Where Mining Cost Cutting and Operational Improvement goes wrong
When you think about the mining sector, the outcomes achieved and the cost of achieving this it leaves a somewhat disappointing taste in your mouth.
When I think of mining consultants and leading strategy consulting firms and business analysts, I think of the old saying that “I am paying you to use my watch to tell me the time”.
Now I have nothing against mining consultants, but I do have issues with the sustainability of the implementations that take place.
For many years not a new C suite or a quiver of decision makers will come into a business announcing to the market that they are making a significant change. They will then bring in a top tier consulting firm to help, they will then guide the miner to cut costs through headcount adjustments, leaving all the dirty work up to the mid level executives.
A bunch of loyal employees will loose their jobs and then this leading management consulting firm will exit stage left, after collecting their cheque of 15 to 20% of the costs that they have just “saved” the Mining company.
No granted I am talking about two different sides of the same coin here, and before you get in a twist, no I have not been on the end of window seat letter. But I have been in mining companies when it has happened.
So where does value based mining optimisation and improvement actually happen
Sustainable operational improvement is not as simple as merely deploying software, sticking a fancy wrapper on it with a bunch of how to recommendations, along with a fancy visual representation board and think that you are going to have an immediate and direct impact.
Sorry it doesn’t happen that way.
How do you drive business value continuously from a theoretical point of view so that your mining operation is running at its most optimum, from a value based management system that remains in place permanently?
When talking about mining optimisation, I am primarily talking about deploying technology within a mining operation to produce data that is quickly ready, and more specifically, simple to understand and implement.
What Is Mining Optimisation and The Theory Behind it?
The Majority of Mines are running 7 days a week, 365 days a year.
Which means that the improvement opportunities in this space are huge, but implementing such initiatives in this environment even with the best business modelling takes a lot of skill.
Across the resources sector there are several methodologies that executives drive down to their line managers, one such example is the Lean Six Sigma approach, which has valuable principles that can be directly applied to pockets mining, BUT a lot of the detail is not really practical from a mining perspective.
Image now for a moment that you could take some of these principles and have meticulously combined them with the theory of constraints and then mould it into a more robust methodology for improving mines.
It would be kinda cool.
Before we get into the detail let’s first look at.
Where Does Mining Optimisation Go Wrong?
- Focus erodes, turnover happens, and the initiatives are lost.
- The markets fluctuate from Boom to Bust
- Cool technology is deployed but poorly supported and not championed
- Great operational improvement coaching team comes along but don’t have the tech to sustain.
Things go wrong when we try to improve something, either because we did not have a plan or the technology we used did not help us do things the right way.
You need to be very careful when measuring your operations. This is so you can make sure you are doing things in the most efficient way possible. If your data is not accurate or if it is not in an easy-to-use format, it can be a big problem.
How Can You Apply Mining Optimisation to Make Your Mining Operation More Efficient?
There are two different types of optimisation – sustainable and instantaneous.
It’s simple to push for quick change, yet the Hawthorne Effect is all that ever occurs. People begin acting differently not because you’ve made improvements, but because you’re focusing on that one area.
People believe it is critical because they’ve been persuaded that it is, but this isn’t sustainable because, as time goes on, their performance deteriorates and never truly locks in. When you use technology, the same thing happens; many firms claim their technologies aid in mining efficiency optimisation, but how do you ensure that it is long-term?
Sustainability is achieved by linking bottom-line outcomes to a meaningful value driver tree and executing sustainable operations. Using an exhaustive approach to guarantee that modifications to your mining operation are kept through all the changes that will happen over time.
If you’re going to utilise technology-driven optimisation, you need to make sure your technologies are reliable and effective. It won’t require a large number of people to maintain it running if it is sturdy and dependable.
The technology used needs to be automated and scalable as far as possible. So, it is not just a manual proof of concept that you have running in the background somewhere.
Achieving this outcome in my opinion only comes from sustainable optimisation by focusing on high-value problems. Using value driver trees to identify what those highest value leavers actually are is the key.
On any given site, just as in any other business, there’s always 150 problems, and people have 150 ideas for solutions for each one of those problems. But what is the largest value driver?
But by focusing on the most prominent value driver tree levers first you are going to get the best bang for your buck.
So What Is A Value Driver Tree?
The value driver tree is used to determine the most high-value levers or core problems on a mining site. It’s a consistent, pure, graphical, and visual approach for you to identify the largest levers in your mining operation.
Once you have a clear value driver tree then it is time to get to work to determine where largest value drivers are and where you and your line managers should focus your time.
Define The Return, Model the Pathway, Build Interest and Implement Your Plan
While data gathering is important, It’s not about more data; it’s about getting the right data into the right hands so that you can make better, more informed decisions.
Is it accurate, reliable, and is it user-friendly and insightful enough that even line managers can actually use the value Driver tree and make effective decisions.
How Do You Use The Value Driver Tree And Truely Optimise Your Operation
Make Sure that the Interface is Operational Friendly
Make the Value Driver Tree Outputs Part Of Your Daily Conversations
Building Trust Is Critical - Make Sure that the Inputs into Your Value Driver Tree Are Accurate
The technology you use needs to be trusted by the operations team and the people who have to drive the results. Make sure that the solution you choose delivers pinpoint accuracy so that you can provide consistent, fair, and reliable feedback, and this is how you gain trust and enable executives.
A truck, for example, is filled up and then driven to a certain location. Historically, the best way of assessing operator performance was to see how many tones they moved. Isn’t it true that if one employee moves more than the other, they must be superior? Unfortunately, not everything in this example is within an operator’s control. Therefore the measure measurement of tones moved by an individual operator is not accurate or fair.
The chosen Technology needs consider all aspects so that we can pinpoint where changes can be made to set realistic targets for your mining team.
If you’ve got the correct data, and you know how to interpret it accurately, then it’s easy to prove to people as to how they are slacking or where they can improve.
Using the Value Driver Tree and starting with a value-first approach to optimisation.
It’s not simply about using or deploying a program. To ensure that you achieve significant changes and economic value in your mining operation, you’ll need persons on site to literally walk the optimisation route with you every step of the way.
Because ultimately we are looking for the best what to ensure that your business modelling is accurate, your performance measurement system is accurate, reduce asset turnover and ultimately that you optimise profitability!