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Understanding the Mining Business Model Cuan Kloppers, Group Manager: Group Business Systems, Samancor Chrome
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
“In ancient times, those known as good warriors prevailed when it was not easy to prevail. Their victories were not flukes because they positioned themselves where they would surely win …” Sun Tzy - The Art of War
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Roadmap • Positioning Mining with Strategy, People, Processes & Technology • The ability to change • Macro Processes in the Mining Business • • • • •
Components Business drivers Business challenges Critical success factors Reporting requirements and systems
• Technology as a business process enabler – the big picture • The Integrated Solution • Utilising ERP to enable a business • Business Intelligence as a strategic tool Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Understanding your company's environment Environment Strategy
Economic
Regulatory
Corporate Strategy / Vision
Operating Model
Process
Physical
Social
Operating Strategy Technology
Technological
Organisation Strategy
Physical Setting
Organisation Framework Organisation Structure
Individual
Performance Management
Leadership
Required Capabilities
Communication
Culture
Learning/Training/ Knowledge Transfer
Resourcing
Performance Support
is key to position yourself in the market today! Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Typical Challenges and Business Drivers Industry Challenges
Business Drivers
Cross-cultural Environment
Multiple Locations
Supply & Demand Planning
Changing Market Dynamics
Communication Infrastructure
Performance Driven Organisation
Complex Legislative Environment
Cash Flow Management
Asset Management
Organisational Size
Operational Efficiency
Complex Stakeholder Environment
Transformation
Cost Containment
in the Environment of a typical Mining Company today Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Gartner’s Top 10 CEO Business and Technology Priorities for 2009 Rank
Top 10 Business Priorities
Top 10 Technology Priorities
1
Business process improvement
Business intelligence
2
Reducing enterprise costs
Enterprise applications (ERP, CRM and others)
3
Improving enterprise workforce effectiveness
Servers and storage technologies
4
Attracting and retaining new customers
Legacy application modernization
5
Increasing the use of information/analytics
Collaboration technologies
6
Creating new products or services (innovation)
Networking, voice and data communications
7
Targeting customers and markets more effectively
Technical infrastructure
8
Managing change initiatives
Security technologies
9
Expanding current customer relationships
Service-oriented applications and architecture
10
Expanding into new markets or geographies
Document management
Extracted from Gartner 2009 CIO Survey
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Key Components of Business Solution Integration
People
Strategy
Process
Technology
to understand the Mining Business model Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
The influence of enabling Strategy
Process
Technology People Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Your maturity to change Re-invent
Redefine Industry Create Best Practice
Reengineer
Match Best Practice Improve For efficiency
Streamline Automate
Functionally Single Managed Function
Core Process
Value Chain
Extended Value Chain
Scope of Change
influence your strategy… Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Typical Mining Business Model External business drivers and stakeholders Stakeholders, Customers, Regulators, Natural Forces, Image / Public Perception, Suppliers Economy, Labour, Competitors, Technology, Political Environment Commodity Segmentation: Precious metals
Strategic Management Process Core Business Processes Acquire & Develop Reserves
Base metals Specialty metals
Extract Ore
Iron ore
Process Ore
Industrial minerals Coal
Sell Product
Gemstones Uranium
Mine Close
By Operation Focus: Exploration Fully integrated
Support Processes Health and Safety
Mine Services Single- or MultiCommodity
Information Management
Environmental Human Resources
Supply
Maintenance
Treasury Management
Asset Custody
Customers Joint Ventures Other mining companies Utilities Customers
Minerals (including ore) Concentrates (including ore and slimes) Manufactured Products
Brokers (including De Beers) Commodity Exchanges
By-products (eg, Contractors sulphuric acid; Manufacturers industrial / Fabricators diamonds) Engineers (including steel mills) Mine Services (Engineering Royalty [CRA, BHP], Owners Governments Technical Mining (including and Maintenance mints) Suppliers [eg, SA mining houses]) Trade Utilities (eg, Associations Tolling / Custom Coal) Milling Governments Excess capacity Refineries / Smelters Outsourced Suppliers
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Processes in the Mining Business Strategy
Strategic Business Processes
People
Core Business Processes Process
Acquire & Develop Reserves
Extract Ore
Process Ore
Sell Product
Mine Close
Technology
Support Business Processes Structure
need to be integrated and support the vision and strategy Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Processes in the Mining Business Strategy
Strategic Business Processes
People
Core Business Processes Process
Acquire & Develop Reserves
Extract Ore
Process Ore
Sell Product
Mine Close
Technology
Support Business Processes Structure
need to be integrated and support the vision and strategy Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
The Objectives Strategic Business Business Processes Strategic Processes
1. 2. 3. 4.
1. 2.
Operational Determine strategic objectives for the company by commodities, markets, countries and customers Provide a clear strategic direction to the business Identify, source and allocate resources necessary to execute strategy Promote culture of continuous improvement Reporting Measure business performance against strategic objectives Confirming the financial statements and supplementary disclosures Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Key performance indicators (KPI’s) Strategic Business Processes Strategic Business Processes
1.
2.
3. 4.
5.
Critical Success Factors Proper understanding of mining sector Proper understanding of company’s competitive strategy Focused strategic plan Successful implementation & monitoring of strategic plan Adapt to changing environment
Key Performance indicators 1.
2.
3. 4.
5. 6.
Return on equity; Share price comparisons; Analyst rating comparisons Actual vs. budget comparison Return on assets Actual vs budget comparison Share price comparison Shareholder / analyst perception
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Some common Financial Best Practice Measurements Strategic Business Processes Strategic Business Processes
Measure 1. 2.
3. 4. 5. 6. 7.
8.
9.
Average selling price per unit Foreign exchange rate effectiveness Payroll to sales Sales price effectiveness Market capitalisation per ounce Purchasing effectiveness Mining operations cost per ton mined Total operating cost per ton milled Total cash cost per ounces poured
Calculation 1. 2.
3.
4.
5.
6.
7. 8. 9.
Total sales / ton sold Foreign exchange rate achieved / spot foreign exchange rate Total salary and fringe expense / net sales Average sales price achieved / average spot price Market capitalisation / number of ounces available Purchasing costs current year / purchasing costs prior year (comparison to local country inflation rates) Mining operating cost / ton mined Total operating cost / ton milled Total cash cost / ounces poured
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Some common Operational Best Practice Measurements Strategic Business Processes Measure 1. 2. 3. 4.
5. 6. 7. 8. 9. 10. 11. 12.
Production effectiveness Exploration expenditure ratio Hedging ratio Ore mining cost (Bank comparison - World Averages) Safety Product development cycle time Capital expenditure cycle time Crushing & Milling effectiveness Mining grade (grams per tonne) Mining strip ratio Milling grade (grams per tonne) Milling recovery (%)
Calculation 1. 2.
3.
4. 5. 6.
7. 8.
9.
10.
Actual production / budget production Total exploration expenditure / total sales Future production hedged / future production Mining costs / number of units mined Number of lost time injuries Time from spending capital to start of capital project Throughput rate per hour Average daily ore milled / design throughput rate Unavailable machine time / total available machine time Industry standard
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Processes in the Mining Business Strategy
Strategic Business Processes
People
Core Business Processes Process
Acquire & Develop Reserves
Extract Ore
Process Ore
Sell Product
Mine Close
Technology
Support Business Processes Structure
need to be integrated and support the vision and strategy Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
The Mining Value Chain... Core Business Processes Acquire & Develop Reserves
Extract Ore
Process Ore
Sell Product
Mine Close
Core business processes are the processes that develop, produce, sell, and distribute an entity’s products and services. These processes do not follow traditional organisational or functional lines, but reflect the grouping of related business activities ...the heart of the business Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Components of the Core Business Processes... Core Business Processes Acquire & Develop Reserves
Extract Ore
Process Ore
Targeting
Mining
Stockpile
Acquisition
Access Reserves
Metallurgical Extraction / Enrichment / Upgrading
Exploration & Evaluation
Sell Product
Selling
Transportation
Mine Close
Salvage Rehabilitation
Transportation
Monitoring
Planning Permitting Construction / Commissioning
Access Reserves
...is the lifeblood of the business Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Typical Key performance indicators (KPI’s) Core Business Processes Extract Ore
Process Ore
Sell Product
Number of failed mining developments
Acquisition
Ratio of successful acquisitions / targets
Exploration & Evaluation
Number of titles lapsing unintentionally
KPI’s
Targeting
Planning Permitting
Budget vs actual production statistics Time and cost to obtain permit Delays to project (days
Commissioning
Actual vs budget cost; days late commissioned
Access Reserves
Frequency and cost of health, safety and environmental fines / claims
Construction /
Mine Close
Geological modeling, Mine Technical systems
Systems
Acquire & Develop Reserves
Budgeting systems, models, etc – ERP
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Typical Key performance indicators (KPI’s Core Business Processes Extract Ore
Sell Product
Mine Close
Tonnes of ore mined per worker / per day
Mining
Labour scheduling
Cost per unit output
KPI’s
Access Reserves Transportation
Process Ore
LTIFR (Lost Time Incidence Frequency Rate) Trips per day or volume of unit per time unit; Amount of time/volume capacity used vs Amount of time/volume capacity available
Systems
Acquire & Develop Reserves
Tri p sheets Mine scheduling Maintenance planning Production & cost reporting
This core business process describes the key elements of the actual extraction of ore from the mine and transportation of this to the processing facility. This includes sampling, breaking and removal of the broken ore, grading and transportation. Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Typical Key performance indicators (KPI’s Core Business Processes Acquire & Develop Reserves
Extract Ore
Process Ore
Sell Product
Mine Close
Mine scheduling Stockpile turnover ratio
Stockpile
Maintenance planning
Metallurgical Extraction / Enrichment / Upgrading
Mining technical systems
Fines / tones of ore recovered Recovery rate; mine call factor Percentage capacity utilisation Units-of-production per time unit Cost per unit output Maintenance cost per machine hour
Systems
Grade of ore recovered
Process Control Metallurgical accounting Quality management/ grade control Production & cost reporting
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Processes in the Mining Business Strategy
Strategic Business Processes
People
Core Business Processes Process
Acquire & Develop Reserves
Extract Ore
Process Ore
Sell Product
Mine Close
Technology
Support Business Processes Structure
need to be integrated and support the vision and strategy Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Support Components Support Business Processes Support Processes
Health and Safety
Environmental
Quality Management / Grade Control
Supply / Procurement
Information Management
Maintenance
Treasury Management
Asset Custody
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Human Resources
Life before a ERP System High cost, low trust, manual, low adoption, gut decisions
Manual Flow Casual Users
Executives
Salespeople, CSRs, Warehouse Mgrs.
CFO, COO, VP Sales
Divisional Mgmt External Users Suppliers, Partners, Customers
Power Users Finance, Sales, Supply Chain Analysts
BI Platforms/Tools
Custom Programmers
BI Teams
Other Systems
BI Tool 2 BI Tool 3BI Tool 4
IT/DW Team
Data Integration/Data Quality
SQL
SQL
SQL
Data Warehouse Data Marts
EDW Data Mgmt Teams Oracle Microsoft
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
ALL Data
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Enterprise BI Strategy & a Integrated Platform Trusted, centralized, high adoption, fact-based, lower cost
Power Users Executives CFO, COO, VP Sales
Finance, Sales, Supply Chain Analysts
Casual Users Salespeople, CSRs, Warehouse Mgrs.
Divisional Mgmt External Users Suppliers, Partners, Customers
Information management
BI Platform BW
BI Platforms/Tools
Teams
BI Teams
BI Team
Operational Systems
SAP ERP
SAP HR
BI Tool 2 BI Tool 3BI Tool 4
MES Data Integration/Data Quality
SQL
Microsoft
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
In the world of the Operations Integration is important? Manager Strategy
People
Process
Technology
Structure
Technology needs to enable the core business processes Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Why is Integration so important?
To make decisions on ONE version of the truth Different information requirements for different levels in the organization Disconnection between the business systems and the business processes Lack of alignment between the applications of the business systems make it difficult to manage the business Roles & responsibilities of the key components of business system applications is not always aligned Lack of growth due to a lack of knowledge sharing Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Mining companies are changing their technology mindset
to get their systems and data organized …
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
How do we do IT at Samancor Chrome? Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
The Samancor Chrome pillars VISION
Growth
Business Processes
Customer
Organisation Learning & Development
SHEQ
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Dictate the way we do Business
OUR VALUES
SHAREHOLDER VALUE
The Samancor Chrome pillars Areas of Focus to VISION
VISION
achieve “Zero harm”
Enablers:
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Dictate the way we do Business
Customer
•Simple Integrated Systems
SHEQ
• Enabling Environment
Organisation Learning & Development
•Positive Attitude
Growth
Leadership
Business Processes
•
OUR VALUES
SHAREHOLDER VALUE
Integrated mining Solution at Integrated Mining Solution Samancor Chrome
SAP Client
Integration - People
People Integration
Mine Technical GEMCOM Systems
BI
Value Proposition
MES Atos KPMG &
Consulting Process Control
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
The big picture: Implementing technology Strategic Management Processes Business Intelligence & Strategic Enterprise Management
Customer Relationship Management
Core Business Processes Supply Chain Management - APO Resource to Product
Product to Customer
Product Life-Cycle Management
Support Business Processes Procurement & Human Capital Supply Management
Financial Management
Asset Life Cycle Management
SHEQ
Information Management
Shared Services
to manage according to the Mining Business Model Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Information Maturity Quadrants 2
1 Business Rules
Data Integrity Open Transactions l Overdue Transactions On time Transactions l Real-time transactions Single Data Source DataCleansing and Process l Data Accountability Inside the System Frequent l Communications Exception Monitoring Cooperation Data Accuracy Data and Process Accountability User Confidence Lead Time Accuracy
HOUSEKEEPING
4
3 Business Value
Process Optimization
Integration (MD07) Data Grouping Groups Strategy and priorities Stocking MRP rules Master Data Rules ATP Levels – Internal & Service External Lead Time/s Exception Management Service Levels Inventory Accuracy Exceptions Business Measures Master Data Design Measures Purchasing & Financial Integration Lead Time Adherence
Automation lTrusted Automation Lead time reduction lEnhance Existing Functionality l Enhanced process lNext Generation Enhance existing Technology functionality lSupplier Performance Collaboration Benchmarking Management Dashboard Global Standardization Supplier & Customer Collaboration Lead Time Reduction
Increase Service Increase Revenue Optimize Increase Service l Inventory Value Levels Improved Inventory Increased l Turns Revenue Reduce Operating Costs l Reduce Value of Improved Management Stock Information (Visibility) Reduce Operating l Increase process Costs optimization & flexibility l Set new targets
INTEGRATION
FUNCTIONALITY
BUSINESS VALUE
l l l l l l l l
©
OWNERSHIP, ACCOUNTABILITY, and GOVERNANCE Get what was implemented to work as intended. Get the processes integrated
Get the system to work for you, rather than you working for the system
Get the system to work for your business. Set VALUE targets and achieve those targets, using your system
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa copyright © 2007 Reveal. All rights reserved.
Barrier to Increased Performance Lack of visibility through entire cycle Strategy
Strategic Alignment Predictable Performance Confident Decisions
Risks
Opportunities
Execution Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Greatest Business Intelligence Value When deployed to everyone who can have an impact
BI Value:
Drive Effectiveness Strategic
Gain competitive advantage or major innovation
Tactical/Ad-Hoc
Drive Efficiency
Enterprise Reporting
Provide better information to the organization Reduce the cost of doing business and improve IT capability
High performing companies use Analytics as a key strategy element 5 times more than low performers* Companies with the highest use of BI achieve above-average Operating Margin in their industry Business Intelligence tools increase productivity by an average of 25% Salesforce Effectiveness and Financial Management are the most important uses of BI Over 80% of companies use a formal BI organization to drive value
Source: Competing on Analytics, Thomas Davenport; ASUG / SAP Benchmarking and Best Practices Survey – Aggregated results are based on 83 total survey submissions Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Think about this… It is often said that what gets measured gets done. Perhaps so, but it is more accurate to say that only things that are understood get managed! Gerhard van Niekerk - SAP Labs
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
THANK YOU
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
“In ancient times, those known as good warriors prevailed when it was not easy to prevail. Their victories were not flukes because they positioned themselves where they would surely win …” Sun Tzy - The Art of War
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Roadmap • Positioning Mining with Strategy, People, Processes & Technology • The ability to change • Macro Processes in the Mining Business • • • • •
Components Business drivers Business challenges Critical success factors Reporting requirements and systems
• Technology as a business process enabler – the big picture • The Integrated Solution • Utilising ERP to enable a business • Business Intelligence as a strategic tool Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Understanding your company's environment Environment Strategy
Economic
Regulatory
Corporate Strategy / Vision
Operating Model
Process
Physical
Social
Operating Strategy Technology
Technological
Organisation Strategy
Physical Setting
Organisation Framework Organisation Structure
Individual
Performance Management
Leadership
Required Capabilities
Communication
Culture
Learning/Training/ Knowledge Transfer
Resourcing
Performance Support
is key to position yourself in the market today! Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Typical Challenges and Business Drivers Industry Challenges
Business Drivers
Cross-cultural Environment
Multiple Locations
Supply & Demand Planning
Changing Market Dynamics
Communication Infrastructure
Performance Driven Organisation
Complex Legislative Environment
Cash Flow Management
Asset Management
Organisational Size
Operational Efficiency
Complex Stakeholder Environment
Transformation
Cost Containment
in the Environment of a typical Mining Company today Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Gartner’s Top 10 CEO Business and Technology Priorities for 2009 Rank
Top 10 Business Priorities
Top 10 Technology Priorities
1
Business process improvement
Business intelligence
2
Reducing enterprise costs
Enterprise applications (ERP, CRM and others)
3
Improving enterprise workforce effectiveness
Servers and storage technologies
4
Attracting and retaining new customers
Legacy application modernization
5
Increasing the use of information/analytics
Collaboration technologies
6
Creating new products or services (innovation)
Networking, voice and data communications
7
Targeting customers and markets more effectively
Technical infrastructure
8
Managing change initiatives
Security technologies
9
Expanding current customer relationships
Service-oriented applications and architecture
10
Expanding into new markets or geographies
Document management
Extracted from Gartner 2009 CIO Survey
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Key Components of Business Solution Integration
People
Strategy
Process
Technology
to understand the Mining Business model Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
The influence of enabling Strategy
Process
Technology People Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Your maturity to change Re-invent
Redefine Industry Create Best Practice
Reengineer
Match Best Practice Improve For efficiency
Streamline Automate
Functionally Single Managed Function
Core Process
Value Chain
Extended Value Chain
Scope of Change
influence your strategy… Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Typical Mining Business Model External business drivers and stakeholders Stakeholders, Customers, Regulators, Natural Forces, Image / Public Perception, Suppliers Economy, Labour, Competitors, Technology, Political Environment Commodity Segmentation: Precious metals
Strategic Management Process Core Business Processes Acquire & Develop Reserves
Base metals Specialty metals
Extract Ore
Iron ore
Process Ore
Industrial minerals Coal
Sell Product
Gemstones Uranium
Mine Close
By Operation Focus: Exploration Fully integrated
Support Processes Health and Safety
Mine Services Single- or MultiCommodity
Information Management
Environmental Human Resources
Supply
Maintenance
Treasury Management
Asset Custody
Customers Joint Ventures Other mining companies Utilities Customers
Minerals (including ore) Concentrates (including ore and slimes) Manufactured Products
Brokers (including De Beers) Commodity Exchanges
By-products (eg, Contractors sulphuric acid; Manufacturers industrial / Fabricators diamonds) Engineers (including steel mills) Mine Services (Engineering Royalty [CRA, BHP], Owners Governments Technical Mining (including and Maintenance mints) Suppliers [eg, SA mining houses]) Trade Utilities (eg, Associations Tolling / Custom Coal) Milling Governments Excess capacity Refineries / Smelters Outsourced Suppliers
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Processes in the Mining Business Strategy
Strategic Business Processes
People
Core Business Processes Process
Acquire & Develop Reserves
Extract Ore
Process Ore
Sell Product
Mine Close
Technology
Support Business Processes Structure
need to be integrated and support the vision and strategy Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Processes in the Mining Business Strategy
Strategic Business Processes
People
Core Business Processes Process
Acquire & Develop Reserves
Extract Ore
Process Ore
Sell Product
Mine Close
Technology
Support Business Processes Structure
need to be integrated and support the vision and strategy Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
The Objectives Strategic Business Business Processes Strategic Processes
1. 2. 3. 4.
1. 2.
Operational Determine strategic objectives for the company by commodities, markets, countries and customers Provide a clear strategic direction to the business Identify, source and allocate resources necessary to execute strategy Promote culture of continuous improvement Reporting Measure business performance against strategic objectives Confirming the financial statements and supplementary disclosures Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Key performance indicators (KPI’s) Strategic Business Processes Strategic Business Processes
1.
2.
3. 4.
5.
Critical Success Factors Proper understanding of mining sector Proper understanding of company’s competitive strategy Focused strategic plan Successful implementation & monitoring of strategic plan Adapt to changing environment
Key Performance indicators 1.
2.
3. 4.
5. 6.
Return on equity; Share price comparisons; Analyst rating comparisons Actual vs. budget comparison Return on assets Actual vs budget comparison Share price comparison Shareholder / analyst perception
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Some common Financial Best Practice Measurements Strategic Business Processes Strategic Business Processes
Measure 1. 2.
3. 4. 5. 6. 7.
8.
9.
Average selling price per unit Foreign exchange rate effectiveness Payroll to sales Sales price effectiveness Market capitalisation per ounce Purchasing effectiveness Mining operations cost per ton mined Total operating cost per ton milled Total cash cost per ounces poured
Calculation 1. 2.
3.
4.
5.
6.
7. 8. 9.
Total sales / ton sold Foreign exchange rate achieved / spot foreign exchange rate Total salary and fringe expense / net sales Average sales price achieved / average spot price Market capitalisation / number of ounces available Purchasing costs current year / purchasing costs prior year (comparison to local country inflation rates) Mining operating cost / ton mined Total operating cost / ton milled Total cash cost / ounces poured
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Some common Operational Best Practice Measurements Strategic Business Processes Measure 1. 2. 3. 4.
5. 6. 7. 8. 9. 10. 11. 12.
Production effectiveness Exploration expenditure ratio Hedging ratio Ore mining cost (Bank comparison - World Averages) Safety Product development cycle time Capital expenditure cycle time Crushing & Milling effectiveness Mining grade (grams per tonne) Mining strip ratio Milling grade (grams per tonne) Milling recovery (%)
Calculation 1. 2.
3.
4. 5. 6.
7. 8.
9.
10.
Actual production / budget production Total exploration expenditure / total sales Future production hedged / future production Mining costs / number of units mined Number of lost time injuries Time from spending capital to start of capital project Throughput rate per hour Average daily ore milled / design throughput rate Unavailable machine time / total available machine time Industry standard
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Processes in the Mining Business Strategy
Strategic Business Processes
People
Core Business Processes Process
Acquire & Develop Reserves
Extract Ore
Process Ore
Sell Product
Mine Close
Technology
Support Business Processes Structure
need to be integrated and support the vision and strategy Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
The Mining Value Chain... Core Business Processes Acquire & Develop Reserves
Extract Ore
Process Ore
Sell Product
Mine Close
Core business processes are the processes that develop, produce, sell, and distribute an entity’s products and services. These processes do not follow traditional organisational or functional lines, but reflect the grouping of related business activities ...the heart of the business Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Components of the Core Business Processes... Core Business Processes Acquire & Develop Reserves
Extract Ore
Process Ore
Targeting
Mining
Stockpile
Acquisition
Access Reserves
Metallurgical Extraction / Enrichment / Upgrading
Exploration & Evaluation
Sell Product
Selling
Transportation
Mine Close
Salvage Rehabilitation
Transportation
Monitoring
Planning Permitting Construction / Commissioning
Access Reserves
...is the lifeblood of the business Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Typical Key performance indicators (KPI’s) Core Business Processes Extract Ore
Process Ore
Sell Product
Number of failed mining developments
Acquisition
Ratio of successful acquisitions / targets
Exploration & Evaluation
Number of titles lapsing unintentionally
KPI’s
Targeting
Planning Permitting
Budget vs actual production statistics Time and cost to obtain permit Delays to project (days
Commissioning
Actual vs budget cost; days late commissioned
Access Reserves
Frequency and cost of health, safety and environmental fines / claims
Construction /
Mine Close
Geological modeling, Mine Technical systems
Systems
Acquire & Develop Reserves
Budgeting systems, models, etc – ERP
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Typical Key performance indicators (KPI’s Core Business Processes Extract Ore
Sell Product
Mine Close
Tonnes of ore mined per worker / per day
Mining
Labour scheduling
Cost per unit output
KPI’s
Access Reserves Transportation
Process Ore
LTIFR (Lost Time Incidence Frequency Rate) Trips per day or volume of unit per time unit; Amount of time/volume capacity used vs Amount of time/volume capacity available
Systems
Acquire & Develop Reserves
Tri p sheets Mine scheduling Maintenance planning Production & cost reporting
This core business process describes the key elements of the actual extraction of ore from the mine and transportation of this to the processing facility. This includes sampling, breaking and removal of the broken ore, grading and transportation. Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Typical Key performance indicators (KPI’s Core Business Processes Acquire & Develop Reserves
Extract Ore
Process Ore
Sell Product
Mine Close
Mine scheduling Stockpile turnover ratio
Stockpile
Maintenance planning
Metallurgical Extraction / Enrichment / Upgrading
Mining technical systems
Fines / tones of ore recovered Recovery rate; mine call factor Percentage capacity utilisation Units-of-production per time unit Cost per unit output Maintenance cost per machine hour
Systems
Grade of ore recovered
Process Control Metallurgical accounting Quality management/ grade control Production & cost reporting
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Processes in the Mining Business Strategy
Strategic Business Processes
People
Core Business Processes Process
Acquire & Develop Reserves
Extract Ore
Process Ore
Sell Product
Mine Close
Technology
Support Business Processes Structure
need to be integrated and support the vision and strategy Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Support Components Support Business Processes Support Processes
Health and Safety
Environmental
Quality Management / Grade Control
Supply / Procurement
Information Management
Maintenance
Treasury Management
Asset Custody
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Human Resources
Life before a ERP System High cost, low trust, manual, low adoption, gut decisions
Manual Flow Casual Users
Executives
Salespeople, CSRs, Warehouse Mgrs.
CFO, COO, VP Sales
Divisional Mgmt External Users Suppliers, Partners, Customers
Power Users Finance, Sales, Supply Chain Analysts
BI Platforms/Tools
Custom Programmers
BI Teams
Other Systems
BI Tool 2 BI Tool 3BI Tool 4
IT/DW Team
Data Integration/Data Quality
SQL
SQL
SQL
Data Warehouse Data Marts
EDW Data Mgmt Teams Oracle Microsoft
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
ALL Data
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Enterprise BI Strategy & a Integrated Platform Trusted, centralized, high adoption, fact-based, lower cost
Power Users Executives CFO, COO, VP Sales
Finance, Sales, Supply Chain Analysts
Casual Users Salespeople, CSRs, Warehouse Mgrs.
Divisional Mgmt External Users Suppliers, Partners, Customers
Information management
BI Platform BW
BI Platforms/Tools
Teams
BI Teams
BI Team
Operational Systems
SAP ERP
SAP HR
BI Tool 2 BI Tool 3BI Tool 4
MES Data Integration/Data Quality
SQL
Microsoft
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
In the world of the Operations Integration is important? Manager Strategy
People
Process
Technology
Structure
Technology needs to enable the core business processes Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Why is Integration so important?
To make decisions on ONE version of the truth Different information requirements for different levels in the organization Disconnection between the business systems and the business processes Lack of alignment between the applications of the business systems make it difficult to manage the business Roles & responsibilities of the key components of business system applications is not always aligned Lack of growth due to a lack of knowledge sharing Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Mining companies are changing their technology mindset
to get their systems and data organized …
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
How do we do IT at Samancor Chrome? Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
The Samancor Chrome pillars VISION
Growth
Business Processes
Customer
Organisation Learning & Development
SHEQ
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Dictate the way we do Business
OUR VALUES
SHAREHOLDER VALUE
The Samancor Chrome pillars Areas of Focus to VISION
VISION
achieve “Zero harm”
Enablers:
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Dictate the way we do Business
Customer
•Simple Integrated Systems
SHEQ
• Enabling Environment
Organisation Learning & Development
•Positive Attitude
Growth
Leadership
Business Processes
•
OUR VALUES
SHAREHOLDER VALUE
Integrated mining Solution at Integrated Mining Solution Samancor Chrome
SAP Client
Integration - People
People Integration
Mine Technical GEMCOM Systems
BI
Value Proposition
MES Atos KPMG &
Consulting Process Control
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
The big picture: Implementing technology Strategic Management Processes Business Intelligence & Strategic Enterprise Management
Customer Relationship Management
Core Business Processes Supply Chain Management - APO Resource to Product
Product to Customer
Product Life-Cycle Management
Support Business Processes Procurement & Human Capital Supply Management
Financial Management
Asset Life Cycle Management
SHEQ
Information Management
Shared Services
to manage according to the Mining Business Model Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Information Maturity Quadrants 2
1 Business Rules
Data Integrity Open Transactions l Overdue Transactions On time Transactions l Real-time transactions Single Data Source DataCleansing and Process l Data Accountability Inside the System Frequent l Communications Exception Monitoring Cooperation Data Accuracy Data and Process Accountability User Confidence Lead Time Accuracy
HOUSEKEEPING
4
3 Business Value
Process Optimization
Integration (MD07) Data Grouping Groups Strategy and priorities Stocking MRP rules Master Data Rules ATP Levels – Internal & Service External Lead Time/s Exception Management Service Levels Inventory Accuracy Exceptions Business Measures Master Data Design Measures Purchasing & Financial Integration Lead Time Adherence
Automation lTrusted Automation Lead time reduction lEnhance Existing Functionality l Enhanced process lNext Generation Enhance existing Technology functionality lSupplier Performance Collaboration Benchmarking Management Dashboard Global Standardization Supplier & Customer Collaboration Lead Time Reduction
Increase Service Increase Revenue Optimize Increase Service l Inventory Value Levels Improved Inventory Increased l Turns Revenue Reduce Operating Costs l Reduce Value of Improved Management Stock Information (Visibility) Reduce Operating l Increase process Costs optimization & flexibility l Set new targets
INTEGRATION
FUNCTIONALITY
BUSINESS VALUE
l l l l l l l l
©
OWNERSHIP, ACCOUNTABILITY, and GOVERNANCE Get what was implemented to work as intended. Get the processes integrated
Get the system to work for you, rather than you working for the system
Get the system to work for your business. Set VALUE targets and achieve those targets, using your system
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa copyright © 2007 Reveal. All rights reserved.
Barrier to Increased Performance Lack of visibility through entire cycle Strategy
Strategic Alignment Predictable Performance Confident Decisions
Risks
Opportunities
Execution Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Greatest Business Intelligence Value When deployed to everyone who can have an impact
BI Value:
Drive Effectiveness Strategic
Gain competitive advantage or major innovation
Tactical/Ad-Hoc
Drive Efficiency
Enterprise Reporting
Provide better information to the organization Reduce the cost of doing business and improve IT capability
High performing companies use Analytics as a key strategy element 5 times more than low performers* Companies with the highest use of BI achieve above-average Operating Margin in their industry Business Intelligence tools increase productivity by an average of 25% Salesforce Effectiveness and Financial Management are the most important uses of BI Over 80% of companies use a formal BI organization to drive value
Source: Competing on Analytics, Thomas Davenport; ASUG / SAP Benchmarking and Best Practices Survey – Aggregated results are based on 83 total survey submissions Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
Think about this… It is often said that what gets measured gets done. Perhaps so, but it is more accurate to say that only things that are understood get managed! Gerhard van Niekerk - SAP Labs
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
THANK YOU
Mine-Tech International Conference and Expo, 2-4 November 2009, Johannesburg, South Africa
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