Mining Working Capital
SITUATION
At an Australian mining company, trends in contract spend and working capital deployment were moving in the wrong direction.
DRIVER GOAL
- Reduce working capital and contract spend.
RESULT
- Released $10.8 million cash in Accounts Payable.
- Released $4.1 million cash in Material & Supplies.
- Released $9.1 million cash in Vendor & Contract Management.
Case Study
Improve Contract Management & Working Capital at an Australian Mining Company
Issue
At an Australian mining company, trends in contract spend and working capital deployment were moving in the wrong direction. The company engaged The Highland Group to help reverse this trend and put in place business practices that would allow it to sustain the improvements over time.
Highland Approach
After a three-week, detailed analysis, the team identified three primary areas on which to focus process improvement and working capital reduction efforts: Accounts Payable, Contract & Vendor Management and Material & Supplies (MRO).
Actions Taken
Accounts Payable:
- Developed and enforced standard Terms & Conditions.
- Implemented changes in payment cycle frequency with specific exceptions.
Contract & Vendor Management:
- Identified and prioritized spend.
- Conducted negotiations across key areas, including labor as well as open-cut operations, consumables and logistics.
Material & Supplies (MRO):
- Developed and deployed new processes for vendor and information/data management.
- Implemented a slow moving and obsolete (SLOB) program.
- Negotiated Forward Purchase Agreements.
Original targets were successfully attained within only 26 weeks and the knowledge and skills required to sustain improvements was transferred to the company. At the end of the project, initial goals were surpassed by 70%.
