5 ways Mining ERP keeps you operating at maximum efficiency
The mining industry is marked by five distinct phases, and we’re touring each of them in this series detailing the value a Mining ERP solution holds across each phase. We’ve surveyed the Exploration phase, appraised the Assessment phase, constructed a picture of the happenings during the Development phase—and now find ourselves ready to dig deeper into the Production and Operations phase. This stage is typically what people envision when they think of mining. This is where the action happens—the mine is in full operation and minerals are being recovered—making it a particularly vital and forward-facing phase. How can a Mining ERP solution deliver value during the Production and Operations phase? We’ve uncovered five ways Mining ERP keeps your operation running in high gear.
The state of the production and operations phase
Canadian mining companies are well-positioned to grow amid a strong global marketplace. In 2018, some 7,000 quarries produced more than 60 minerals and metals worth $47 billion. These are mining operations that have reached the potentially lucrative production and operations phase. Determining precisely when development ends and production begins can be tricky. It is a key determination for mining entities, though, as the change to production activity means that (among other things) certain costs are no longer capitalized and the depreciation of assets commences. It is also the stage at which the mining operation will actually begin producing inventory and recognizing revenue. This phase can last for a long time, typically 5 to 30 years or beyond.
The right technology for the production and operations phase
With the onset of such substantial changes, it follows that a mining operation’s business software needs will shift too in order to remain productive and begin generating revenue. Worldwide mining operations are as much as 28% less productive today than a decade ago, and that lack of productivity is costly and wasteful. To reverse that trend and keep operations on track, mining companies are wise to leverage technology in the form of a Mining ERP solution to provide them with accurate production data, asset depreciation tools, real-time operational data, visibility into spending, and recruiting and retention tools.
Below, we’ve identified five of the most important ways a Mining ERP solution builds value during the all-important development and operations phase.
- Production-specific accounting
Production accounting in the mining industry refers to the planning, tracking and management of all resources, materials and labour involved in mining operations. From inventory to sales, from equipment to procurement, from tax compliance to human resources, production accounting should rely on a single, shared information repository capable of storing, analyzing and sharing the relevant data to mining stakeholders. A Mining ERP application provides an ideal platform for production accounting, supporting access to the necessary data, valuations and calculations required in the production process and the efficient running of the mine.
- Monitoring progress, controlling costs and driving performance
At this phase in the mining lifecycle, all eyes are on the bottom line. Each day of mine operation consumes vast amounts of cash, so mining organizations must maintain a fast pace throughout the project and keep their human and physical resources fully productive. Changes and challenges may be unavoidable, but additional costs can be minimized when owners are armed with real-time data, operational metrics and cross-operation visibility allowing them to make faster, more strategic decisions. A Mining ERP solution provides the foundation for in-depth financial analyses necessary to optimize resources and ensure global compliance.
- Optimizing equipment maintenance scheduling
Throughout the production and operations phase, your equipment will be working as hard as you are. To minimize downtime, it’s helpful to use predictive equipment maintenance techniques. Predictive equipment maintenance promises cost savings over routine or time-based preventive maintenance, because tasks are performed only when actually needed, rather than simply because a certain time interval has passed. Equipment maintenance software, used in conjunction with Mining ERP, can optimize the longevity of your mining equipment and lower the total cost of ownership.
- Tracking and depreciating assets
When the mine enters the operations phase, the investment in capital assets begins to pay off as those assets are put to full use. Depreciation and amortization become larger concerns for the organization. While fixed asset tracking and depreciation aren’t often thought of as the glamorous side of mining, ignoring these vital functions can be costly. A Mining ERP solution can help you track assets throughout their lifecycle as well as help determine the appropriate basis of depreciation for assets used in mining activities.
- High turnover and an aging workforce
Along with virtually every other sector, mining is suffering from a talent shortage. The problem may be particularly acute as companies in the mining industry also suffer from an aging workforce, and retirement rates are anticipated to increase over the next decade. Canadian mining employers indicate that roughly 20% of their workforce is eligible to retire in the next three to five years and 6% of workers are currently eligible to retire. These retirements impact operational continuity and lead to a great loss of organizational know-how and operational experience for mining companies. Combining a robust human capital management system (HCMS) along with your mining ERP application can drive employee engagement and streamline and strengthen your recruiting efforts.
Superior data leads to superior performance
Only with access to superior data can companies achieve superior performance—companies that successfully use data outperform their peers by 20%. In addition to providing a platform to successfully complete the transactional functions required of your mining operation, a mining ERP solution can deliver the strategic functionality and data your organization needs to drive success throughout the production and operations phase.
Note: Many of the topics discussed here are tax-related and therefore should be considered and implemented in concert with your tax professionals. We are not purporting to offer tax advice in this article.
Caron Mining Solutions is a comprehensive, powerful and easy-to-use mining industry ERP solution, built on Sage ERP software, that addresses the challenges modern mining operations face. Learn more about Caron Mining Solutions here, or by contacting us here.