I introduced the issue of
complexity in my last blog and stated that there is little evidence in open cut
equipment production data that “complexity” plays any role in decreasing
equipment productivity over time. This is a controversial view in the
mining industry, particularly the large mining companies where increasing
complexity has been used as an excuse for falling equipment productivity rates
for some years now.
I stated in my last blog;
It is my theory that the corporatisation
of the mine site is to blame for the reduction in availability and consequent
productivity. It is the focus on process and not the result.
Managers are often judged on how they do their job, not the end result, and a
declining result can be hidden behind exceptional processes. Part of that
change is an increasing focus on safety but not the majority of it.
Because most managers have little real natural management expertise they
embrace the processes which are encouraged by corporatisation. Six Sigma
or Lean are great because they provide the manager with a focus on
process. You can actually point to what you have done.
Unfortunately the performance metric is wrong.
I believe that the silent
majority support this view but many just have to fit within the confines of the
company that employs them. I received the following from someone running
a mine this week after they read my last blog (that makes two of us who read
it).
You are so right about people
getting hung up about the process of a process and the process of process
improvement rather than the bottom line impact of the outcome it produces
You can extend this further by
explicitly focussing on added value as the principle and proper measure of
improvement. eg "For any given operational outcome, a process
'improvement' that does not measurably generate positive added value or improve
safety without negative impact on the firm's overall value is no improvement at
all." No matter how exceptional it might be.
This industry needs to take
more notice of Prof Michael Porter - the father of the value chain concept. He
had it spot on. If it doesn't add measurable value, prune it.
However, remember not all value is financial - reputation, employee wellbeing,
and other "soft" forms of value also matter to different degrees in
different companies.
Six Sigma and Lean do not cover
the value chain concept well I reckon, and their experts too frequently have no
wider business management training to know any better.
A few other personal
operational observations for you;
- Pits do get more complex
sometimes but usually just deeper and/or less "rich". Any
complexity is mostly human induced.
- You are right about
availability being a function of age. BUT its more complicated and its
only true beyond a certain age. There is a trade-off between depreciation
of new equipment with age and repair with age on 2 axes vs availability
with age on the third. If you map profit (or net value added) against
these axes you will find here is a reasonable sweet spot for average fleet
age where profit is maximised - and it’s not at any of the extremes.
Operational rosters (eg 4 days a week, 24*7 etc) change the sweet spot
quite a bit.
- I've never seen any specific
mining industry research on this and there are a lot of misconceptions out
there.
- Availability is an issue but
not the only one. Cost saving pressures, lack of professional knowledge,
managerial ignorance and inappropriate performance metrics are an even
bigger part of it. Maybe some would argue this is the actual
"complexity" causing most of the problems, eg...
- Payload and digging cycle time
(esp truck shovel) are affected (often severely) by poor pit design
(relative to deposit and equipment), poor road placement, poor matching of
blast performance, poor dump design, but also limited communication
between the engineers and mining supervisors - the latter usually make the
shift to shift decisions with no knowledge or understanding of the
former's work (= poor decisions frequently).
I will repeat my last paragraph from the last column. Commodity prices (maybe with the exception of gold) are going to decline. You won’t be able to keep making money without focusing on the real reason you are in business. You need more of your commodity going out the gate at a lower cost, not a new business improvement process every week or month.
Graham Lumley
BE(Min)Hons, MBA, DBA, FAUSIMM(CP), MMICA, MAICD, RPEQ
No comments:
Post a Comment