Mining Procure to Pay and Stock management



Once of the biggest challenges faced by mining companies across Africa, irrespective of being in either the exploration or production phase of mining, is managing stock and the internal supply chain.

Commonly during ‘Procure to Pay’ cycle, mines, irrespective of size or complexity commonly face these ten system challenges.  If you struggle with any of these, know you are not alone!

  1. Non-Stock: There is nothing more frustrating than a production process grinding to a halt due to the unavailability of internal stock items. Poor procurement processes need to take the blame for this.
    1. Interdepartmental budgeting & spending: Budgets are set and approved and yet when an important procurement needs to happen, department managers find that they have no budget as mining procurement processes fails to identify and stop incorrect allocations.
    2. Commitment accounting: Checking budgets before spending is great, but did you check any commitments against that same budget for any open orders.  Result: over spending!

 

  1. Vendor Management: Finding the right vendor is almost as important as finding the right product.  Most mines’ quoting systems do not provide additional intelligence on vendor performance such as delivery times.  What is more expensive:  Paying more for an stock-item but getting production back on track quicker, or paying less and stalling the production process?

 

  1. Catalogues with fixed price agreements: Having a catalogue is one thing, but linking a fixed price agreement to that catalogues to ensure a smooth stock replenishment process is often an unattained utopia.  It’s such an easy problem to solve yet ERP’s are not the right place to store these catalogues and agreements.

 

  1. No ordering algorithms: No, this is not science fiction and yes, if you want to stay ahead of the pack, you need to investigate supply chain algorithms.  These are unique to each mine and takes into account aspects such as delivery lead time, min & max levels, backorder stock and stock on orders.

 

  1. Bad management of consignment stock: The stock is not yours, not yet anyway, and yet you are stuck with the stock holding and resulting liabilities per supplier.

 

  1. Lack of proper project accounting: Whether it’s a capex or opex project, mines need to live and breathe on the accuracy of projects/jobs.  For the mining and manufacturing industries Work in Progress (WIP) Accounting is of paramount importance yet some aspects of internal labour costs, equipment costs and overheads are ‘missed’.

 

  1. Show me your barcode: Receiving and issuing of stock from internal warehouses is so much easier when items contain barcodes.  Many mines however have not invested in integrated barcoding systems so that stock items are labeled with both internal and vendor item numbers.   Again, not a complex nor an expensive exercise yet the improvement in efficiency it brings are often times immeasurable in value.

 

  1. Missing paperwork: Having an electronic document repository is one thing, but supply chain approvers often do not have direct access to these supporting documents (Quotes, GRN’s, invoices etc.) whilst they are in the approval cycle, again, slowing down the procure-to-pay cycle.

 

  1. Lack of Business Intelligence: Production data is captured, but then what.  Mines find the masses of data overwhelming, yet the lifeblood of the mine depends on accurate decisions made from these numbers.  Run of mine (ROM) ore, tons hoisted, carats recovered, meters drilled, etc.   BI is a massive industry in the IT sector and for good reason yet many mines still rely on the simple Excel spreadsheet.  Hey, its great, we love Microsoft Excel, but do you really know what your production data is trying to tell you?

 

  1. To Mobile or not to Mobile: “What are we waiting for?  Well our workflow approver is travelling and the order is in his inbox for approval.”  Mobile solution for approvers on the move eliminating bottlenecks within your procurement process.