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Cracking The Operational Efficiency Code

Posted by Alex Barshai on Sep 13, 2016 9:00:00 AM
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When we talk about operational efficiency, what do we really mean? All of us are looking to improve overall corporate performance, but how do we clearly define this?  In order to deliver services or goods in the most cost and time efficient manner, we strive to improve operational efficiency, which is frequently described as a ratio between what we put into the business and what we gain as the output.

 

Process optimization techniques 

There are many formal optimization processes that companies all over the world, large and small, actively use to improve their business operations and profitability.  Let's take a look at some of the approaches that are commonly used today:

Business Process Reengineering (BPR)

The idea behind BPR is that sometimes a radical change at the enterprise level is required to lower costs and increase the quality of service. Business Process Reengineering concentrates on organizing the outcomes and not tasks, prioritization of processes, integration of information processing work, linking parallel activities versus results integration, and one-time information capture. 

Kaizen

Kaizen is a process optimization technique that originated in Japan. Kaizen promotes continuous improvement that is based on some core principals, such as: 

  • Good processes bring good results;
  • Go see for yourself to grasp the current situation
  • Speak with data, manage by facts
  • Take action to contain and correct root causes of problems
  • Work as a team
  • Kaizen is everybody’s business

Kaizen is based on the idea that the final result is an outcome of many small changes made over a long time. A normal practice for Kaizen is to get cross-functional teams to meet at Kaizen events.

Lean Management

Lean Management is based on the principal of small incremental changes aimed to improve the quality and processes efficiency. Lean Management is striving to eliminate any waste of time, effort, and money by removing unnecessary elements in business procedures.

Total Quality Management

In Total Quality Management, all members of an organization participate in process and company culture improvements. This technique concentrates on customer satisfaction as a tool to process improvement. The customer has the final say in regards to how well company processes are optimized and whether the efforts were worthwhile. 

Six Sigma

Six Sigma is a set of tools that are used in many industrial sectors, which aims to improve the quality of output by removing the causes of defects and minimizing the variability in manufacturing. This technique focuses on: 
  • Reducing variability in manufacturing in order to achieve a stable result.
  • Defining business process characteristics that can be measured and analyzed.
  • Achieving a sustainable quality improvement.
  • Focusing on generating financial returns.
  • Commitment to making decisions based on measurable data and analysis.

 Now that we have an overview of some of the formal process optimization techniques that are available, let's look at some real world examples of how these can be applied.  In this highly competitive, industrialized, and connected world we live, process optimization and effective utilization of natural resources has never been more important.  

Recovering Value from Waste

A constantly growing demand for metals increases the world’s dependency on raw materials. When it comes to mining and refining industries, the meaning of this is how to produce more metal while spending less and generating less waste. Since the concentrations of metals in ore bodies are less and less, mining companies are required to process much more ore in order to meet their production targets while keeping to very tight budgets. Without process optimization, it is merely impossible to maintain quality, production and stable metal prices, while investing more in project development and new technologies.

Reducing Waste 

One of the biggest challenges in mining and refining sectors is reducing wastewater and tailings. With the increase in tonnage of ores processed, a sensible increase in generated wastewater is to be expected. And since regulations have become stricter from year to year when it comes to sustainable mining and environmental protection, mining companies are managing and treating waste in order to meet the stringent environmental guidelines set out by government and other stakeholders.  Optimized processes are an absolute necessity to ensure the social, environmental and safety targets of modern mining companies are met while staying profitable in today's competive metals market.

 

Wastewater Also Contains Pollutants Woud you like to know how to treat wastewater  and at the same time recover metals?

 

Investment in Automation and Sensing

One of the greatest things about living in the 21st century is having access to affordable technology and fast-paced intelligence development. Every day new technological opportunities for improvement are added to the growing arsenal of tools that can be utilized in industrial processes. One of them is a self-learning algorithm that can help plant operators to do their job more efficiently. Modern technology allows us to implant sensors capable of measuring voltage, temperature, humidity, concentration of elements and much more to a very precise level. By connecting the industrial plant to the Internet of Things (IoT) we open the possibility of monitoring and managing a plant remotely.  The self-learning algorithm can learn trends and suggest required changes aimed to optimize operations or perform preventative maintenance, turning the production facility into the epitome of a 'well oiled machine'.

Metal Markets and Weakened Economies

In 2013, a record decline in profits was registered in the mining industry. The market capitalization of the top 40‘s biggest mining companies in the world decreased 23% devastating the industry. The mining industry has been in a slowdown as stock exchanges dropped approximately 60% in a last 10 years and investment in mining companies continues to decrease every year. Just 170 million dollars was raised for mining exploration in the last quarter of 2014. States and provinces that base their economy on gas, oil and metal mining lost thousands of jobs spiking unemployment rates to 7-8%. Given all that, the demand for raw materials just keeps increasing and metals have to be supplied at lower prices. Finding ways to continuously and scrupulously optimize industrial processes is the key to financial success. Operational efficiency and processes optimization can help lower the gap between lower revenues and operational expenses. Improvement in operational efficiencies will not eliminate the effect of weakened economies and low metal prices completely, but will significantly soften their impact.

Is It Possible to Stay Afloat?

Low metal prices have been the new reality for the mining and metals industry. Mining companies cannot afford to develop countless mines and invest in equipment that will produce and sell metals at constantly eroding prices. If on the other hand they have the wherewithal to increase productivity, decrease production costs and increase margins through process optimization, they will be able to soar even in the midst of a slow market.

 

Curious to Know More?

 

 

https://en.wikipedia.org/wiki/Operational_efficiency

http://www.wmc-direkt.de/en/consulting/it-governance/known-process-optimization-methods.php

http://searchcio.techtarget.com/definition/business-process-reengineering

https://ca.kaizen.com/about-us/definition-of-kaizen.html

http://searchcio.techtarget.com/definition/lean-management

http://asq.org/learn-about-quality/total-quality-management/overview/overview.html

https://en.wikipedia.org/wiki/Six_Sigma

http://www.earto.eu/fileadmin/content/10_Hidden_Pages/Mats_Carlin.pdf

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/mining-industry-clobbered-in-2013-report/article18999828/

http://minesqc.com/en/blog/article/2015/09/14/mining-industry-downturn-explanation/

Topics: mining, Refinery Optimization