GROWTH POTENTIAL SA mining companies are yet to dip into the massive savings potential of efficient logistics and supply chain management
When it comes to materials handling and logistics management, South Africa’s mining industry is 20 years behind other industries, says nonprofit organisation the Chartered Institute of Logistics and Transport South Africa (CILTSA).
CILTSA VP Martin Bailey tells Mining Weekly that properly managed materials handling and logistics management systems can help mines save between 15% and 30% of the total logistics costs of a mining operation, depending on the type of mining operation.
He notes that highly automated operations have the least saving potential, while underground deep-level mines have a greater saving potential.
“Materials handling is the last division from which the mining industry can achieve real financial gain from their operations,” says Bailey, adding that mining companies have been reducing their workforce through retrenchment for years.
“They have also been reducing operations’ reliance on labour, introducing increased levels of automation and seeking the most cost-effective methods of mining. However, they are yet to dip into the potential of massive saving with regard to efficient logistics and supply chain management,” explains Bailey.
He adds that, unlike other industries, the mining industry has not embraced technologi- cal advancements and innovation in terms of materials handling. “The industry tends to focus more on capi- tal expenditure, actual mining, labour and almost every other aspect of mining, rather than on supply chain management.”
Bailey highlights that this has impacted negatively on the cost of mining projects, subsequently leading to inflated costs and services supplied to the mine being com- promised.
“The industry needs to stop viewing supply chain management as the stepchild of the industry. It needs to be regarded as a core factor in the business, which will mean a change in personnel and in systems. Methods used to improve the sector will also need to be scrutinised, as capital will become more available,” he elaborates.
Challenges
Bailey maintains that one of the major contributing factors to the mining industry’s negative perception of materials handling is mining’s conservative approach to business.
“The mining industry is as bureaucratic as government. When considering supply chain processes, in terms of the purchasing aspect, the industry is very traditional and slow. Many single purchases have to go through several steps, which adds cost layers and slows down the purchasing process.
“On the warehousing and distribution side, the infrastructure and facilities are old- fashioned, and when technological advancements are incorporated, they are not fully or properly implemented,” Bailey explains.
He adds that the sector is further burdened by a diminishing skills base and an over- supply of unskilled workers who are not being trained.
“One of the reasons why skills are being lost is that highly skilled people do not want to put up with the industry’s bureaucracy, and it has become a challenge for companies to keep skilled people in these conditions. Its not only about the lack of skills but also about retaining skills and transferring them to the next generation,” Bailey concludes.