Cost cutting and incremental improvements aren’t enough to lift mining, and the industry must embrace innovation or else, a Deloitte report says.

In its recent Innovation in Mining report, Deloitte explained that the industry understood the innovation concept but it is failing to implement it effectively, and the current focus on driving down capex and opex through cost cutting measures, as well as chasing incremental efficiencies to lift productivity, are no longer enough.

“Innovation is not only key to protect the future of the mining sector,” Deloitte said, “but that of the entire mining system, from the country in which the resources are harnessed to the people in its workforce, government, and the broader mining community.”

Nicki Ivory, Deloitte’s Australian national mining leader, explained that the industry has endured a difficult market marked by commodity price volatility, diminished Chinese demand tied to a slowdown in the country’s economic growth, capital and investment access issues, and ongoing environmental issues, according to The Australian.

“However to remain globally competitive, Australian miners must decide if they are willing to go beyond the basics and incorporate a structured approach to innovation,’’ Ivory said.

This research echoes statements made by METS sector lobby group Austmine.

“Most in the sector are agreed that for Australia to remain competitive in the years to come, the way we do things needs to change – dramatically,” Austmine CEO Christine Gibbs Stewart said.

“This is where innovation comes in. When we refer to innovation, we’re not simply referring to the next big invention, we are also encompassing incremental innovation, or a re-thinking of how we use equipment, technology or processes that we already have in place.

“This concept of re-thinking is key for innovation to succeed in the mining and METS sector. We must change how we think about innovation, about how we partner to achieve innovation and what innovation looks like.”

The Australian report added that while innovation is viewed overwhelmingly positively, most miners prefer to chase operational excellence and continuous improvement programs rather than make a huge leap technologically –  as well as in  mindset – and invest in transformative innovation.

“The tide for taking innovation seriously as a business imperative has come in,” Deloitte’s Africa Energy & Resources leader said in the African division of the report.

“While talk of this had drummed on for years, often constrained to the boardroom, now is when mining houses will succeed or falter based on whether innovation strategy is brought to life and whether it is integrated across departments.

“It is now critical for companies to push beyond what these reports term Core innovation.”

As mining company profits continue to be pressured by the uncertainty that remains in the global economy, the industry is on a quest for innovation to help increase productivity.

The mining industry tends to be slow in adopting new technology, but given the state of the industry – change is paramount in order to survive. By employing new technologies used by other industries, mining companies can better manage their businesses and their bottom line.  As such, we can learn from other industries use of innovative technology to improve mining.

By looking to other industries, the mining industry can incorporate new applications into existing technology for improved productivity. More advanced simulation and 3D technology, as well as big data and the interoperability of systems, must be used at each stage of the mining cycle to improve productivity and output levels. Bold moves are needed to propel the industry forward.

To understand where mining can look for innovation, it is useful to examine what has led to successful transformations in other industries. Take, for example, Toyota – it became the world’s largest and most successful producer of automobiles by becoming an agile business – one that rapidly adjusts itself in light of changing demand and economic conditions. In essence, it put the framework in place to become a much more sustainable business. It started at the very bottom of its business by establishing operational stability to gain better control over manufacturing processes.

To become agile and sustainable, mining companies need to achieve operational stability – the predictability of expected mine production, costs, and performance levels. This requires mining and plant processing activities to function at higher levels of productivity and efficiency so that conformance to plan is always realized.

The quickest avenue to improved operational stability begins with reducing the variability in the planning and execution of mining and processing, which requires comprehensive planning, optimised scheduling, and disciplined work management.

Stability increases throughput, reduces waste and associated costs, and ensures production and quality targets are met. The key lies in harnessing operational data.  While “big data” may be produced in mining in terms of volume, it must become visible, analysable, and it must be made actionable to executives, mine management, and frontline workers. If it is, the path to mining execution excellence, and eventually business agility, is paved. Enabling technology from other industries is one of the most important requirements to begin the journey.

Establishing predictability in operations is the first step towards transforming mining businesses in a meaningful way. Without control over operations, attempts at becoming agile may not deliver the desired value. If mining businesses do not understand how healthy their operating processes are (including their inputs, plans, equipment, labor, and supporting activities), and how well they are functioning in the now, they will continue to waste resources (capital, equipment, labor, and even the mineral assets).

Decades ago, the manufacturing industry established processes and systems to support operational stability, setting a foundation for agile decision-making and dramatic transformations. Today, companies from a wide variety of industries can design, simulate, and manage their businesses by leveraging seamless collaborative environments, connecting their operations, employees, suppliers, and even their customers. This technology exists today for mining companies, if they choose to embrace it.

One of the most significant challenges mining operations face is conformance to mine plan. Achieving it often requires scrambling to make up shortfalls and increasing expenditures. Significant productivity benefits can be gain by reducing instability.

If planning and operational data is used effectively, it can provide rapid insight into how well activities are performing, enabling fast adjustments as operating conditions change. The analytics operational data enables will also drive continuous improvement.

Mining Execution Management Systems (MES) / Mining Operations Management (MOM) platforms, which integrate data from every mining data source on the site, enable superior work management through increased visibility and control over performance. Companies can expect up-to-the-minute tracking and management of: mining and processing activities; equipment; maintenance; labor; support; and other inputs and outputs.

Mining companies can update activities and tasks between scheduling cycles; gain real-time visibility into capacity, availability, and performance; and better manage activities, tasks and/or priorities to account for changes in production and unexpected events. In addition, they can instantly communicate new and updated work orders wherever they are required, provide efficient handover of incomplete activities and tasks between shifts, and obtain assurance that activities and tasks are completed to specification (sequence, time, duration, tons, grade, maintenance, safety, regulatory compliance, etc.).

When connected to scheduling systems, the benefits of MES/MOM in mining are amplified: linking to scheduling ensures continuous feedback loops are part of the scheduling process for production, blending, waste, maintenance, and support schedules. This allows for adjustments to be made rapidly, within shift, which keeps production on track.

While MES/MOM systems are not yet widely employed in the mining industry, manufacturing and other industries have used them for decades. In these industries MES/MOM has played an enabling role in conformance to plan by reducing variation in processes. We understand how 3D technology from other industries can be applied to the mining industry, and how it can enable operational stability by reimagining how productivity is addressed through next-generation technologies. Some of the results of borrowing technology from other industries include a 2-4 per cent increase in operating margins and reduced variation to plan by 20 per cent or more. One mining company, alone, has improved mine production output by 44 per cent and doubled mine production.

Another aspect of achieving stability is improved collaboration to drive planning. Bombardier, an Aerospace company, provides an illustration of how significant improvements can be made to engineering. We partnered with global aircraft manufacturer Bombardier Aerospace to develop more innovative aircraft in response to intense competition and changes in the aviation industry. 3D models became the central source of all product information for Bombardier, integrating internal teams and worldwide development partners. Bombardier rolled out a global platform that enabled geographically dispersed teams to collaborate anytime and anywhere, with each contributor able to access up-to-date information in the cloud. The results were a 62 per cent drop in the time taken to develop multiple iterations of existing designs, 95% less time for engineering calculations and 80 per cent less time to locate design information.

Advanced simulation also has a role to play in aiding the mining industry. Sydney-based mining consultancy, Coffey, has used our SIMULIA software, widely used in automotive, oil and gas and other industries, to improve both open pit slope stability for their rock mechanics analysis and underground safety.

There is plenty of opportunity for innovation in the mining industry, and numerous proven technologies used in other industries that can be deployed today. The examples presented here are just but a few of what is available.

A research paper by UBS has predicted that a combination of automation and connectivity will see the competitive advantage of low labour cost countries shrink, but also lead to rising inequality.

Released at the 2016 Davos World Economic Forum, the research argues that the effect of the “Fourth Industrial Revolution” will have the greatest effect on developing markets.

It describes the revolution as following steam, electricity and electronics, and involving a joining of “extreme automation” and “extreme connectivity”.

Low-skilled jobs will be affected, and middle class roles will also be increasingly automated out of existence. “Middle skill” employees would feel the “greatest disruption”.

“Inequality increases not just between developed and developing and emerging countries,” explained UBS chairman Alex Weber, according to Sputnik News.

“It’s also within our society. It will have an impact not only between the rich and the poor but also the young and the old.”

Tech Republic notes that an increase in aggregate worldwide unemployment, however, is not modelled in the research, with workforce productivity increasing and new jobs being created.

Also anticipated is a reshoring of manufacturing to higher-wage countries, driven by robotics, automation and 3D printing.

What happens when we have so much information that it is impossible to even decide what to read? We constantly check our phones, computers or tablets. We are online and connected 24/7. We have an overload of information, stuff, processes and stress…

There’s a reason why ‘de‑cluttering’ businesses are growing in number around the world. People are seeking help to go back to basics, to a clearer and simpler life, with less stuff.

Our businesses have become overloaded and cluttered as well. When a company grows, the levels of management multiply and more co-ordination is needed; that in itself increases complexity, but it also increases clutter. Sales operations are complex systems, but like with whole businesses, people can add unnecessary complexity. There’s a need to go back to the essentials and for that we need clarity.

Sales operations loaded with dated processes, hard-to-work systems and countless priorities cannot function efficiently. We need to de-clutter. We can’t oversimplify what is a complex system; we can’t transform every process into a linear one. But we can remove what is just making noise, occupying space in our minds only causing stress and clouding our vision.

Less is more.
The 12 Barrett Sales Trends for 2016 all share this thread about bringing things back to basics, bringing clarity and transparency to businesses and sales.

Here is a summary of the trends, or you can download a copy of the full report here.

Sales Trend 1 – Beyond profit erosion
Over the last few years, a vast majority of companies derived their profits mainly through cost-cutting but this is not possible any more. Costs have bottomed out. Companies will have to change how they sell to find profit and growth through selling value.

Sales Trend 2 – Beware competitor zero
There is a new competitor in our midst: indecision.

This sales trend looks at how and why the decision-making process has changed in organisations and what we can do about it.

Sales Trend 3 – Selling is everybody’s business
This trend is about how smart companies recognise the importance of selling across the value chain and making sales and customer satisfaction a whole business activity with purpose.

Sales Trend 4 – Sales and marketing unite
With shrinking markets, micro segments, more informed buyers and the digital revolution to name a few key influences, smart companies know that if they are to steal the march on their competitors, win market share and engage the right kind of buyers, the sibling rivalry between sales and marketing must end.

Sales Trend 5 – How we sell around here
Smart companies are adopting best practices as a minimum standard of sales excellence to embed ‘How We Sell Around Here’. They are reaping the rewards of their continuous learning programmes and sound sales strategies. This trend highlights how these companies are doing it.

Sales Trend 6 – The sales curator
No longer are salespeople seen as the purveyors of information that they once were in the 20th century, 21st century salespeople now need to be experts at sifting and sorting information for their clients and prospects. A new sales capability is required in this information overloaded world. This sales trend sees 21st century salespeople needing to develop their skills as curators.

Sales Trend 7 – Buyers in transition
This sales trend highlights that more mature procurement professionals, who have been through the sourcing cycle several times, are now starting to seek new ways in which they can be relevant and valuable to their organisations. They are seeking innovation, ideas, and collaborations because they have seen that taking prices lower would be detrimental to their business. It’s early days but things are starting to shift, albeit slowly.

Sales Trend 8 – Streamlining CRM
Smart companies are adapting and embracing the new ways of doing things to make it easier and more efficient for their sales teams to sell better i.e. from utilising the comprehensive analytics available from the web and social media to the ability to customise a Customer Relationship Management system and deploy applications on various devices. Streamlining CRM capabilities is key to getting sales teams to use them most effectively.

Sales Trend 9 – Marketing technology for better sales results
Less is more when it comes to technology, with the lesson being that what big business does is usually not what SMEs should be doing and vice versa.

This sales trend focuses specifically on the impact technology is having on businesses large and small for good and bad and what technologies we should be paying attention to and what we should be ignoring.

Sales Trend 10 – The evolution of sales incentive plans
Sales incentive programs (SIPs) constitute a major cost in many companies but the research indicates that a well-designed SIP can be a worthwhile investment. Certainly, SIPs are becoming the norm in many sales settings. This sales trend tells of the shift towards more customised variable SIPs taking into account team selling, complex solutions, longer sales cycles, and so on.

Sales Trend 11 – The renaissance sales manager
More and more sales leaders and their respective sales managers are realising that too much data across too many spectrums is counterproductive to effective sales leadership, sales performance and building sustainable sales results. They know that you can’t lead a sales team from behind a desk in front of a screen crunching numbers. This trend sees smart companies employing and/or developing the Renaissance Sales Manager to be the standard of ‘how we lead sales teams around here’.

Sales Trend 12 – The rise of “seniorpreneurs”
Senior entrepreneurs are Australia’s fastest-growing segment of entrepreneurs. Seniorpreneurship is a global trend with the over 55s showing a strong representation in the USA and UK. They are a force to consider in the business landscape with much to offer to the economies.