Supply Chain Challenges - Mining Industry

MRO:
Maintenance and Repair Operations (MRO) management is a highly sophisticated process and due to the high risk of breakdowns and work stoppages, stockholders often keep more inventory than is necessary. This leads to unbalanced inventories and high levels of obsolescence and poor service to end-users. Increasing demands on quality and service puts pressure on delivery performance -the right product at the right time. This in turn reduces the scope for errors and delays -and this in turn increases focus on equipment reliability. In the mining industry, both costs and equipment reliability have one significant thing in common - they are driven substantially by maintenance. In the current economic climate, minimizing costs assumes even greater importance, so that equipment reliability must be stepped up to reduce delays. Equipment reliability means effective maintenance. Maintenance costs in the mining industries are commonly between 30% -50% of mine-site total operating costs. Mining equipment maintenance and management level directly affect the situation and the economic benefits of production tasks, and device management is a multi-layered complex system, from the decision-making at all levels to the operational level. Old mining equipment aging directly translates into high energy consumption, low efficiency, high downtime, high maintenance cost which directly affect production of enterprise and increase production costs. Therefore, mining equipment upgrade in a timely manner is an important factor in diminishing the above effects.
Spare Parts:
Six major problems that hamper effective spare parts management include lack of adequate inventory records, wrong estimation of spare parts requirements, non-utilization of inventory systems, non-classification of spare parts items, lack of qualified personnel to manage inventory and lack of adoption of scientific methods in spare parts management. Realistic goals of minimizing the impact of this issue rather than a focus on eliminating it altogether seem to be the best method of approach. Implementing and developing lean six sigma capabilities will enhance the successful minimization for shortage of spares through forecasting and fostering business relationships with suppliers.
Procurement
Given the growing interdependence among economies worldwide, its no surprise globalization ranks as a top supply chain challenge. Global sourcing has led to many issues that companies encounter, including unreliable delivery, longer lead times and issues with new sources. These challenges in delivery and quality are reflected in sourcing priorities. Mining companies are primarily focused on total cost when working with suppliers, less so on the suppliers delivery or overall capabilities.
Following the peak of the mining boom, the levels of production and number of projects in the market is still high, resulting in severe supply backlogs. The changing nature of the current economic resources climate means mining companies grappling with meeting high demands while cutting costs. To further compound the problem, equipment and skills shortages are still causing further procurement and supply challenges. As a result, the pressure to reduce costs and streamline overall procurement processes is greater than ever.
Problems also occur when procurement is decentralized and duplicate orders are made causing excess and redundant stock issues.
Materials Management
Warehouse Management - This can lead to operational downtime due to capacity and sub-optimal levels of stock requiring storage at various warehouses and thus indicating mismanagement of materials. This then affects lead times and has a knock on effect resulting in negative productivity.
Inventory management - Unless inventory management of item classification, forecasting, stock holding policy and lead times is vigilant, critical item availability will be complicated and have a huge effect on the overall materials management and thus the operational downtime.
Data Management
A key challenge faced by many mining companies is data integrity: they need the right data in a standard format to enable consolidation across the enterprise. At a minimum, that data will include inventory levels of critical materials, demand and supply plans to drive replenishment requirements, available supplier inventory and associated lead times, and total cost parameters to support decision modeling. There is also a need to develop proper tools to extract and monitor relevant data and to improve data quality.
Equipment availability
Modern underground mines operate fleets of mobile production equipment including drill jumbos, long-hole drills, load-haul-dump machines, trucks and bolters. Their availability has a substantial impact onto production cost and thus onto mine profitability. Following Moore (1998), an increase of availability by 1% may generate a profit gain between 1.7-3.5%.

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