The South African mining industry is vital to the country’s economy because it provides hundreds of thousands of jobs to South Africans and contributes a large portion to the country’s GDP, capital inflow and merchandise exports. However, the mining process relies heavily on industrial equipment and the energy, fuel, spares and lubricants needed to run this equipment, to function effectively. As a result of this, mining companies are beginning to implement commodity management and strategic sourcing (SS) programmes to effectively manage their supply and optimise the buying of these commodities.
One mining company (XYZ Mining) has recognised the importance of proper commodity management programs and the use of SS to add value to their commodity supply chains, and have begun the implementation of such a programme for their lubricants commodity supply chain. The SS cycle is a continuous process which includes four main steps: namely the building of knowledge and understanding for the commodity, identifying and developing improvement initiatives, implementing these initiatives and managing and monitoring the status of the commodity.
The aim of the project was therefore to develop a quantitative tool that could be used throughout the lubricant commodity SS cycle carried out at XYZ Mining. This tool was developed in the form of an information system separated into two main parts, namely a database for collecting all data about the lubricant commodity, and a set of analysis tools including:
A total cost of ownership (TCO) analysis which is used to trace the use of lubricants to a per-equipment level and which may be used to trace the impact of improvement projects on specific fleets or lubricants;
A dashboard comprising of trend analyses, summary TCO analyses and Pareto analyses to identify areas for improvement over the supply chain; and
A project evaluator analysis which analyses a number of potential improvement projects and determines which projects should be implemented first.
The construction of the information system began with constructing a logical design of the database in the form of an entity relationship diagram; and a logical design of the analysis
section in the form of a use-case diagram. Using these logical designs, a generic IS was designed and constructed for use at any mine, and an accompanying user manual was also developed.
The IS was developed to fit the requirements stated by XYZ Mining directly and it was developed using proven tools and techniques. User friendliness and ease of understanding were considered throughout the development of the IS and the user manual so that the ultimate implementation of the tool would be ensured.
Although the tool has not been implemented at XYZ Mining yet due to time constraints, the generic tool and the user manual have been delivered to the company for their use. The usefulness and importance of the IS was also demonstrated by positive feedback from XYZ Mining and by validating the model by means of a working example.
In the future, it is recommended to expand the information system so that it automatically pulls relevant data directly from XYZ Mining’s ERP systems. Also, this information system can be expanded to cover other commodities in the mining sector such as fuel or gearboxes; and it can even be extended beyond the mining sector to any industries that make use of commodity management.
Thesis (B Eng. (Industrial and Systems Engineering))--University of Pretoria, 2012.