Unifying business planning and control with MineRP and SAP
The global mining industry has experienced significant slowdown over the past decade, with the top 40 miners posted a collective net loss and lowest yet return on capital employed. This means that miners are under tremendous pressure to boost output and lower costs at their existing mines, bring new projects online quickly and make rapid asset portfolio composition and capital allocation decisions.
The majority of the top 40 mining houses employ SAP for financial planning, and a fragmented collection of mining technical systems (MTS) for mine planning. To facilitate unified business planning where financial and technical teams iteratively collaborate, a unified technological platform has become a business imperative.
Beyond unified planning, effective operational scheduling and control of mining activities and related costs (at aligned levels of granularity) is vitally important. Solutions that exploit innovations in real-time monitoring and control technologies for integrated short interval planning and orchestration are therefore equally essential.
Partners in Innovation
MineRP (an independent software vendor focused on developing MTS integration platforms) has developed and patented solutions (referred to as GeoInventoryTM and GeoFinanceTM) to achieve unified business planning and control. MineRP has subsequently partnered with SAP through a formal Co-Innovation Laboratory (COIL) process to develop the required business alignment and mediation solutions to facilitate Unified Resource Management.
Figure 1 The SAP Co-Innovation Laboratory (COIL) process
Complementing this partnership, MineRP and Britehouse, an SAP Gold Partner and division of Dimension Data, have entered into an agreement for the development of a blueprint for a Rapid Deployment Solution enabling SAP, MineRP and its partners to take the solution to market. The agreement provides Britehouse first right of response for an agreed period beyond introducing the solution to the market.
Realizing the strategic benefits that could be achieved from this initiative, a prominent international gold mining company, headquartered in Johannesburg, has expressed interest in joining the COIL process as early adopter. With a globally diverse, world-class portfolio of operations and projects as well as several exploration programmes, they are ideally positioned to confirm and even influence value priorities of the solutions.
The Business Challenge
Whether for green- or brown fields operations, mine planning across any time horizon is time consuming and laborious. This means mines are typically able to create and assess only one mine plan per annual planning cycle. Manually drawing CAD mine designs to be sequenced and scheduled is the major bottleneck, and the handover between design and financial costing & budgeting is a spreadsheet nightmare.
While the rigors of business planning at any time horizon practically demands collaboration between technical and financial domain experts, the information management and systems landscapes are divided into fragmented MTS on the one hand, and granularly misaligned ERP systems on the other. This lack of integration and mediation between MTS and ERP results in very limited capability to do collaborative, iterative business planning, leading to inaccurate factorization of mine planning fundamentals during financial planning.
When it comes to production scheduling, the reality is that schedules exist in both the MTS and ERP domains, and while activities in these schedules are logically interdependent, critical tasks such as resource leveling and critical path protection cannot take place across domains. This reality causes expensive production interruptions, unnecessary delays and severely impacts productivity and efficiency.
The Innovation Scenario
Rapid Long & Medium Term Mine planning
Framework based planning with MineRP Planner transforms mine planning, and dramatically reduces the process time for mine design, sequence and scheduling activities. Traditional design by CAD drawing is replaced by a framework for data- and rules driven design. The simplification and vast improvements in time and effort introduced via MineRP Planner provides opportunity to create and examine many more business alternatives.
As a result, miners have the flexibility to make large scale changes or incremental adjustments in response to triggers such as market trends or geological events within the window of opportunity presented.
Figure 2 Unified Mining & Financial Planning
Unified Mining & Financial Planning
Directly integrating MTS activities with SAP means operations employ the right capabilities (resources) doing the right work, deployed to and costed against the right place (physical space), at the time when those resources and consumables are required, to the appropriate quantities and standards.
By establishing alignment and bi-directional mediation between mine plans generated in MineRP and financial plans in SAP’s IPB and BPC, unified mining and financial planning becomes reality.
MineRP’s GeoInventory and GeoFinance solutions provide a system and method for the alignment and integration of stock (i.e. mineral reserves and consumables), process (i.e. work breakdown structures) and money (i.e. costs and revenue).
MineRP’s multifunctional mediation platforms establish a robust mechanism to mediate spatially described mining transactions between the MTS domain and the ERP domain, and oversee the orchestration required for cross-domain collaboration.
The application of advanced analytical capabilities allows simulation of the permutative effects of multiple planning parameters influenced by external change, and quick comparison of outcomes.
Unified Mining & Business Schedules
Alignment of schedules is the basis for enterprise wide control. MineRP facilitates alignment through the integration of capabilities (i.e. resources), activities (i.e. tasks) and timelines across the MTS and ERP scheduling domains.
What emerges is an amalgamated Master Business Schedule (MBS) containing all interrelated activities in a single repository. This MBS does not only provide enterprise visibility and oversight over all operational schedules, but can also be optimized through the application of advanced analytical solutions.
Furthermore, all activities are scheduled, costed and measured at the appropriate and aligned granularity, for simultaneous financial control.
Figure 3 Fragmented Schedules amalgamated into a Master Business Schedule
With MineRP Planner, multiple mine planning alternatives can be created, evaluated and compared within a business planning cycle. Even short term catch-up plans or event impact simulations become feasible without major interruption of the planning teams.
The mediated alignment of MTS and ERP transactions, and equivalent granularity of mining technical and financial management dimensions provide the capability to do practical area and activity based costing. More importantly, MineRP’s GeoFinance solution allows mines to accurately distinguish between capital development costs and operational production costs.
PWC, Mine 2016, www.pwc.com