The long term nature of mining projects, allied with the scale of equipment, materials and services needed, makes buyers highly dependent upon a few suppliers with high switching costs.
Performance management helps mining companies build mutually beneficial relationships with suppliers, with rewards giving both parties a stake in the success. Multiple contracts with the same suppliers should be aligned across different operating units and geographies, bringing consistency and economies of scale. Procurement alliances with competitors provide further scale benefits and give suppliers greater security.
Getting the right inventory levels
Supply chain specialists can manage specific commodity categories, analyze usage and demand, rationalize the range of items purchased, and monitor performance.
To balance high inventory levels (which users desire) with smooth, continuous demand levels (which suppliers prefer), the mine could hold consignment stock that is owned by the supplier but located on the buyer’s premises. Discounts and penalties for early or late payment can improve supplier relationships and potentially reduce costs.
The complete picture
KPMG firms understand the operating environment within mines and look at every aspect of your procurement and stock management – including interviewing suppliers to gauge their views and satisfaction levels. We realize that good procurement is about more than price, and an assessment of consumption and production levels is needed to achieve greater efficiency, reduce total cost of ownership and improve profitability