SMA Supply Chain Forum PotashCorp

Transcription

1 SMA Supply Chain Forum PotashCorp Tim Herrod Vice President, Procurement April 2017 PotashCorp.com 1

2 Mission: Creating and sustaining competitive advantages through innovative supply chain strategies that support PotashCorp s priorities and foster long-term partnerships

3 Differentiated Supply Chain Value Aligned to Business Needs and Desired Context Strategic Context Alignment with business priorities, needs and strategic direction External Forces Dynamic orientation Adaptable to conditions Creates and sustains supply chain advantage 3

4 Competitive Advantages through Supply Chain Strategies Aligned to Business Needs and Desired Context Strategy Improve Innovation Supplier enabled innovation through connecting and facilitating new approaches, processes and products across our operating sites through formal motivation of supplier capabilities and resources Reduce Waste Identifying supply chain inefficiencies, eliminating duplication, enabling continuous improvement and reducing costs through center-led operating systems, aligned business processes, policies, tools and training Reduce Life Cycle Costs Consolidate, leverage and utilize our entire enterprise spend, competitive processes, demand management, standardization and supplier collaboration to reduce life cycle costs of materials and services strategically procured Decrease Supply Chain Risk Active management of total supply chain risks, including reputation, to ensure consistent and uninterrupted flow of materials and services, and with a particular focus on quality, reliability and corporate social responsibility 4

5 World Class Procurement Organization Goals Aligned to PotashCorp Strategic Priorities and Values Strategy 1 Help sites drive down the industry cost curve ($150M/yr cost savings target) 2 Have a positive impact on productivity and SH&E 3 Act as a proactive, strategic partner in jointly solving business problems with Operations 4 Evolve into a key talent hub for PotashCorp 5 Provide a robust governance framework for how we do business and support our local communities 5

6 Integrated Approach To Sustainable, Repeatable Results Design Business Processes Best Practices Integrated Value Chain High Capability Fast and Cost Effective People Tailored org. structure Clear roles and resp. Capability development Performance mgmt. Management System Linked to strategy KPI s and score cards Decisions and actions Accountabilities Behaviors Fact based dialogue Team based vs. individual Embedded and ingrained Values Consistent with strategy Contextual and grounded Culture Results Delivered and sustained Owned by organization Achieved by organization Continuous Improvement Learning organization Always testing the current 6

7 Focus Of Strategic Procurement Operational Excellence through Quality Suppliers and Value Relationships 7

8 Creating Economic Impact Through Inclusion You re Not Alone Addressing D&I With All Suppliers Strategies to give each supplier group an opportunity to align with our inclusion priorities Procurement Strategies Currently, 85 percent of spend with non-aboriginal suppliers Encouraging non-aboriginal partners to explore opportunities for partnerships or greater inclusion Aboriginal Opportunity Partners First Nation or Métis owned Aboriginal Ownership Integrity of ownership structure Non-Aboriginal Suppliers Majority of our supply chain Looking for Aboriginal content Together We Grow 14

9 Strategic Procurement Takes Broad View Direct Cost Is One Piece In Assessing Full Lifecycle Cost Being a low-cost supplier is important in a competitive potash industry Neglecting any piece will hurt your competitive position Supporting inclusion is a strategic priority for PotashCorp Together We Grow 9

10 DIRECT EMPLOYMENT ABORIGINAL BUSINESS AND ENTREPRENEURSHIP GOAL To be a company whose supply chain reflects the diversity of our operating communities. ABORIGINAL SUBCONTRACTING COMMUNITY INVESTMENT

11 PotashCorp s Aboriginal Content Playbook Working With You to Develop a Plan Provides sample strategies, goals and targets Will help: Identify diversity priorities Set measurable goals Build meaningful relationships with Aboriginal partners Available at potashcorp.com/about/procurement Access the Playbook by following the link to Diversity and Inclusion Read online at PotashCorp.com Together We Grow 11

12 Examples of Supplier Commitment Supplier with a 5-year contract Criteria Commitment Est. Direct Impact/Cost Direct Aboriginal Employment 5% increase in Aboriginal hires per year based on historical turnover Value = $125k/yr Contract value = $1.8M Aboriginal Sub-contracting % increase in LAC spend /yr Value = $125k/yr Contract value = $1.75M Annual/ Contract Value =($2k x 5yrs) New Aboriginal Business & Entrepreneurship ID and carve out a suitable product line and develop two start up Sask. Aboriginal-owned fabricating shops Target by the end of Year 5. Progress and impact will be measured over course of contract Community Investment Two youth scholarships Two career fairs Value $1k/yr Together We Grow 12

13 Local Regional Global Utilizing Spend Data to Set Priorities and Work Plans Center-Led Approach to Operating and Capital Spend Management Operations % of Total Spend Categories Category Managers 35% Bearings & PT Electrical Eng. Services Environ. Services Equip & Tool Rentals FR clothing Industrial gases Instrumentation IT & telecom MRO - Consumables Lab supplies Pipes, valves & fittings Offices supplies Processing Equip Prof. services Pumps Reagents & chemicals Ropes & cables Heavy Mobile Equip Nutrient Managers I T 15% Dedust oil Drilling & geological services Facilities mgmt Janitorial Material handling Mining contractors Light mobile equip Printing Raw materials Security Scaffolding Nutrient-specific requirements eg. N catalyst Site Leads 50% Contract services and other site-specific requirements 13

14 Global, Regional, Local OPEX and CAPEX Operating and Capital budgets significantly reduced We must buy, run, and rebuild our equipment more efficiently Therefore, actively engaging and challenging our suppliers similarly We are working to develop and execute high priority strategic contracts that will: Support those key operating and capital spend categories, and Create long term sustainable results for our operations and those suppliers who innovate with us. 14

15 2017 Priorities Procurement Team We are: Continuing to work through Global Categories, which may have Regional carve-outs Focusing on key capital projects which will drive Regional opportunities long term These high priority Regional opportunities will be utilized to form long term Master Supply Agreements Local Master Supply Agreements will also be prioritized Resource constrained, so are working through prioritization with Operation s direction 15

16 2017 Priorities OPEX and CAPEX Global Categories Regional Categories / Global Carve-outs Materials Handling Light and Heavy Mobile Equipment New equipment (underground and surface) Rebuilds and parts Machining and Processing Pumps Scaffolding Fuels, Oils, and Lubricants Chemicals and Reagents Materials Handling Light and Heavy Mobile Equipment New equipment (underground and surface) Rebuilds and parts Machining and Processing New Mine and Mill production / process equipment Rebuilds and parts Mining Contracting General and Trades Contracting Paintings, Coatings, and Roofing 16

17 2017 Priorities OPEX and CAPEX Local Trades Contracting Electrical Mechanical Civil Structural One-off equipment Specialty services 17

18 Some Collaboration / Innovation Opportunities Machining and Processing Spare parts inventory management (Vendor Managed Inventory) Equipment performance audits and KPI programs Long term rebuild programs New technology testing programs, with ROI analysis 18

19 Integrated Digital-Physical Supply Chains Use Case Examples: Asset Intelligence & Predictive Maintenance; Worker Safety & Productivity Collect and translate physical records into digital record ERP & Automation Systems Cellular, Satellite & Wi-Fi Comms. Cloud Computing Visualize and analyze digital information Internet of Things Blockchain & Cryptography Physical Additive Mfg. Decision Support Machine Learning Artificial Intelligence Visualization Digital Transform digital analysis into physical change Robotics Autonomous Vehicle + Drones Virtual/ Augmented Reality Intelligent Workflow Automation

20 Supplier Innovation Day(s) Concept Track 2: Suppliers Not Currently Part of Global Contracts Plan with Center/Site Leadership, Technical, Capital, etc Supplier Engagement, Presentations Idea Selection, Testing, Funding 1 Set program terms, PCS participants Determine Ops Focus Areas Determine Innovation Areas Invite Suppliers Innovation Day Presentations Short-list Best Ideas, Testing/ Proving 7 Select and Fund Ideas Rules, dates & location(s) Nutrient strategies Attendees & advisors Mine, mills, chem plants Processes & systems Safety & environmental Ops, Maint, etc Digital & automation Energy, water, emissions, waste Sensors, software monitoring of conditions, people By opport, innov areas Access to technical Shortlist best, invite to faceto-face Supplier presentations Attendees challenge Technical, economic evaluations Align based on objective criteria Advanced validation, onsite testing Inform winner(s) Contract Implement 20

21 Thank you There s more online: PotashCorp.com Visit us online Facebook.com/PotashCorp Find us on Facebook Twitter.com/PotashCorp Follow us on Twitter