Mining Case study

Practice - Strategic Sourcing
Sector - Mining
Category - Mobile Plant
Geography - UK
Baseline - GBP 13.8m
Savings - GBP 1.1m (8%)

Our client was a large European minerals extraction company. It has major operations in many world regions (Europe, North America, South America, and Asia Pacific). The Client was looking to re-tender the cost of its Mobile Plant, which was a key component of spend.

The Client used a variety of mobile plant to dig, manipulate and transport the mineral ore from the pit to the nearby processing facility. These included Graders, Diggers, and Tractors/Trailers. These were purchased both direct and from distributors.

Key savings levers were:

Optimising the cost metric: All of the cost components related to a fleet of equipment was rolled into a single unit of measure: Net present cost per tonne
Enhanced utilisation: The individual vehicles that comprise a fleet were optimised so that each component was as close as possible to 100% utilisation
Optimised run time: The overall, optimised fleet was itself managed for optimal capacity utilisation
Introducing new vendors: In addition to both soliciting distributors and manufacturers, “challenger” vendors, particularly from China, were identified and solicited to bid
Granular bidding: Each component of cost of the equipment over its lifetime was bid separately (purchase price, maintenance, tyres, regular spare parts)
Optimisation of MP equipment type: Substitution of one type for another, more efficient one was explored

The results were that we obtained total project cash savings of GBP 1.1 m (8%). Additional “soft” savings from efficiency gains were identified as being up to an incremental GBP 1.6m (12%).