Mining Operational Excellence PDF
Mining Operational Excellence PDF
Mining Operational Excellence PDF
KPMG Mining
Operational
Excellence
Framework
kpmg.com
KPMG INTERNATIONAL
2 | KPMG Mining Operational Excellence Framework
Introduction
We have developed our operational excellence framework over the last several
years of association with leading mining companies. It starts off an organization
on a journey of efficiency and then over time embeds such characteristics in its
organization that makes the change sustainable over business cycles. This puts
together all the capabilities necessary to assure the CEO that “operation” will be
able to adapt to support their hunt for the next opportunity, whatever its nature.
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KPMG Mining Operational Excellence Framework | 3
Mining Operational
Excellence Framework
Typical operational issues faced by resources companies
In context of these challenges, KPMG identified certain parameters of the mining process architecture, which should be revisited
and operational parameters and KPI’s to be benchmarked to address operational issues and maximize value and minimize risk.
© 2011 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
4 | KPMG Mining Operational Excellence Framework
Mining Operational
Excellence Framework
KPMG’s Operational Excellence Framework helps mining / resource companies gain a strong
position in markets, become industry leaders by EBITDA, retain a leading position in margins and
return on investments through high levels of operations integration across functional verticals and
cost competitiveness.
Retaining cost Increase in cost of operation due to escalation in raw material cost (e.g., explosive cost,
leadership electric power, etc.). Certain costs of operations such as wages, utilities, construction
and maintenance costs are quite sensitive to possible general price increases.
Ensuring investment
High capital expenditures with focus on the modernization of mining facilities.
effectiveness
Managing operational Multiple entities and mine operations need appropriate level of integration and
flexibility/integration operational flexibility implemented to manage cyclic nature of commodity industry.
Driving value through Entities need to evaluate the impact of pricing and regulation of carbon emissions
carbon optimization on financial performance in order to optimize operational and technology
investment decisions.
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KPMG Mining Operational Excellence Framework | 5
1 Opportunity Diagnostic
Analyze the cost base of production facilities to identify the cost optimization opportunities across
value chain through analytics and good practice/benchmark comparison
a. Analyze the major cost and spend categories, identify cost drivers
b. Identify performance issues for each process (and related drivers) and analyze root cause.
© 2011 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
6 | KPMG Mining Operational Excellence Framework
b. Identify and agree with client the process, people/skill, organization and system change
required to realize the envisaged benefit
c. Evaluate each action to estimate rough cash inflow impact, Capex and Opex requirement.
• Study of inputs and • Identify and agree with • Agree with client the
outputs, focusing on client the process, improvement
KPIs to drive internal and people/skill, organization opportunities, high level
Objective
analysis.
model, processes and • Detailed business case
technology to achieve for change.
the targeted level of
performance and the
cost savings.
Benefit Measurement tools and templates Deliverable – Business Case for Change
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KPMG Mining Operational Excellence Framework | 7
a. Interview department heads and above to assess willingness and capability of people to take
ownership of the change
• Allocation of required • Ensure clarity around key • Define clear roles and
resources and/or measures to track responsibilities of team
budgets program benefits including the role of the
Objective
Implementation Plan
• Identification and • Agreement on the • Finalize the project
Processes to development of key phasing of the identified management tools and
be considered activities to achieve the potential benefits. templates
Tasks
• Risk analysis
• RACI model
• Benefits delivery.
© 2011 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
8 | KPMG Mining Operational Excellence Framework
4 Implementation Roll-out
• Managed Delivery
• Assisted Delivery
• Independent Delivery
• Execute implementation plan by training people, instituting systems and processes to enable
continuous improvement or business excellence
System constraints
OEE Utilisation
High
Improvement Investment
efficacy and Off specification
Pit profile and efficiency generation
bench layout
Flow of material –
Inventory levels – Multiple handling
working capital
Relative Savings potential
Asset
Maintenance
Logistics cost
Fleet profile Contractor cost
benchmarking
Power, fuel and
explosive
consumption per
unit of production
Contractor
productivity
Improvement Spare and store
consumption
Low
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KPMG Mining Operational Excellence Framework | 9
• Institute relevant change management and change communication framework to ensure program
success.
© 2011 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
10 | KPMG Mining Operational Excellence Framework
Case Studies
Operational Excellence
© 2011 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
KPMG Mining Operational Excellence Framework | 11
© 2011 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
Wayne Jansen Hiranyana Bhadra
Global Head of Mining Global Lead
T: +27 11 647 7201 Operations Excellence – Mining
E: [email protected] T: +91 (22) 3983 6000
E: [email protected]
kpmg.com/energy
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© 2011 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent
firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to
obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such
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Publication name: KPMG Mining Operational Excellence Framework
Publication number: 110611
Publication date: August 2011