struttman consulting
 
 
 
 
Client Results
Reduce Costs
  CC102
  CC104
Expand Revenues and EBITDA
  CC110
  CC115
  CC106
Grow Strategically
  CC111
Reduce Costs

Summary—104

As the expiration date on a contract for a global sourcing initiative loomed, a major gold producer struggled to achieve stakeholder buy-in for contract renewal from 10 participating companies with 31 local mines. While the current agreement was effective at the corporate level, linkages with operations failed to achieve cost reduction and organizational synergy. Dissatisfaction with the current agreement by both mine operations and equipment dealers was prevalent. If the contract was not renewed, there was a strong risk that the producer would lose the opportunities for knowledge, innovation, and cost reduction that would keep it ahead of its competitors.

We engaged the COOs of all 10 participating companies to achieve consensus on structuring a new agreement to ramp up project participation at each of the 31 mines. To increase project engagement, the agreement included a set of standardized metrics to measure improvement and performance across all sites. It also included a shared cost reduction goal of 20% to be realized over 10 years.

Challenges
Lack of project buy-in across 10 companies from COOs and operations management personnel
Unable to implement the best service model
No linkage between a strategic sourcing initiative with production and cost reduction goals
The best technologies to increase production and utilization (e.g. routing and measurement systems) were not employed
Lack of a consistent, optimized services platform at every project site

Results
20% shared cost reduction
100% COO project engagement with a shared vision and common operating philosophy
Global planning protocol adoption; continuous improvement platform and funding model implementation
A framework for equipment management optimization and logistics services at every site
200+ personnel trained
Designed the framework for an automated system and built a reporting platform to capture metrics, measure results, and prioritize improvement opportunities
$400 million targeted annual savings
  
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