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How secure is your supply? A guide to effective supply risk management in the mining industry

Mining companies today face challenges on several fronts when it comes to addressing supply risk effectively. There are people challenges, which include high turnover rates, a limited supply of skilled labour and service providers, and the logistics around getting personnel to mining sites in remote locations. There are process challenges throughout the mining supply chain that include: limited negotiating power in sourcing and procurement; coordination of complex global distribution networks across multiple regions and modes; a lack of upstream information necessary to perform adequate planning and forecasting; and ineffective processes to assess and quantify the magnitude of various risk types. Finally, there are technology challenges related to poor quality of data and a lack of effective analytical tools to support the modelling and evaluation of risk.

Leading practices in supply risk management address risk quantitatively and strategically, and take an integrated view of risk across the value chain and the enterprise. Strategic risks need to be segmented and separated from financial and operational risks in the current environment. Identifying the key drivers of change can help organisations prepare for changes across different time durations. Core supply chain and supply management capabilities must include an organisation, with the appropriate skills and abilities, charged with managing and reducing overall supply risk. In addition, core supply chain processes in the areas of forecasting and planning, inventory management, strategic sourcing, contract management, and supplier relationship management are a basic first line of defence to combat supply risk.

Those organisations who are more advanced in addressing supply risk deploy specialised risk management capabilities to address the more complex threats posed by regulatory and geopolitical shifts. These advanced capabilities include: focusing on market intelligence by partnering with strategic suppliers to share and evaluate data on market and economic conditions; enhancing internal systems to capture data that supports dynamic decision making; and intelligent risk modelling tools to conduct scenario analysis and optimise supply decisions.

Overall, mining companies today are faced with pressure to meet rising demand for mining commodities in a climate where the cost of supply disruptions is greater than ever. Mining companies that effectively develop the capability to manage supply risk will be better positioned to meet market demand and exceed stakeholder expectations amid volatility and uncertainty.

Download the full article . . . .  A guide to effective supply risk management in the mining industry

If you require a more information on the topic of supply risk management, the South African members of the Deloitte Global Mining Team will be more than happy to have a more detailed discussion with you. Their contact details are Werner van Antwerpen, Manager – wvanantwerpen@deloitte.co.za, Genevieve de Carcenac, Manager – gdecarcenac@deloitte.co.za and Tomek Jekot, Senior Manager – tjekot@deloitte.co.za.

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Category: Executive Leadership, Mining, Mining, Energy & Resources, Risk Management

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