In recent years the massive leap in progress from digitalisation and automation has again offered M&MP players a major challenge: Adapt or become irrelevant and unsustainable. Therein lies the opportunity. Yes, adoption in this sector has been incremental, but right now there is a scramble to take a leap and unlock the imbedded value. McKenzie suggests more than $1 trillion in value can be unlocked globally. South Africa, with roughly 1% global GDP, is highly reliant on this sector and thus feeling the need to push hard in order to stay on the curve in the digital transformation game.
Driver of Change
What are the drivers for the current phenomenon?
Firstly, profits are down and productivity in operations has declined over the last two decades (however, the industry received a kick-up the proverbial following the 2008 market crash and demonstrated a drastic slow-down in productivity decay since then). These drivers of change are now accelerated with a changing workforce (Millennials needing a very different working environment and an urgency to make a difference), a rapidly evolving customer and stakeholder ecosystem (community employment, safety, sustainability and impact consciousness being critical factors) and thirdly, the very real prospects from technological advances in the digital space.
In order for M&MP players to capitalise from IR4 and pursue sustainability, the opportunities with digitalisation in productivity improvement, operations management, maintenance management, supply chain management, health & safety and other labour related factors, must be realised.
So far, a significant number of success stories can be found, each liberated by early adopters exploiting the natural inertia in the industry. Examples reported by the major research & consulting firm include:
- Rapid ROI realisation;
- Double digit margin improvements; and
- A surprising number of references to improved culture dynamics due to empowered resources achieving meaningful improvements through innovation.
For example, several mines have realised success with predictive maintenance enabled by latest statistical analysis techniques linked to rapidly learning AI models. Site routings are optimised utilising low cost sensors, combined with enhanced communications and geolocation technologies, collectively allowing for optimal machine and resource movement. These technologies are being operationalised in mining plans generated from improved mineral resource analyses and mine development programs. The latter courtesy of the latest data analysis techniques.
Looking at hardware: robotic drills at the mine face, driverless trucks hauling ROM safely and drones monitoring spoils and boundaries, are mentioning only a few of the differentiating technologies being deployed at mine operations and integrated with systems at enterprise level.
Fully integrated, you can only imagine the compounding differentiation a mine will enjoy from all these systems.
It is clear that the adoption of digitalisation is no longer a technology issue. It is a management issue. Management will need to get this done or face tough challenges ahead. Organisations will need to assign executives with clear innovation objectives and resource their teams to accelerate implementation and realise value.
In a report on industrial adoption of digital technologies McKinsey suggests value creation to be achieved across 5 domains, being:
- Innovation – developing products and services, i.e. realising the value from data-enabled business models and connected products;
- Making & delivery, i.e. enhanced supply chain, enhanced forecasting, production and streamlined delivery;
- Selling, i.e. enhanced customer experience, optimised pricing;
- Servicing, i.e. managing against customer demand, managing parts and labour; and
- Running the organisation, i.e. improved finance systems, HR systems and, ideally, a strong and enabling IT backbone.
We are thus at a tipping point where Mining operators need to manage variability and change and drive productivity and sustainability by using the available technological advancements. These technologies are grouped in the report as:
- Data, computational power and connectivity
- Analytics & intelligence
- Human – machine interaction
- Digital to physical conversion
Sadly, the adoption rate has been slow and FLDSmith reported that less than 5% of Mining operators are effectively utilising IOT for operations management, suggesting that significant improvements can still be achieved through digital maintenance and process optimisation, i.e. reducing utility consumption or improving safety and compliance.
Over the last decade robotics and automation related hardware globally reduced in cost by 50% while labour cost doubled (much more in certain countries). Tech cost is not the thing holding you back. Plus, there is a continuous flux of new technologies maturing and ready for deployment in industrial environments. The latest in wearable sensors will enhance work environment and human condition monitoring, offering significant improvement in safety and security. A further benefit will come from smart glasses pushing information and instructions to operators, minimising the duration for humans to be in high risk areas. Ultimately, progress in robotics will remove us completely from risk in the workplace. Humans will upskill and move away from high-risk, mundane and repeated tasks and we will rather focus on innovation and management.
However, there are concerns: will technology put humans out of work (on 1 to 1 basis)? And how secure is data? What risks will these operations have when so dependent on digital systems and highly skilled workers to operate? These aspects continue to be explored and are touted as some of the major factors causing hesitation with digital adoption at many corporates.
What to do?
Do you have the required skill and knowledge in-house? To ensure successful digital transformation, you need the right experience on your team. Organisational design, strategic partnership and progressive development of skills and attitudes are all essential to maximise benefits from your digital investment.
If you have not planned your strategy and organisation, get help. It is prudent to fully understand the strengths and weaknesses in your business, but also the knowledge, attitudes, skills and habits that will support or detract from your digital journey. Once you have an understanding of your business and the objective with digital, then look at specific technology for solutions.
We live in exciting times with amazing opportunities available to organisations that are proactive and getting themselves ready for the digital transformation journey. Don’t allow your business to be caught lagging behind!
Johan Louw is the founder of Aguru Business Solutions. He helps companies to get ready for automation and digitalisation.
Aguru Business Solutions