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Dan Hillier | 02 Aug 2023 | 5 min read
Seven reasons why going digital can unearth sourcing opportunities for Mining in 2023
Faced by ongoing global supply chain disruptions, talent shortages and changing customer demands, procurement teams in Australian mining organisations are leveraging digital capabilities and local sourcing strategies to adapt and thrive in a challenging environment.
Australian resources and energy exports are forecast to earn a record $459 billion in 2022-23 before dropping to $391 billion in 2023-24 as historically high demand begins to stabilise. While the outlook for the sector remains optimistic, profitability is at risk of being undermined by unaddressed procurement challenges impacting efficiency and the ability to meet customer demands.
Below, we share a summary of the seven most significant challenges facing procurement teams in the Australian mining sector and suggest how they can be addressed through digitisation and local sourcing.
1. Global supply chain disruptions:
Australian miners rely on a wide range of goods and services from suppliers around the world including equipment, spare parts, and chemicals. Disruptions in global supply chains including those caused by Chinese port congestion and the war in Ukraine has led to delivery times reportedly blowing out to twice as long. In addition, an unwillingness by overseas suppliers to commit to firm delivery dates is contributing to greater uncertainty and making it difficult to plan effectively.
2. Rising costs
Rocketing commodity prices have benefited the industry, but profits have been eroded by inflationary pressure and the rising cost of doing business. Estimated to have increased by 9% over 2022, cost inflation can be felt across every aspect of running a mine including wage escalation, supply chain and logistics (particularly international shipping), raw materials, diesel, equipment and exploration costs.
3. Safety and regulatory compliance
Mining companies operate in a highly regulated environment with strict safety and environmental standards. Even if the primary organisation has an excellent safety culture and strong standards, significant risk exists in complex supply chains with multiple tiers of contractors and subcontractors. Procurement teams must ensure that the suppliers they work with meet these standards and that they have the necessary certifications, insurance, and risk-management processes in place.
Did you know: VendorPanel’s powerful integration capability allows you to easily integrate with market-leading compliance management platforms and partners (like Avetta, Rapid Global and LinkSafe) to improve oversight on third-party risk and compliance.
4. ESG demand
The industry is undergoing significant transformation, with changing customer demands for sustainability, reduced waste, ethical sourcing, supplier diversity and improved transparency. Procurement teams need to ensure their supply chains are aligned with these changing demands and that they can adapt quickly to new requirements. Sustainable transformation is key to meeting ESG (Environment, Social, and Governance) targets and winning a Licence to Operate.
Did you know: VendorPanel have partnered with givvable, an award-winning platform that uses AI to validate supplier sustainability credentials. This integrated solution enables buyers to purchase goods and services from suppliers with strong ESG credentials.
5. Talent shortages
One of many industries facing acute labour shortages in the post-Covid economy, mining organisations in WA alone are grappling with a shortage of over 10,000 workers. Within the next year, the industry will need 15,000 new workers to meet the demands of nearly 70 projects due for completion in 2024. Procurement teams should continue to digitise and automate processes to help reduce the impact of anticipated talent shortages.
Did you know: VendorPanel’s Policy Guide module helps easily guide new and existing staff through company policies when going out to market, ensuring improved staff compliance and easier onboarding.
6. Supply chain visibility
Complex supply chains with multiple levels of suppliers, contractors and subcontractors carry significant risk – particularly if they are siloed. Procurement teams need to ensure that they have visibility into their entire supply chain to identify and manage risks such as supplier non-compliance, quality issues, ESG risk or supply disruptions.
Did you know: In addition to the efficiency and compliance benefits, managing all of your strategic and operational procurement on a single platform unlocks data-driven insights. VendorPanel helps organisations get valuable oversight, and insight, to drive real improvement through the procurement function.
7. Manual procurement and contract management
Manual processes in procurement and contract management lead to poor data visibility, , lengthy and inefficient sourcing from suppliers by phone and email, spend duplication, maverick spend, and missed opportunities for cost savings and supplier consolidation and increased risk.
Consolidating data into a single source of truth by using a next-generation source-to-contract procurement platform will dramatically improve value optimisation, risk management and support overall business objectives.
Did you know: VendorPanel offers a range of contract management solutions, based on an organisation's requirements, ensuring the transfer of sourcing data to contract is efficient and accurate. From there, automation makes sure you stay on top of contract approvals, compliance and renewals.
Invest in a digital solution to enable local sourcing
Many of the challenges listed above can be mitigated by investing in a source-to-contract platform that enables better discovery and management of local suppliers.
Local sourcing enabled by a digital solution can help solve procurement challenges by:
- Improving resilience: Local sourcing can help build a more resilient supply chain by reducing the risk of disruptions caused by long lead times, transportation delays, and other logistical issues.
- Improve sustainability: Greater visibility of the local supplier landscape will help with better management and discovery of local and ESG suppliers to boost sustainability and help mitigate the ongoing talent shortage.
- Generating cost savings: By sourcing locally, mining companies can reduce transportation and logistics costs, which can be significant in remote areas of Australia.
- Accessing local expertise: Local suppliers may have specialised knowledge of the local market and operating conditions that can help mining organisations optimise their procurement processes and improve overall operational efficiency.
- Complying with local regulations: In many cases, the Australian government requires mining companies to give preference to local suppliers in order to support economic development in the region. Local sourcing can help ensure compliance with these regulations and avoid potential legal and reputational risks.
- Improving stakeholder relations: Mining companies often face pressure from local communities and other stakeholders to support local businesses and create jobs in the area. Local sourcing can help demonstrate a commitment to these goals.
To leverage the benefits of local sourcing, Australia miners should develop a comprehensive sourcing strategy that identifies local suppliers, evaluates their capabilities, and establishes long-term partnerships with key suppliers. Consider investing in supplier development programs to help build the capacity of local suppliers and ensure that they meet the quality and safety standards required by the sector.
Vendorpanel’s solution for Australian mining organisations
Whether you need a specialist trade at a remote site, to build your relationships with local suppliers, or to increase your social impact through procurement, VendorPanel helps you find suppliers that complement those you already work with. Supplier discovery through our local supplier Marketplace (with over 60,000 validated suppliers) allows competitive opportunities and better value on sourcing activity.
To learn more, get in touch with us today.
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