Cost Efficiency on Production

Mining industry continues to surface from a decline, the procurement and supply expenditure still is a crucial element of the mining industry for their capability to be successful and have a return on investment.

The continuous push for efficient cost levels and greater productivity; means miners are re-evaluating their methods and the management of all sectors of their operation. Having an automated procurement process allows a huge reduction in costs through its ability to counter the traditional methods of managing supplier’s contracts, processes and so on. It is much more efficient as it improves control and visibility of the contracts in real time. The procurement department is very costly in many countries.    De Beers who is known around the world for creating the finest diamond rings reported expenditures of P4 billion on procurement in Botswana, 2016. This shows how costly it can be for a company in the mining industry.

Trying to maximise savings through procurement has always been very vital for the mining industry. As the sector continues to find ways to maximise production and reduce operational costs, exploration companies are introducing new ways to cut down costs. One of the methods is to direct their procurement to local companies. Optimising their supply chain and reducing their purchases/costs in foreign currencies.

 Cost vs. Quality

In any organisation there are unplanned changes that can affect their operational costs. Procurement these days are trying to minimise the downturns in order to reduce company losses. The common sense can make us believe that cost is the key denominator on the decision making process for equipment acquisition and supplier preference. However, quality and product service is seen by buyers in the procurement industry as the dominant factor for supplier preference.

“Mining IQ’s Procurement and Supply Chain industry report revealed that cost is not the main factor influencing companies to seek new suppliers. Over 40 percent of 2015 respondents said that quality and product service were number one.” – Mining IQ

Procurement can be seen as one of the heaviest costs for the mining industry to endure, dealing with multiple suppliers and finding suitable and reliable ones that will cater to their needs. With the use of quality assurance tools and ERP systems companies are consolidating their expenditure in a more effective way.

Global Synergy Resources provides clients with the best technical solutions by supplying quality products and the best prices. With a multi-disciplinary team we are able to cater to clients’ needs across different industries such as manufacturing, oil & gas, mining, healthcare and telecommunications.

By Samad Khan, Buyer,  Global Synergy Resources, London 09/08/2017