A purchasing expert believes mining companies can receive more for their money though preparation.
Procurement can achieve better value for money if more is done during the planning stage. This is the conclusion Sergii Dovgalenko reached after speaking with several suppliers.
“The lion’s share of procurement value could be created in the planning stage. To do that we must establish trustful relations with budget owners, master some inventory and consumption forecasting methods, build and maintain complex stock keeping units (SKU) and price databases and much more,” he said in a blog post.
The IPSM Procurement consultant revealed some professionals assess their results based on how much ‘bang’ they received for their ‘buck’.
“Colleagues find it simpler to dedicate themselves to tireless supplier negotiations and measure the value creation in savings,” he said.
“[However,] we must establish the process governance, timelines, responsibilities, stakeholder training and communications, etc. There should be a good policy describing all of that.”
He recommends the following steps:
- create an SKU database and update cost estimates according to budget memos
- estimate inventories at the beginning of each new budget period
- optimised demand must pass by the SKU and cost master to translate into inventory units and obtain budget estimates
- consolidate well-specified demands from all business units in the draft demand plan
- prepare contract management plans to identify valid multi-year contracts and upcoming contract renewals
- prepare supply plans to buy after the need-by date.