Published on the 13/12/2023 | Written by Bloom Consulting

AT A GLANCE

Bloom Consulting

INDUSTRY

Mining Services

BUSINESS OBJECTIVES

• Become a ‘best-in-class high reliability’ organisation
• Transform procurement to be a value-adding function
• Optimise procurement operations

SOLUTION

• SAP S/4HANA Financials
• Bloom Consulting – Procurement Operations Review

BUSINESS BENEFITS

• Reduced operational wastage
• Lower inventory investment
• Improved master data management
• Roadmap for ongoing transformation

CONTACT DETAILS

Bloom Consulting
W: https://www.bloomit.com.au/
E: info@bloomit.com.au

In pursuit of improved performance from key business processes, an ASX-listed mining services company engaged Bloom Consulting for a complete review of its procurement operations and an assessment of its SAP S/4 HANA Enterprise Resource Planning solution.

Through a series of collaborative workshops and desktop assessments, Bloom Consulting identified multiple opportunities for improvement which could significantly reduce the cost of procurement through the adoption of SAP best practices, inventory optimisation, and enhanced asset performance.

“The conclusion of the software project has represented the start of a process of optimisation and refinement”

Upon conclusion of this exploratory piece of work, the mining company engaged Bloom Consulting for a second phase of work, Procurement Transformation, as the miner seeks to take advantage of the review findings.

The mining services company is a diversified contractor with leading capabilities in surface and underground mining, civil construction, and resources engineering. The company’s end-to-end mining services encompass mine development and materials delivery, engineering, civil construction, on-site mining services, rehabilitation, and site remediation.

Situation

In pursuit of operational efficiencies and savings as part of its journey to becoming a ‘best-in-class high reliability’ organisation, the miner’s target state for the procurement function was for it to be a value-adding activity.

Supporting the overall transformation is a program of work focused on change management, capability uplift, embedding best practice policy and procedural frameworks in the business.

For such large and complex organisations, transformation doesn’t happen overnight, particularly when they involve the introduction of new software systems, which required a review of operational processes and procedures. With the 2021 deployment of S/4HANA Finance considered a success, in part due to investment in change management and training, subsequent deployments of additional modules required optimisation.

This led to the company’s engagement with Bloom Consulting for a diagnostic examination of the organisation’s procurement processes and the creation of a roadmap prioritising improvements which would mature the organisation and its use of the software. Bloom won selection in an open tender on the strength of its track record of detecting issues and delivering improvements specific to SAP implementations.

The optimisation goals include an increase in operating efficiency, reduction in complexity, and a move towards recognised SAP and procurement industry best practices. In turn, this rolls up into software and processes which make it easier for the mining company’s staff to do their jobs while focusing on operational priorities.

In this case, the conclusion of the software project has represented the start of a process of optimisation and refinement.

Solution

Leveraging its specialist procurement transformation and change management expertise, Bloom Consulting conducted a series of workshops and interviews with key personnel over the course of six weeks. Broadly, the review identified key issues and provided recommendations for addressing the challenges through a series of focused initiatives.

Among the opportunities for improvement were:

• A high proportion of cost-inefficient purchases associated with work orders (more than 70 percent).
• Early-stage adoption of SAP Best Practice Procure to Pay processes.
• Significant excess inventory with associated high cost.
• Immature asset performance and work order creation (anecdotally more than 45 percent is reactive and emergency maintenance).
• Significant manual services procurement and associated reconciliations.
• Inefficient transactional processes for Purchasing and Invoicing.
• Immature master data management and ownership across the organisation.

In addition, Bloom Consulting identified incomplete process standardisation across sites, including a lack of easily referenced and adopted procedural documentation. Further analysis indicated opportunity for functional enhancement of the S/4 HANA architecture to improve the Procure to Pay processes.

The business was impressed with the efficiency of the engagement, and the formal identification and definition of issues personnel knew were present.

Results

Based on the findings from the workshops, associated pain-points and observations, Bloom Consulting identified twenty-one initiatives for the mining company’s consideration. This was accompanied with a proposed phasing, providing a roadmap and prioritisation so the company could move towards best practice and successful realisation of anticipated benefits.

Bloom has, therefore, detailed where the company can improve and set out the low-hanging fruit where rapid value is possible from remediation efforts. This took the effort from theoretical to practical, with a clear view on how value will be exposed.

As is typical in a Bloom engagement of this nature, the procurement improvement opportunities were grouped into categories as listed below:

• People and Organisation – addressing Source to Pay Business Roles and Responsibilities, Procurement Operations, Change Management, Training and Awareness
• Strategy and Policy – addressing Buying Channel Strategy and Procurement Financial Management
• Source to Contract – addressing Contract Management, Sourcing, Third Party Risk Assessment, Environment, Social and Governance, and Supplier Lifecycle Management
• Purchase to Pay – addressing Invoice Automation and Management, Digital B2B Collaboration, Services Procurement, Catalogue Management, Contingent Labour
• Asset Management – addressing Maintenance Planning and Work Orders
• Inventory and Warehousing – addressing Materials Requirements Planning, Inventory Management and Internal Logistics
• Technical and Functional – addressing Master Data Governance and Process Ownership, User Security Mapping for S/4 HANA, and S/4HANA Release Management.

The project has proven a resounding success. In just six weeks, Bloom has delivered a comprehensive analysis of the company’s complex procurement operations. The client has recognised the validity of Bloom’s findings and is looking to commence the next phase of the project – a transformation exercise where operations are redefined with Bloom’s guidance from both a business process and systems perspective.

FURTHER READING