Tuesday 10 March 2014
Almaty Office, Kazakhstan
In our outline of setting up supply chain at a new mine, previous blogs have covered
- Management controls as they relate to Supply Chain
- Finance and SCM Coordination
- Foundations – establishing IT records and reporting, setting parameters and inventory and replenishment management
This blog discusses LOGISTICS.
Once POs / contracts are placed, it is essential that orders are expedited:
- To ensure on time delivery
- To resolve any queries promptly
- To maintain supplier relations – regular contact with suppliers means better service
- To allow time for discussions on packing, documentation and despatch
- If prepayment has unavoidably been made, to ensure that goods are actually delivered.
Be a ‘Squeaky Wheel’. The squeaky wheel on a cart receives the most attention and oil. Silence may result in supplier complacency.
Wherever possible take control over delivery of materials and equipment from as close to the point of manufacture/supply as possible. Suppliers will add a safety margin to pre-quotes concerning logistics and will add their mark-up to the final figure. Their means of transportation may not be suitable for your region, documentation may be inaccurate and you may lose the benefits of consolidation.
Arrange with an internationally-competent freight-forwarder to handle collections and shipments. Don’t be too economic: a little extra cost ensures better service and added value. Forwarders will arrange the most efficient and effective means of transportation and keep you aware of all of the unknowns of freighting that are impossible to be aware of otherwise. Arrange definitive contracts with freight forwarders so that everything is clear and there is no room for misunderstandings. Freight forwarders must also be responsible for goalkeeping documentation discrepancies so that there are no importation issues in transit and on arrival. Packaging must be checked and upgraded where necessary to ensure no damage during transit. Freight forwarders may also check that goods are correct but this is not always possible when goods are securely packed.
If pre-inspection is required, freight forwarders may help with this, especially where EXW deliveries occur.
Arrange for smaller consignments to be container consolidated from regular source regions (e.g. USA, Europe, Australia, S Africa). Regular schedules will be agreed. Containers must not be delayed unnecessarily waiting for “the next delivery due next week”. This WILL save on airfreight.
Airfreight must be minimised to substantially lower freight costs. Consolidation helps but so does ordering in plenty of time. To ensure this, airfreight must be costed and compared to more conventional (hopefully consolidated) freight costs and then approved by both the most senior person on the site (GM/CEO) and by the Head of Supply. Introduction of this measure instantly minimises airfreight costs, offsetting the nuisance caused by the extra work. Airfreight is subsequently limited to genuine emergency needs.
Freight forwarders must regularly report on the whereabouts of consignments and, for remote sites where delivery lead-times are long, they may also receive offshore (usually at extra cost) directly into your software; most ERP processes allow for this and it is a matter of working with IT to ensure restricted and secure access. The benefit is that receipts offshore allow for a more effective payment of invoices. If payment needs a site generated GRN, this may be weeks after shipment.
Offshore receiving has the effect of reducing mismatches where invoices are loaded in software before receipts. Mismatches are restricted to genuine matching issues which must be cleared by warehouse/procurement departments promptly.
Goods flow two ways and an efficient despatch procedure is required.
All procurement procedures will be supported by detailed manuals in relevant languages.
CBC is able to undertake and support this crucial element of setting up for an efficient mining supply procurement operation.