With physical products and a capital-intensive physical supply chain, mining remains one of the last industries to be disrupted by technology. But that is changing quickly. As the landscape is transformed by new Industry 4.0 technologies such as automation, data analytics, and the industrial Internet, mining companies are gaining the opportunity to solve complex and previously intractable problems related to their value chains.
This digital evolution creates the opportunity for mining companies to fundamentally change the business model, unlocking much-improved customer service and customization, reducing costs in the value chain, improving safety, and creating opportunities for new businesses.
MiningCo—a multinational company that operates in multiple commodities—recognizes that the next wave of productivity gains in mining will be driven primarily by technology. It therefore is seeking to build world-class digital capabilities to vastly improve performance.
The company has turned to BCG to help create a new digital organization that will leverage digital technology to create a more competitive business.
As technology begins to disrupt the mining industry and change the traditional sources of competitive advantage such as access to resources and mining experience, MiningCo aspires to use technology to make its business more competitive. BCG has supported MiningCo in pursuing its goals in four areas:
To help define what a technology-enabled MiningCo could look like, MiningCo engaged BCG to assess the impact of digital on other industries as well as the implications of digital disruption for the mining industry. BCG engaged the MiningCo team with other large industrial goods companies and BCG’s own internal digital centers of excellence during a week-long “immersion trip’ that helped MiningCo build a deep understanding quickly.
The trip was combined with a series of discussions held with BCG’s global network of experts working in digital transformation, allowing the leadership team to see how the company’s future could involve a radical departure from MiningCo’s current business operating model. Under this approach, MiningCo gained insight into how technology could enable it not only to optimize the current value chain but also to develop new revenue streams built on MiningCo’s core capabilities and intellectual assets.
BCG has helped MiningCo define a pipeline of initiatives to start realizing this vision. Historically at the company, technology initiatives had been developed within the individual steps of the value chain. BCG has helped identify a broader suite of initiatives that span multiple steps in the value chain. This approach can unlock significant value by improving the flow of information from one step to the next, eliminating or reducing the waste between value-chain steps.
The BCG team has helped to frame these initiatives and define the starting roadmap that would allow MiningCo to begin delivering value.
Traditionally at MiningCo, as with many other mining businesses, technology had been seen as a cost center, with little coordination of effort made in technology efforts across MiningCo’s many operations. BCG has helped design the new technology function to reflect the future aspiration that technology could be a center of value. For the function, the team has helped define the future operating model, structure, accountabilities, capability requirements, and a plan to deliver the change.
To capture digital opportunities that span the value chain, MiningCo will need to take a fundamentally different approach to delivering digital. This new approach will require not only a new way of working but also a new set of capabilities that doesn’t exist within the business today.
BCG has helped MiningCo think through this challenge and develop a new technology accelerator organization to address it. The BCG team has helped define the purpose and structure for the new organization, the governance framework for technology projects, the required capabilities and resources, and the talent sourcing strategy. The work has been completed using an agile methodology that will be used when the new organization is in operation.
In addition, BCG has helped MiningCo define a new, flexible digital architecture. It will allow MiningCo to move away from “monolithic” high-cost, and high-risk IT projects toward a flexible and customizable architecture that allows the technology function to respond more quickly to changing business demands at lower cost and risk.