Selecting Vendors To Optimize Your Mining Business

Two decades ago, there was not a lot of conversation about optimizing production processes, nor were there suppliers that designed equipment and supplies for that purpose. Things are different today.

Today there is an increased focus on optimizing production and/or value stream performance. If optimization is a corporate goal and if capital has been spent on new equipment and systems to achieve that goal, finding suppliers who invest in R&D to "optimize their customers' businesses" should be part of the procurement RFQ/RFP criteria. 

Unfortunately, there is often a “disconnect” between your "optimization mission" and procurement processes that select vendors by price, which excludes vendors that bring a “profit advantage” to the table. Some suppliers are “in business” to optimize “your business” and sometimes invest millions in R&D to produce products that exceed your production/maintenance requirements.

These products may cost a little more, but last longer, increase quality and/or reduce future costs. These savings are greater than the higher incremental price, which helps you make more money. If a company decides to focus on optimization but continues to use price as the main criteria for vendor selection, inputs will be purchased for use in the production process that may actually "steal" from the production potential and cost potential that could be achieved. 

To solve this problem, a new set of vendor selection criteria is required. It would give “extra points” for R&D and technology advancements that are designed to contribute more value than the lowest cost part or supply. Cost/benefit criteria would replace a “cost-only” quote. Vendor product information would include technical evidence and/or case studies that substantiate the value stated by the vendor. Some of the risk would be absorbed by the vendor. 

Making these changes to your procurement process “aligns” one of your most important support groups with the goals of your production value stream. Procurement must work with departments involved in optimization planning meetings (engineering, operations, maintenance, etc.). You cannot lose by creating stronger internal and external partnerships to achieve optimization... in fact, those partnerships are REQUIRED to maximize your opportunity.

About the author: Kay Sever is an industry leader in performance optimization and change acceleration. She helps companies experience “break-through change” by removing the barriers that hold them back. To assist with this work, Kay created a management training program that removes barriers to align the culture and management system with optimization goals. See MiningOpportunity.com for details on her services, contact information and products.