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Decision Making For Higher Profitability in Mining Sector
1. DECISION MAKING FOR HIGHER
PROFITABILITY IN MINING SECTOR
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2. PROBLEMS OF MINING SECTOR
Key Issues: In mining industry decision makers and
stakeholders are spread over geographically broad,
diverse area, and varied time zones. The difficulty in
aligning all the stakeholders and decision makers over
necessary data at appropriate times makes decision
making a challenging task in mining industry.
The mining industry is incurring on average 25% cost
over-run over budgeted cost. This cost over-run not only
impacts profits of the company, but also puts the
purpose of feasibility study in question.
Mining companies and their units work under constant
pressure to make cost control, improve performance ,
and profitability.
3. KEY ISSUES……..
Most of the efforts taken to improve financial performance
by different companies have been proved ineffective due
to the operational profitability killers that centre around
some key areas of the system.. These profitability killers
are characteristics of traditional system and are strong
enough to resist decision making.
4. PROFITABILITY KILLERS IN MINING
SECTOR
Geographic Separation: By nature mining is a global industry.
The industry expends according to new discovery of new
reserves across the globe. As a result of this, the decision
makers and subject matter experts are widely dispersed both
geographically and in terms of time zones. This wide dispersion
makes the decision making process slow.
Functional silos: Operators, in order to more efficiently discharge
their responsibilities, divide individual works into different sub-
units and assign responsibilities to different sub teams. These
sub teams concentrate on their own works and do not bother
about how their performance can impact other functional teams.
This lack of cooperation results in missed opportunity, deferred
project completion, and cost over-run.
Individualistic approaches: In the production phase of a project,
many operational units create their own approaches to the whole
system. These approaches remain non-aligned, and prevents
best practices throughout the organization. The lack of best
practices diminishes efficiency and erodes profitability.
5. PROFITABILITY KILLERS…..
Gap in demand for and supply of experts with specialized
knowledge: Demand for experts is high enough, but they are
inadequate in supply. Many companies depend upon handful of
experts for different projects across the world. This huge gap in
demand and supply creates financial and logistical handicaps for the
organizations which can create bottleneck in delivering project in
time.
Lack of reliable data: Obtaining reliable data and presenting the
same to the decision makers in time is a big problem for mot of the
mining companies. Huge amount of money is being spent in
collecting, collating, and presenting data, but most of the company
complain that mot of the decisions are taken without adequate
reliable data (Wipro 2017).
6. COLLABORATIVE DECISION ENVIRONMENT
(DCE) MODEL
When the decision makers make informed decision
on the basis of reliable and timely delivered data,
the decision should be cost and time effective. This
can be done by proper utilization of the
technologies and initiation of decision making
process. This need in the decision making aspect
has driven the companies adopt the model where
decision is taken in collaborative environment
(Hernanandez, Lyons, Zarate and Dargam 2014).
The building equation of the model
Right Information + Right Connections + Right
Time = Right Decision
7. PROFITABILITY KILLERS
Geographic Separation
Functional silos
Gap in demand for and supply of experts with
specialized knowledge
Lack of reliable data
9. WEIGHTING
The model should be such as to eliminate the
bottleneck that arises due to geographical
dispersion. This s the most significant bottleneck
faced by mining industry.
The second important bottleneck is the functional
silos, then comes availability and presentation of
reliable data.
Then the individualistic approaches and gap in
demand and supply should be taken into account
10. CONSTITUENTS OF CDE MODEL
Technology:
High quality video conferencing
3 dimensional data displays
visualization and integration portals
Physical and/or virtual environment conducive to:
Synchronize activities of the workers with work processes.
Connecting information and people at the correct time
Accepting and adopting collaboration as the best practice
Encouraging team-based approach
Training to embed priority to organizational objectives
Measurement of performance and identify area of improvemnt
11. CDE PROCESS
Identify: Enable the stakeholders and the management
understand the business process in objective way so that
the processes or roles not functioning properly could be
identified
Enable: The organization establishes infrastructure to
connect information and people in timely manner
Collaborate: Develop cooperation so that problems
identified in step 1 can be addressed
Maintain: Installation of systems to measure performance
in an ongoing process
12. BENEFITS OF CDE
CDE eliminates all the profitability killers and
improves profitability.
The issues of geographical separation are resolved
by technology
Specialized knowledge can be made available
without much physical travel
Individualistic approaches are eliminated by
introducing common processes, systems, and roles
in the organization
Reliable data can be generated and presented
through automation
13. RESULT OF CDE
5% reduction in costs
15% decrease in trouble shooting time
6% increase in production
2% reduction in production losses
(Wipro 2017)
14. CONCLUSION
In today’s competitive business scenario, the mining
industry must be flexible to changes in the decision
making process in order to increase profitability and
meet increased market demand.
Decision making process in the collaborative decision
environment would result in better forecasting and
project management, which would in turn improve
profitability.
15. CONCLUSION …..
The profitability killers identified cannot be eliminated
by traditional decision making processes. By
eliminating the profitability killers CDE increases
return on investment.
CDE implementation is new in mining projects but it is
highly effective in removing function al silos at the
beginning of a project.
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