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Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies
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Scott Singer, Rio Tinto - Re-engineering Procurement to Create True Synergies

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  • 1. Re-engineering Procurement to create true synergies Scott Singer Global Head of Procurement
  • 2. Agenda Introduction Rio Tinto overview & procurement context Re-engineering Procurement Lessons learned What’s next? Slide 2
  • 3. Slide 3
  • 4. Rio Tinto – who we are • Leading international mining group combining: – Rio Tinto Limited (ASX: RIO) and – Rio Tinto plc, a company listed on the London Stock Exchange. • Major M j products: d t – Aluminium, – Copper (and molybdenum) – Diamonds – Energy (coal and uranium) – Gold – Industrial minerals (borax, titanium dioxide, salt, dioxide salt talc) – Iron ore • US$44 billion in sales revenue (2009) • 100,000+ employees and contractors Slide 4
  • 5. Rio Tinto operations worldwide Key Aluminium Mines and mining projects Copper Smelters, refineries, Smelters refineries power Diamonds facilities and processing plants remote from mine Energy Iron ore Minerals Europe North America Asia Africa South America Australasia Slide 5
  • 6. Shared services structure Rio Tinto Global Business Services IS&T Procurement Shared Services (Headcount: 1050) (Headcount: 1100) (Headcount: 630) Slide 6
  • 7. Rio Tinto Procurement (RTP) • US$12 billion spend • 38 spend categories d t i • 50,000+ suppliers • 2.5 million purchase orders • Staff in more than 20 countries • 8 hubs – Asia Pacific: Brisbane, Perth Brisbane Perth, Shanghai, Singapore – EMEA: Johannesburg, Voreppe – North America: Montreal, Salt Montreal Lake City “Source, Buy, Deliver” • Business Process Outsourcing (BPO) – India: Pune – Mexico: Monterrey Slide 7
  • 8. Resources boom: 2004 - 2008 • Record prices: – Aluminium – Copper – Crude oil – Gold – Lead – Silver – Uranium Slide 8
  • 9. Intense corporate activity: 2007 - 2009 Slide 9
  • 10. Re-engineering g g procurement Copyright © 2009 Rio Tinto Copper being poured at the Kennecott smelter, Salt Lake City Slide 10
  • 11. Organisational clarity • Consistent global message – Core set of principles & values – Clearly articulated vision – Meaningful and actionable • Credibility • Model that can adapt to suit – BU client needs – Geographic & cultural differences Slide 11
  • 12. Alcan integration – bringing two cultures together g Slide 12
  • 13. Using LEAN to connect cultures Value Stream Mapping event, March 2008 Results: Common sourcing approach Slide 13
  • 14. Using LEAN to simplify the process 2.2 2.4 2.3 2.5 2.6 Complete Approve 2.1 Start Conduct Contract Contract Requirements Recommend Bid Execution Implementation Package to Award 1.1 End User Request 2.1 Review Additional BU Information 3.1 Attend Handover Meeting with Project 4.1 Simple Project? 5.1 Attend Handover Meeting with 2.6.1 Is Vendor in ERP? 1.2 Does Request Adhere to 2..2 Validate Scope of Work, Evaluation Owner 4.2 Is BU Review of Responses Project Owner 2.6.2 Follow up on New Vendor Request Commitments Policy? Criteria and Pre-qualification 3.2 Check Requirements Package Required? (Complex 5.2 Review Contract Related Documents Form 1.3 Provide Justification for Criteria 3.3 Is more information from Project Projects) 5.3 Is Further Work Required from 2.6.3 Prepare and Approve New Vendor Deviation 2.3 Finalise Scope of Work, Pre- Owner Required? 4.3 Review Responses and Project Owner? Request 1.4 Submit Bu Ad-Hoc Workflow qualification Criteria and Evaluation3.4 Set Up Suppliers on Procuri Provide Input (Complex 5.4 Perform Additional Work Required 2.6.4 Notify Data Management Team Request Form Criteria 3.5 Build Event and Publish on Procuri Projects) by Contacts Team 2.6.5 Provide Price File & Forward 1.5 Submit Ad-Hoc Workflow 2.4 Complete Contract Risk Register 3.6 Record Milestone and Reason for any 4.4 Resolve all T&Cs (Complex 5.5 Is this Capital? Purchase Agreements Details Request with BU Delays Projects) 5.6 5 6 Check BU Capital Approval 2.6.6 266 Are Inventory Re-Order Points Re Order 1.6 Communicate with End User 2.5 Sign Off on Contract Risk Register 3.7 Monitor Responses and Manage 4.5 Provide Advice on T&Cs 5.7 Prepare Contract Execution Required? 1.7 Complete Scope of Work 2.6 Provide Input on Procuri Strategy Queries 4.6 Update Register of Supplier Documents 2.6.7 Is a Bills of Material /Application Parts 1.8 Determine Evaluation (Auctions) 3.8 Confirm Acceptance of T&Cs Concerns 5.8 Record Milestone & Reasons for any Listing Required? Criteria 2.7 Provide Contractual Advice 3.9 Resolve T&Cs before Auction 4.7 Prepare Recommendation Delay 2.6.8 Set up Bills of Material /Application 1.9 Manage SDP and Check for 2.8 Complete Sourcing Strategy with 3.10 Provide Advice on Contract T&Cs to Award (Complex 5.9 Approve Contract Completion Parts Listing BU Authorisations RTP Functional Teams 3.11 Technical Queries Projects) Checklist 2.6.9 Set up Contract Details in System 1.10 Activate Project & Record 2.9 Identify Potential Suppliers 3.12 Consult with BU End User; Inform 4.8 Record Milestone & Reason 5.10 Send to Project Owner for Review 2.6.10 Determine Level of Contract Milestone (SDT) 2.10 Confirm Suppliers Before After Project Owner % Reduction for any Delays (Complex 5.11 Review Contract and Sign Checklist Management Required 1.11 Identify Multi-BU & Major 2.11 Verify BU Safety Pre-Qualification 3.13 Respond to Bid Team on Technical Projects) 5.12 Conduct Final Reviews 2.6.11 Is an Implementation Plan Required? Category Projects Requirements Queries 4.9 Confirm Status of Supplier 5.13 Record Milestone and Reasons for 2.6.12 Prepare Implementation Plan 1.12 1 12 Activate Project & Record 2.12 2 12 Are All Suppliers Pre Qualified? 3 14 Pre-Qualified? 3.14 Close Bid Pre-Qualification Pre Qualification any Delays 2.6.13 2 6 13 Provide Input Pro ide Inp t on Contract pages Milestone Qualification? 110 2.13 Does BU Agree to Initiate Pre- 3.15 23 Record Milestone and Reason for Any Delays 81% 4.10 Determine if Vendor Requires Set Up on ERP 5.14 Send Contract Documents to BU – Management Responsibilities (Single BU Contract) 2.6.14 Determine Contract Management 2.14 Initiate Pre-Qualification 3.16 Load Supplier Responses to Portal 4.11 Is Supplier Pre-Qualified? 5.15 Conduct BU Approvals & Signatures Responsibilities 2.15 Proceed Based on Pre-Qualification 3.17 Prepare Register of Supplier 4.12 Complete Supplier Pre- – (Single BU Contract) 2.6.15 Schedule Meeting on Contract steps Policy 130 Concerns 14 89% Qualification 5.16 Record Milestone and Reasons for Management Responsibilities 2.16 Determine Contract Template 3.18 Simple Project? 4.13 Approve Recommendation any Delays 2.6.16 Attend Meeting on Contract 2.17 Changes to T&Cs? 3.19 Summarise Bid Results & Load on to Award 5.17 Send Contract to Supplier Management Responsibilities 2.18 Obtain Sign Off on Changes to Portal (Complex Projects) 4.14 Document Results and File 5.18 Supplier Signs Contract 2.6.17 Lead Meeting on Contract control points T&Cs 18 3.20 5 Record Milestone & Reason for any 73% on Portal 5.19 Check Contract for any Changes Management Responsibilities 2.19 Prepare RFx (Contract with T&Cs Delays (Complex Projects) 4.15 Request Meeting with 5.20 Notify Project Owner and BU of y j 2.6.18 Prepare and File Minutes on the and Schedules) 3.21 Evaluate Based on Evaluation Criteria Contracts Team Contract Execution Portal 2.20 Review RFx Package with BU (Simple Projects) 4.16 Record Milestone and 5.21 File Paper and Electronic 2.6.19 Load Contract Management Details milestones 2.21 Load Documents on Portal & 17 3.22 6 Prepare Recommendation to Award 65% Reasons for any Delays Documents and Flags in the System Update Project Details (Simple Projects) 5.22 Create Contract in the Contract 2.6.20 Is Implementation Complete? 2.22 Request Handover Meeting with Bid 3.23 Load Recommendation to Award on Administration System 2.6.21 Complete Implementation Team Portal (Simple Projects) 5.23 Notify Unsuccessful Tenders Requirements 2.23 Record Milestone and Reasons for3.24 Record Milestone and Reason for any 5.24 Record Milestone and Reasons for 2.6.22 Complete Implementation Checklist any Delays Delays (Simple Projects) any Delays 2.6.23 Record Milestone and Reasons for 5.25 Complete all Portal Documentation any Delays 5.26 Request Sponsor Sign Off on the 2.6.24 Approve Implementation and Project Complete Project 5.27 Sponsor Sign Off on Project 5.28 Prepare GAA/GAL (USC) Slide 14
  • 15. Category management goes beyond sourcing Strategies Outcomes • Sustainable supply to Consumption support growth Forecasting OEM supply • Economic advantage through consolidated Emerging Markets sourcing Slide 15
  • 16. Emerging markets sourcing 2,640 ore cars First 120 ore cars delivered in total Prototype ore car loading l di delivered in Qingdao port Initial China visit 2004 2007 2008 2009 Key drivers: 2008 #1: Capacity #2: Lead time #3: Price 2009 #1: Price #2: Capacity #3: Lead time Slide 16
  • 17. RTP’s BPO journey ? End-to-end Cat. Management Cat - High End-to-end Cat. Management - Low Category Management Insights Agile Business Intelligence Reporting Purchasing – Triage / Selected Manual POs Category Management Research - Simple Bid Team Operations Back Office – Master Data (Materials , Price Files, Vendors) - R&A reports from our systems Slide 17
  • 18. Managing our non-employee workforce • Managing ~50,000 FTEs across our sites • Applying Software as a Service (SaaS), cloud computing and outsourced services to reshape a perennial mining industry challenge Contractor Skill Contractor Definition Time-sheeting Workforce Pre-qual Vendor Contractor Induction & People Contractor Performance Planning Sourcing SOW Buying On-boarding Tracking Milestone/ time/ off-boarding Management Development resource capture Pre-qualification Pre qualification of Capturing performance Vendors to RT HSE and information and feeding commercial standards in to pre-qual/buying process Establishing Master Closing-out contractor Service Agreements or engagements other contractual arrangements Defining the skill Linking delivery of work required or scope of to invoicing work Selecting & engaging Visibility of contractors contractor based on throughout RT sites suitability of skill and rates submitted Time and Materials Contractors Ensuring contractors meet Scope of Work Contractors appropriate qualification and skill requirements Slide 18
  • 19. Purchase-to-pay (P2P) Buy Deliver • Automation strategies to date: Purchase-to- pay – Common P2P processes and SAP platform Strategic g – Outsourcing transactional processes sourcing and category – eProcurement management • To drive further automation we will leverage: – Cloud computing – Greater involvement and engagement of our suppliers eg. master data management – Further integration with our suppliers in areas such as supply chain and logistics Slide 19
  • 20. Functional alignment • Defining RTP’s role in the broader Global Business Services structure – Alignment at the MD level, shared responsibility – Common mindset between RTP, IS&T and Shared Services – Consistent vision on BPO – Regular dialogue on innovation opportunities through using Software as a Service and cloud computing Slide 20
  • 21. Lessons learned Copyright © 2009 Rio Tinto Northparkes copper and gold mine, Australia Slide 21
  • 22. Don’t underestimate culture (country, company…) company ) Slide 22
  • 23. Drive organisational clarity through symbols • Health, safety and environment • Our people & culture • Our customers • Operational excellence • Our suppliers • Value delivery “Plan on a page” Slide 23
  • 24. LEAN events create a ‘safe zone’ for change management Slide 24
  • 25. Maintain discipline and rigor with systems alignment & improvement • Maintain investment in technology systems • Analytics will drive the next phase of value • Data alone is not useful – convert into intelligence Aligning B i Ali i Business Data Warehouse - S D t W h Spend d Strategic S St t i Sourcing i Systems - ABS Analytics System Slide 25
  • 26. What’s next? Copyright © 2009 Rio Tinto Kestrel coal mine, Australia Slide 26
  • 27. Opportunities and challenges Slide 27
  • 28. Lots more to do… Copyright © 2007 Rio Tinto Ice road to Diavik mine, Canada Slide 28
  • 29. Questions? Scott Singer Global Head of Procurement

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