Hi 5 Top Tips for Performance Managing Your Suppliers to Success.!. & Strategic Sourcing.!.

Hi 5 Top Tips for Performance Managing Your Suppliers to Success.!.

Procurement and contracts professionals in the mining industry, between interviews, surveys and annual Mine Procurement and Supply conference, a big focus that keeps coming up time and time again is that of supplier performance management and getting back to basics with what you expect from your vendors in the mining industry. 

Based on research with over 100 procurement and supply chain executives in the mining sector from companies such as Rio Tinto, MMG, BHP Billiton, Fortescue Metals, Thiess, St. Barbara, Orica Mining Services and many more, here are top tips for improving the results from your suppliers:

1.       Review all SLAs and contracts in place to identify core KPIs – many long-standing vendor relationships will be based on contracts that have been in place for years, or even decades sometimes. 

They are often drafted by people who have now left the company, so it’s important to conduct regular reviews of all SLAs and contracts to understand what agreement is in place on both sides, and to ensure the terms are still beneficial in changed market environments. 

If the terms are no longer relevant or suitable, then it’s time for a change! If they are, ensure they’re actually being adhered to, measured and rewarded when achieved.

There’s no point in having great, structured KPIs if they're not then measured and acknowledged.

2.       Where applicable, using end to end category management to derive more value from your supplier expenditure – utilising market experts to drive ongoing savings without an “end point” in sight, can help extract significantly more from your suppliers.

The sustainable results it can deliver actually go beyond simple cost savings, and can extend into additional value, opportunities and upgrades for organisations. 

E2E category management can also be used to better design the supply model and improve inventory management.

3.       Shortlisting vendors across all services and categories – having a permanent short list that you can review on an annual, or less frequent basis, can reduce a lot of wastage time for more transactional purchases. 

A clear list of requirements helps whittle down the applicants quickly, and safety standards should be top of this list in the majority of categories.

4.       Understanding your suppliers’ delivery cycles and inventory to minimise stockpiles and revenue sunk in assets – whilst the temptation is often to have excess inventory and equipment on site (rather have too much than risk too little and have production ground to a halt), this can end up in vast amounts of money sitting around in the form of assets. 

That revenue is very valuable to the GM of a Mine if it can be freed up.

5.       Involve your suppliers early in any system or project overhauls – bringing suppliers to the table early when there are any significant changes to your company workings is usually beneficial for all parties. 

As with any stakeholders, early involvement usually means more engagement in any changes. 

Bringing long-standing suppliers in early can also help with their expertise and ability to identify any problems or opportunities with system or project shifts.

Click Here To Download The .PDF Document For Mining Procurement & Supply APAC 2014.! Or View & Download Below.

Mining Procurement & Supply APAC 2014.!.

Hi Mining Extra Feature!

Hi Strategic Sourcing in Mining – What Skills and Characteristics Should Your Strategic Sourcing Expert Possess?

Strategic sourcing and end-to-end category management have both increased in popularity significantly over the last 6 – 18 months in the mining sector, due to the current pressures being place on procurement departments by the state of the industry.

Whilst historically procurement has been a financial qualifications driven department however, many are finding that some of the best category managers and strategic sourcing experts come from an operational background.

So what really makes the ideal candidate for a strategic sourcing role? We've got the views of many experienced procurement managers across the mining sector and compiled their input into a top skills and characteristics list:

1.       A hands-on understanding of the product/category they are responsible for. This doesn't have to directly come from working in an operational job at the coal face, but if their background is purely financial they should strive to work closely with operations, or the relevant department, to understand less tangible implications of purchasing decisions they will be making for that category. This can include aspects such as product quality, life cycle cost, customer service quality of the providers in the market, integration issues, or staff knowledge of different systems/products.

2.      They should have strong analytical skills and an ability to translate data into commercially applicable strategies for purchasing within their remit. 

This can stem from a deep market insight and knowledge, but it can also be an inherent trait that will only sharpen with an increased knowledge of the sector, players and products.

3.       Their ability to negotiate, influence and engage with suppliers should be advanced. 

The person can have the best product and market knowledge possible, but if they are not able to use this to influence results with suppliers (in terms of contract, cost, support etc. ), then it is rendered fairly useless. Finding someone who can be strong in both analytical and interpersonal skills can often be a challenge, so understanding which is more important for the particular category can be the critical difference.

4.       Intertwined with this, they should also be able to apply these skills internally, within the business, to get buy in and work closely with the key departments they will be engaging with. 

Being trusted by other departments to make the right purchasing decisions is incredibly important, and obviously this trust can be built quicker by people with the ability to approach, listen to and collaborate with other functions. 

This can also be achieved better by those with intrinsic leadership qualities, but that’s not mandatory. An ability to inspire is more useful here.

5.       For a contracting firm, rather than a mining company, position(e.g. an OEM, or a major contractor, or EPCM), an understanding of the client’s requirements and expectations is another important factor to be taken into consideration. 

This will obviously come partly from the client’s briefing, but an ongoing collaboration between the strategic sourcing executive and the client will ensure a higher level of client satisfaction throughout and at the end of the contract.