Growing your mining supply company for a global market – by Dick DeStefano

Dick DeStefano is the Executive Director of Sudbury Area Mining Supply and Service Association (SAMSSA). destefan@isys.ca This column was originally published in the March, 2011 issue of Sudbury Mining Solutions Journal.

One of the most consistent questions from the SAMSSA membership is how do we build a truly viable and vital company that can meet all the needs and  demands of a global market. What model or dynamics works best and what is a waste of time and effort? A worthy question.

The list of options is somewhat endless and changes quite frequently as new models emanate from different economic conditions and research.  What works for one company is a waste of time for another depending on the attitude and resources available, but I believe that the most fundamental model is the generic structure that encompasses the strategic business plan.

The list of models presented here is not exhaustive but appear as the most applied.

Strategic planning is an organization’s process of defining the strategy or direction and making decisions and allocating resources to pursue this strategy utilizing its capital and people. You can use a SWOT or PEST or STEER analysis or even a supplementary but comprehensive model called EPISTEL (Environment, Political, Informatic, Social, Technological, and Economic & Legal) as the primary map for success. All strategic planning deals with at least one of three key questions: 1. What do we do? 2. For whom do we do it? 3. How do we excel?

What is surprising is that  in a recent study, approximately 35 per cent of SMEs were found to have written  strategic business plans. However, even more surprising was that half of those plans  had not been revisited after the first draft. The major reason for not renewing them is that companies became too busy with their existing business clients to plan for the long term. This is a major error in a competitive global market.
There are other strategic and process models, but they are often specific to the size of a company and its operations.

Another holistic strategy that has worked within our membership is the Toyota Way approach with its multiple management principles and guidelines. Within the overall process are the tools of Lean Management and Kaizen.

Lean manufacturing is centered on preserving value with less work.

Kaizen is the Japanese term for improvement or “change for the better” and it refers to the philosophy or practices that focus on continuous improvement of processes in manufacturing, engineering, supporting business processes and management.  By improving standardized activities and processes, Kaizen aims to eliminate waste and engage employees and CEOs to be on the same page as the company grows and competes globally.

The history and applications of the Toyota Way are well documented and available for small to large mining supply operations.

According to Jeff Fuller, president of Fuller Industrial,  “The application of the 14 management principles of the Toyota Way was the best thing that ever happened to our company.

“I have become a disciple and proponent of this approach because, once you understand and implement this model, you see the improved results,” he said.

Jeff recently won a multi-million dollar contract in Mongolia with the Ivanhoe Mining/Rio Tinto Oyu Tolgoi Project beating out Chinese bidders based on his recent implementation of the Toyota principles.

Six Sigma is a process-based solution which was originally developed by Motorola USA in 1986 and is used in many sectors, although not without some controversy. Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of deficits (errors) and minimizing variability in manufacturing or business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization who are experts.

Each Six Sigma project developed within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction and /or profit increase).

According to critics, Six Sigma has lost some of its status because  it doesn’t deal with long term projections, is a narrowly-designed process to only fix an existing process and doesn’t help in coming up with products or new disruptive technologies. Supporters disagree with this criticism, but a number of Northern Ontario mining companies have used this model quite effectively.

The newest model yet to be used by SAMSSA members is the Blue Ocean Strategy, which is based on a study of 150 strategic moves spanning more than 100 years and 30 industries. It provides a systematic approach to making the competition irrelevant and creating uncontested market space.

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