The emergence of lean manufacturing has been observed all across the mining industry. As more company continues to improve operational performances and cut out inefficiencies, more miners will begin turning to lean practices.
Barrick Gold, the third largest gold mining company in the world, is expecting a big year in 2014. The company production guidance is around 6.5 million ounces from a portfolio that includes some of the world’s prestigious gold assets.
With five core mines — Cortez and Goldstrike in Nevada, Lagunas Norte in Peru, Veladero in Argentina and Pueblo Viejo in the Dominican Republic – Barrick Gold is continuously looking for new ways to cut costs while simultaneously increasing production, and lean manufacturing may very well be the answer.
Lean principles aren’t new to Barrick Gold. The company has been utilizing automaker Toyota’s lean manufacturing principles to help drive production teams to eliminate waste that ranges from surplus production to underused talent.
A study conducted, titled ‘Implementing Lean Principles in Mining Industry Issues and Challenges’ states that lean processes can significantly help mining companies eliminate waste and improve processes because of a shared common view with the automotive sector.
According to the study: Both rely on effective business processes; both rely on efficiency within the value stream; both strive to maximize operational efficiency; both rely on an extensive supply chain; and both sectors have a ruthless focus on safety.
These similarities bring an opportunity to successfully apply lean principles into the mining industry.
The process of formalizing improvement efforts comes down to the employees. Barrick sets annual performance commitments for its entire senior staff down to the general manager and their leadership teams. Measurements include everything from improvement coaches to creating value targets of the company to reach.
By creating a starting point, companies can focus on adding value to the end product and eliminating waste. Seven types of commonly identified waste include: waiting; over production; repair; motion; processing; inventory; and transportation. In order to make mines leaner it’s important to map every single process (no matter how small or seemingly insignificant) and streamline it.
These steps can be paramount to a mining company’s success.
Improving from within
To ensure various operations maintain their success and improve operations, Barrick Gold employs over 80 full-time business improvement (BI) coaches. Cultivated from management positions, the coaches take their posts for approximately two years. During that time, the coaches are responsible for “engaging the site leadership teams and the employees and identifying improvement opportunities, putting teams together, and facilitating those improvement projects through to completion.” The coaches then generally return to their previous areas – usually at a higher level of responsibility – armed with two years of leadership experience facilitating improvement initiatives.
Barrick puts significant energy into training coaches in improvement initiative techniques and methods. The coaches communicate with each other to a regular basis, forming a close network through which they exchange knowledge and experience. This is instrumental in securing buy-in from all levels of the organization.
Another way the company is implementing lean principles is promoting from within.
“We prefer to promote from within and bring Barrick people into the BI roles instead of using external resources so that there’s already a good relationship between the coaches and the employees at the mine sites,” explains Trevor Krawchyk, senior business improvement specialist at Barrick Gold. “We make sure we pick high-potential employees who have strong leadership capabilities and are good communicators, so there’s a credibility that’s already there when we do these types of improvements.”
Continuing the trend
As part of empowering your employees, it’s vital to provide a visual representation of key product performance date, which will empower employees even at the lowest level to make operational decisions based on data and key findings.
“Continuous improvement is more ingrained in the culture now,” explains Krawchyk. “It’s systematized, versus being something that’s off on its own. We’ve made it part of our annual business cycle.” While Barrick does not disclose the annual savings resulting from these initiatives, Krawchyk says that the cumulative effect over the last several years has been significant.
He goes on to explain the Barrick has developed a four-stage scorecard for various operations to use in a self-evaluation process to improve efforts. According to Krawchyk, “We’ve always said, you’ll never achieve or retain Stage 3 [the top stage], because the day you think you have achieved it, you’ll become complacent and lose that traction. Someone with a mindset that believes he has achieved perfection will never achieve a continuous improvement culture.”
Barrick Gold’s implementation of lean principles is ubiquitous in a world of management leadership development. The benefits miners can obtain from lean principles are substantial. With capital costs creeping up and labor becoming scarcer, these practices can squeeze margins and grow day-to-day operations. The experience of lean manufacturing from other industries suggests there is ample value to be discovered. Applied correctly, they can have serious positive impacts for miners -- just ask Barrick Gold.