SUPPLY CHAIN CONFERENCE

THEME 3 - SECURITY OF SUPPLY Colin Kittel

Setting the scene• A key objective of supply chain management (SCM) is adding value to end

users / customers

• Value is added by:• Competitive pricing of products and • Product availability

• Whilst SCM has influence on price competitiveness, its principal focus is product availability

• Product availability is a function of inventory management and transportation effectiveness

• Put another way, the SCM challenge is about having the right product, in the right quantity, at the right place and the right time. If that happens customer value has been created.

Setting the scene• My purpose today is to outline just how massive the challenge of security

of supply can be.

• By way of example, I have selected the issues associated with the supply chain for a remote area mining operation.

• I only propose to outline the issues, not address the solutions.

• Whilst the issues I will raise are specific to the mining operation being used as an example, they represent a generic range of issues which, in one form or another, could impact the security of supply for many enterprises.

• No doubt the conference will deliberate on effective ways to address such issues.

The mining operation

• Open cut copper and gold mine.

• Produces about 700,000 dmt of copper concentrate (28% copper) and 550,000 ozs of gold pa.

• Located in the Star mountains of PNG’s Western Province.

• Only access is by way of the Fly River to Kiunga (450 nm) + 135 km road transport to mine site or by air.

• No road connection with other parts of PNG.

Location map

Map of the area

Scope of inwards supply chain

• Consumables, spares and capital items required for the mining operation – about 50,000 tonnes of general cargo pa. Inventory is approx 53000 line items.

• Fuel for mining operations, power generation to supplement hydro system and the community at large – about 100 million litres per annum

• Food and consumer goods for company messes and the community at large.

Scope of the outbound supply chain

• Copper concentrate

• Empty containers

• Repair & return items

• Sold off obsolete equipment and inventory items

• Repatriation of contractor equipment

Some supply chain challenges

• Uncertainty in requirement and availability

• Where is it? Expediting and order tracking • Timeliness / frequency of the shipping

• Rain – the impact of having and not having

• Container availability

In conclusion

• This session of the conference will address supply chain security.

• I hope I have given you some food for thought about what that might mean in the context of the broad scope of supply chain management.

• I wish you well with your deliberations and interactions at this conference.