Case study

Case Study

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Business challenge

Our client aimed to capture sourcing savings by capitalising on its newfound scale, global presence and prominence in the market.

Context

A global miner was heavily leveraged from a global expansion and wanted to reduce its cost base by running a sourcing savings program.

Procurement was managed individually at each site, rather than from a central position, which limited its buying power. A major expansion project had been completed, and a transition was required from project set up to steady‑state operation.

Business impact

$0m

in annual savings off the targeted $630m annual spend base

$0m

in savings from global OEM (Original Equipment Manufacturer) suppliers

$0m

in savings from sourcing OPM (Original Part Manufacturer) or credible aftermarket parts

$0m

in savings from global supply agreements for chemicals, lubricants and drilling services

$0m

in savings of parts and services from regional suppliers in South America, Africa and Australia

$0m

of spend placed on contract for better transparency and reduced workload

Solution
  • Determine addressable spend to identify where there is global scale and overlaps between sites and common purchasers/vendors
  • Establish sourcing strategy per category, such as direct negotiations, global and regional tenders, rapid sourcing on tail spend
  • Engage with vendors to negotiate better conditions, using the client's scale to motivate for discounts/rebates

Key Takeaway

  • Intensive research per market is of paramount importance
  • In an environment where the suppliers are facing cost inflation pressures, a simple negotiation alone is not enough to reach results
  • A thorough understanding of the cost base and supply market is required in order to negotiate productively
  • Collaborative solutions with incumbents need to be defined and implemented
LeftProcurement and Supply ChainLeftMining and Metals