Metals and mining companies are investing in digital technologies across the value chain, from operations to procurement to sales and marketing. Unfortunately, many of these investments have fallen far short of their potential: according to BCG’s Digital Acceleration Index (DAI), the metals and mining industry is roughly 30% to 40% less digitally mature than comparable industries, such as automotive or chemicals.
That’s a huge deficit, especially considering the enormous benefits digital technology can bring to the sector. By accelerating digital transformation, metals and mining players can boost throughput, simplify processes, lower costs, improve metal recovery and yield, and reduce supply chain complexity. It’s not easy to pull off, but a handful of companies have done it—and after a closer look at the various players in our survey, we have identified the digital accelerators that set those industry leaders apart.
Unique Barriers to Digital Adoption—and Unique Opportunities
On one level, it isn’t surprising that so many metals and mining companies struggle to implement digital transformations. Their workforces tend to be blue collar and are often less familiar with digital solutions than in other industries; they frequently operate in remote locations with poor network bandwidth and where the rugged terrain makes deploying digital sensors difficult. There also can be cultural resistance to incorporating digital into processes that have been established for more than a century—automation that could lead to workforce redundancies.
These are not insignificant challenges. But during our DAI research, we worked with several metals and mining companies that overcame these barriers in innovative ways—and, in turn, reaped significant rewards. Some improved their mining throughput by 10% to 20% and their procurement productivity by up to 50%, and reduced emissions by 15% to 30%. (See Exhibit 1.)
The scale and variety of these benefits spurred us to dig deeper into the DAI survey findings, and to draw on our global experience in metals and mining, to identify the key practices that digital leaders follow—five accelerators, specific to the industry, that can help fast-track sustainable and value-creating digital adoption.
Focus on operators’ needs to close the digital strategy-execution gap. Most metals and mining companies have ambitious digital strategies in place, but the gap between strategy and execution is significant—especially relative to other industries. (See Exhibit 2.) Leaders cite three reasons for this: a lack of customized solutions, the use of traditional waterfall models instead of agile methods to deploy digital products, and an inadequate focus on a solution’s sustainability.
To solve these problems, digital leaders have embraced an operator-centric approach based on the following attributes:
Value data assets as much as physical assets. The value of data in digitally advanced industries such as banking and retail is obvious. But for many metals and mining companies, investments in data-capture technologies are still viewed as little more than an additional cost. According to the DAI survey, only around 10% of the industry views data as a corporate asset.
Metals and mining executives argue—often rightfully so—that the cost of sensors to gather data is prohibitive, that installation is difficult and time consuming, and that it’s hard to quantify the data’s value. But there are ways to overcome these challenges. Many of our clients are installing low-cost alternatives, such as sensor boxes, in less than two hours. For maintenance purposes, these no-frill sensors capture only vital information—temperature, vibration, and noise levels, for example—and link to smart AI-based functionalities to provide predictive maintenance alerts.
Even if players solve data capture challenges, they must still address storage and network infrastructure issues. A single mine or plant can potentially generate huge volumes and varieties of data every second. Storing all this data would be expensive and unnecessary, since only a limited amount of data is truly useful—anomalous data related to machine breakdowns, for instance. What’s more, the network infrastructure in many remote operations is not strong enough for real-time storage.
Given these constraints, about half the companies in our DAI survey are combining traditional data warehousing models with new data and digital platforms, such as edge computing and the cloud, to lessen the cost of storing data and to increase the speed of accessing it. Some are hosting complex analytics models on a secured, cloud-based platform, which allows them to use multiple digital models without needing additional storage or software for processing.
Finally, given the value of data, its security and governance are critical. Lapses can have dire consequences. Half of the companies in our survey are instituting new data strategy and governance designs, which involve setting up data governing bodies and identifying specific data-owner roles within their organizations.
Develop an ecosystem mindset to leverage internal and external partnerships. The whole is often greater than the sum of its parts, and that’s especially true when it comes to digital. Digital leaders understand the power of leveraging both internal and external ecosystems, and the benefits of building interconnected solutions on the same digital foundation:
Build digital talent at all levels to sustain value creation. Most metals and mining companies have adopted traditional operational improvement tools, including overall equipment effectiveness, Six Sigma, and lean business principles. Now leaders need to add digital to this toolbox. Of the organizations we surveyed, 30% had no digital upskilling plan at all, while another 45% had only recently begun training initiatives. Shaping this culture requires time and can be arduous, but the potential payoff is tremendous.
Companies need to design programs and policies that educate and align all levels of the organization with the digital strategy—senior leadership, middle management, and the shop floor. One company, for example, arranged for senior leaders to visit digital centers and industry startups to see firsthand how digital technology is helping to solve problems like their own.
Engaging middle managers is even more critical, since they have the dual responsibility of championing digital while delivering the next quarter’s results. Smart senior leadership teams build incentive structures that allow middle management to take measured risks—and that give them enough time to show results. One company assigned its managers to work closely with the shop-floor teams, identify where digital solutions could solve business problems, and then implement these solutions to become business as usual. This approach allowed middle management to take ownership of the digital transformation, rather than making the transformation a top-down effort.
Many companies say the shop floor is the most difficult domain to introduce digital. The typical approaches—online training programs and classroom-based sessions—are often ineffective because they rarely show how digital tools solve real-world problems. In response, some companies are now using Action Learning certification programs that apply advanced digital tools to various business situations. These programs also give trainees a common language to communicate with developers. The goal is not just to train employees on digital concepts, but also to encourage them to adopt these tools in their day-to-day jobs.
Apply digital tools across the organization. Metals and mining companies have traditionally focused most of their digital efforts on improving operations. As a result, however, digital maturity scores—even among digital leaders—are much lower in areas such as sales and marketing, procurement, and human resources. As the digital opportunities in operations narrow, it’s crucial to begin applying digital to other functions, including:
Charting the Digital Journey
Metals and mining companies fall on a wide digital spectrum. Each has adopted a different approach to digital based on its current state, business context, and external environment. But much remains to be done. The insights from the DAI survey, and our experience working with digital leaders, offer a good starting point, as well as some specific interventions that will help companies accelerate their own digital journeys—and create sustainable value. (See Exhibit 3.)