Procurement is a strategic process that involves sourcing goods that are needed. Typically associated with business spending, it is the process of purchasing goods and services. This can vary from small to large items and is completely dependent on the sector you work in. At Storm we mainly work within the energy, mining, construction, and civils industries.
Choosing to outsource your procurement greatly benefits your business. You will be working with professionals with specialist skills. They will understand the ins and outs of the industry, know which suppliers can offer the best products for your operational needs and their industry connections ensure they can provide you with the resources you require, from reputable suppliers. Assigning this task to a third party means your business doesn’t spend time locating goods and arranging delivery. A procurement supplier can do all this for you, which in turn frees up your time to work on other aspects of your business, allocating time to develop and grow.
To utilise the power of procurement, businesses must incorporate efficient systems that add value to their operations. Procurement connects manufacturers, suppliers, purchasers, and the end-user. The process can add value by reducing costs, without compromise in quality or product features. Strategic sourcing helps identify your businesses spending patterns and can identity any risks in the supply chain. Having a strategic approach to your sourcing can create long-term value for your business.
Advancements in technology and automating processes can improve control and enhance supply chains. Innovation in procurement improves the supply chains efficiency and effectiveness. It can also enhance the communications and transparency, by identifying any ‘bottlenecks’ that may occur within the supply chain to reduce cycle times and offer faster delivery times.
Implementing sustainability to ensure the supply chain can continue to meet the needs of the business is crucial. Sourcing locally reduces the distance goods are required to travel, while supporting local businesses. It also reduces the emissions from the supply chain when the distance goods have travelled has been minimised.
Mining
The mining industry is huge ‘the global mining market size grew from $2022.6 billion in 2022 to $2145.15 billion in 2023, at a compound annual growth rate of 6.1%’ which makes it a key industry in the international trade, capital flow and political influence. The mining industry has a significant influence across regions and industries.
A successful mining production comes down to procurement. Without a reliable supplier, you’re less likely to be running your production efficiently and effectively. Missing KPI’s due to a poor supply chain, can negatively impact the longevity of the project. Mining companies are typically impacted by global events, particularly over the last few years with the Covid-19 pandemic and the Ukraine-Russia war which has directly impacted supply chains, which has had a knock-on effect to budgets.
It is important for mining companies to analyse market trends and prepare their procurement system, so the set up can enhance their capital and limit the disruption that any disasters and conflicts could create. With the rise in demand of electric vehicles (EV’s) so has the minerals required to produce the batteries. This is anticipated to continue rising over the coming decades, with more manufacturers producing EV’s. Minerals such as copper and cobalt are expected to become more in demand to keep up with the production of these vehicles.
Energy
The global power generation market was estimated at USD 1.8 trillion in 2022. According to IEA it is estimated that around USD 2.8 trillion would be invested in 2023. With more than USD 1.7 trillion invested in clean energy, including renewable power, nuclear, grids, storage, low-emission fuels, and efficiency improvements.
The energy industry is no different to the mining industry, a reliable and efficient supply chain will enhance the success of your operations. It is simply not just about getting the best price, but ensuring the products you source is the right fit for your operations. That it delivers efficiency, meets the intended purpose, and enhances the performance and value of your business.
Analysing your current processes to understand what products you need is the first stage. Once this has been determined, producing a strategy to align what you need and how it meets your goals will increase efficiency. One of the most important relationships you will have is with your supplier, as they can keep your costs low and optimise your performance. Investing in strong working relationships, will help with long term success and keep a thriving supply chain.
Conclusion
This week’s blog highlights the importance of procurement and ensuring your supply chain suits your business operations. Efficiency and reliability are key, to ensure that should any disruptions occur, you are able to work around them and limit the negative impact. While some disruptions are more intense than others, such as the pandemic, a reliable supply chain should protect your operations as much as possible. It was an important event that taught many businesses how to adapt to work around these situations and it is very likely many businesses will now have processes set out, should it happen again. Procurement is a powerful leverage, it can keep costs low, keep quality in check and minimise risks. Being organised, with a clear strategy will be key for success.
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