Working Capital Improvement
SITUATION
Working capital was not closely managed at this leading mining organization and contractor costs had grown unchecked.
DRIVER GOAL
- Improve working capital performance and release $19.7 million of cash.
- Reduce contractor cost by $6.4 million.
RESULT
- Released $18 million in cash.
- Reduced contractor cost by $4.6 million, in just 15 weeks.
Case Study
Improve Working Capital Performance & Reduce Contractor Cost
Issue
Working capital had not been a focus for this leading mining organization and substantial cash benefits could be realized within a short period of time. Additionally, contractor costs had grown and needed to be reduced to ensure current and future profitability. The remote location and aboriginal agreements added complexity to realizing the cost reductions.
Highland Approach
A detailed analysis identified four primary work streams, or focus areas:
- Accounts Payable Optimization
- Haul Truck Optimization and Reduction
- Light Vehicle Optimization and Reduction
- Contractor Resource Optimization
Actions Taken
The Highland Group identified, developed and implemented processes, disciplines and management practices delivering the following results:
- Increased Days Payable Outstanding by 9 days in Accounts Payable.
- Improved utilization of haul trucks resulting in a reduction of the fleet by two trucks.
- Implemented a System For Managing Contractors in the Mobile Equipment Maintenance Shop to increase productivity and reduce cost.
- Increased utilization of light vehicles resulting in a reduction in the total number of vehicles.
