Reducing a Mining Company’s Procurement Costs
See how BCG helped a mining company create a supply-chain organization to cut procurement costs by more than 10 percent.
Our client is one of the biggest companies in the world—a top-five mining company with a diversified resources portfolio. The organization consists of a small corporate center and individual business units with strong positions. The company has operations in Australia, Asia, South America, Africa, and Europe.
The client wanted to outperform direct competitors by adopting a global supply-chain approach. The overall project goal was to achieve recurring procurement cost reductions of more than 10 percent over a three-year period. Integration and buy-in from all business units and operating sites were key to the project's success.
BCG was asked to support client team members in high-impact categories. The prime objective was to enable quick wins, creating lighthouse effects for the whole transformation process.
In the first phase of the project, BCG's focus was on creating market transparency. Several internal and external analyses were conducted, including
spend analyses by region, business unit, and supplier
supplier profiles and cost structures
identification of supply-and-demand market drivers
benchmarking of operating equipment to identify best practices
Strategic directions for value creation were identified and presented to the company management in a comprehensive category plan.
BCG-supported teams ensured early and continuous engagement with all internal (operations and management) and external (suppliers) stakeholders.
For each category, a value-creation strategy consisting of several cost-saving initiatives was developed:
BCG played an integral role in the strategy implementation and savings enablement by
preparing and conducting supplier negotiations
developing and installing processes for global company internal collaboration
facilitating mobilization and training at the mine sites
At the same time, BCG supported the organizational redesign and launch of the global procurement department.
BCG's support in developing category strategies had a strong impact on the client company in three key areas:
Identification and Enablement of Savings Above the Original Targets.
Increased Acceptance and Credibility of the Overall Project Within the Client Organization.
Increased Awareness of and Respect for the Project from External Stakeholders.