When they are in full seeing they change the dynamics within organizations. Driving them way from tightly controlled cost management in favor of the highest safe levels of production possible.
And why not? When demand outstrips possible supply then price skyrockets and the gains are worth it and under any economic trade off...
The only real problem is that everyone else in the same sector is feeling the exact same pressures to ramp up production. Skilled resources are harder to come by, to keep and far more expensive. But this again is only the tip of the iceberg.
All of a sudden you have a small hand full of providers being squeezed for parts, assets and consumables that is physically impossible to produce.
We saw this very clearly in the tire shortages of the recent boom in the mid 2000's, and we are already starting to see it again in the lead time for supply of many major assets such as haul trucks, excavators and blast hole drills.
Huge demands placed on OEMS the world over. Most of whom are nowhere near as large as their client companies, and have nowhere near the resources required to deliver these demands.
When faced with these problems the small end players have absolutely no chance when fighting against the spending power of BHP Billiton or Rio Tinto.
So how can they even the scales? How can they effectively compete for scarce resources when battling the industry giants such as these guys?
Not easy... but possible
The field of small and mid sized miners is pretty large. It ranges from small organizations like Mt Gibson mining and Western Areas through to Peabody and Xstrata. Some of these are giants in their own rights, but all are too small to compete with the global majors on buying power.Getting the most out of boom situations means then that you are going to have to successfully out navigate the global giants, as well compete with the SME mining buyers from around the globe. A situation requiring arm twisting, threats and just plain bloody-mindedness...
The answer, like every other strategic issue in asset management, revolves around being able to take high confidence decisions over the long term.
Companies able to take high confidence decisions can post and pay for their purchase orders months, if not quarters or years ahead. Gaining commitment to time frames way off in the future, and locking out competitors for scarce resources no matter how big they might be!
But hurry, the race is already underway....
Planning Horizons
Regardless of whether the assets are mobile or fixed, above or below ground, or part of hazardous process plants; leading practice revolves around establishing tightly controlled planning horizons, and tying these to production and ore body management plans.
5 year look ahead - At the corporate level 5 years is a strong horizon to allow companies to ensure supply of scarce resources. Taking a mildly pessimistic view of market conditions, fleet selections, forward orders, and major rebuild and refurbishment programs need to be accurately planned at least 5 years out.
Regulated industries in the UK and Europe have blazed a pretty strong trail in these areas. Providing accurate, defensible and challenge-able asset management plans (AMP) for period of 5 years at a time.
The critical success factor here is the underlying understanding that they are betting the company on every 5 year plan. Errors in AMP preparation or accuracy means not having access to enough capital or dramatic overspends, all leading to reduced or negative profit margins.
2 year Look Ahead - Under normal circumstances this is where the purchase order horizons should be targeting. (And booms are not normal circumstances)
A company or site level function, working with plans and activities from 3 months out to 2 years. Solidifying the overall direction, spending requirements, logistics and forward purchase orders. making slight changes and reflecting these in the overall 5 year plan .. and so on. Obviously a power of work.
1 week to 3 Months - The standard area most courses and articles are written about. The tight planning skills like estimating, capacity scheduling, logistics, parts optimization and so on. All valid, all vital and all well and truly understood in todays marketplace.
Your planners are not clerks to enter time sheets, update work orders and print out the weekly schedule. They are the front line asset managers, responsible for your competitive advantages in chasing these hard to get resources.
Good luck !
5 year look ahead - At the corporate level 5 years is a strong horizon to allow companies to ensure supply of scarce resources. Taking a mildly pessimistic view of market conditions, fleet selections, forward orders, and major rebuild and refurbishment programs need to be accurately planned at least 5 years out.
Regulated industries in the UK and Europe have blazed a pretty strong trail in these areas. Providing accurate, defensible and challenge-able asset management plans (AMP) for period of 5 years at a time.
The critical success factor here is the underlying understanding that they are betting the company on every 5 year plan. Errors in AMP preparation or accuracy means not having access to enough capital or dramatic overspends, all leading to reduced or negative profit margins.
2 year Look Ahead - Under normal circumstances this is where the purchase order horizons should be targeting. (And booms are not normal circumstances)
A company or site level function, working with plans and activities from 3 months out to 2 years. Solidifying the overall direction, spending requirements, logistics and forward purchase orders. making slight changes and reflecting these in the overall 5 year plan .. and so on. Obviously a power of work.
1 week to 3 Months - The standard area most courses and articles are written about. The tight planning skills like estimating, capacity scheduling, logistics, parts optimization and so on. All valid, all vital and all well and truly understood in todays marketplace.
Your planners are not clerks to enter time sheets, update work orders and print out the weekly schedule. They are the front line asset managers, responsible for your competitive advantages in chasing these hard to get resources.
Good luck !
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