can include free delivery.
4) If my fleet has the same maintenance issues or the same parts fail repetitively, are you able to offer any solutions?
Aside from mining Aftermarket Parts, downtime and maintenance are two major costs that are best kept to a minimum. Do you know if your supplier has any engineering expertise? If so, ask if they are willing to participate in failure analysis and devising a solution for repetitive breakdowns. You may even find that your supplier may already have the answer or solution to your concerns. Cost savings over the machine’s lifetime can be significant.
5) What kind of relevant enhanced performance products can you offer and what are their cost benefits?
Original designs and standard parts can be taken for granted as “the best” or most efficient in the marketplace. However, a ‘next generation’ development can improve the bottom line significantly whether it be in ease of maintenance, less downtime, labour costs and consequentially, whole of life costs. Don’t take it for granted, ask your supplier if they have any enhanced performance products and what data they can show to prove their efficiencies.
6) Can you offer traceability throughout the supply chain?
Often time can be wasted in tracing an item for delivery. If your supply can offer traceability this can stop the wastage.
Let your supplier do the legwork for you and ask the questions. If your supplier/s can go that extra mile in offering all or most of the 6 points above, then you are sure to gain some ground in your cost reduction agenda.