Mines are increasingly required to implement programmes showing good practice in local procurement. International standards – as well as local policy and regulation – provide requirements and guidelines, but what really works in the field? In this series, SRK Consulting’s Lisl Pullinger and Andrew van Zyl, together with Jeff Geipel, from Mining Shared Value, explore five local procurement topics, highlighting good practice principles, providing case studies from mines and recommending practical initiatives mines can take to improve how mines apply local procurement programmes. This second article focuses on how online supplier portals offer mines valuable opportunities

As mining houses look to enhance the local impact of their supply chains, they can leverage online supplier portals to good effect; however, there are a few basic guidelines to observe.

Many companies, under the daily pressure of procurement functions, lack the time to seek out new suppliers – and this is a key benefit that supplier portals offer for relatively little investment. The portals can essentially do much of this work of attracting suppliers into the supply chain.

As was emphasised in the previous article in this series, an effective local procurement focus needs to be based on a good understanding of the supplier landscape. Where resources allow, this can be built up through a physical ‘activation’ of suppliers by a dedicated team that visits, screens and enrols suppliers onto a database. Portals offer an economical alternative – or addition – to this route by harnessing digital technology and sharing the responsibility with potential suppliers to register themselves online.

This is not as simple as sending out an Internet link to local businesses and requesting their registration, however. The mining company still needs to create an enabling environment that both attracts attention and facilitates the actual completion of new applications.

This usually includes arranging a formal launch, where experienced people are available to help suppliers to navigate this digital resource. The information required by procurement departments is generally detailed and specific, and the task of providing this data in a virtual setting can be quite overwhelming – even for highly qualified businesspeople. The challenges range from the quality of the user interface to the content of the data requested, and guidance is essential to avoid a loss of momentum in the registration process in this critical phase.

This is not to say that potential suppliers are not expected to put in the necessary effort. Indeed, the portal itself has a less-recognised benefit of providing another screening layer to assess supplier capacity. If they can successfully register on a portal, they are much more likely to manage the level of digital engagement that the mine will expect.

Shared portals with other mining company participants, and those that bring in buyers from other sectors, offer considerable advantages over company-specific online databases. Primarily, they serve as a cost- and time-saving prequalification tool that assists mining procurement staff in finding targeted suppliers that have already been vouched for in terms of basic business standards. At the same time, the suppliers are exposed to opportunities beyond a single mine’s own procurement needs – potentially raising levels of supplier sustainability to everyone’s advantage.

Participating in shared portals is perhaps one of the most valuable opportunities open to mining companies in their efforts to promote local procurement. It removes a number of the barriers that discourage smaller players from even putting themselves forward for business. Procurement managers on mines could contribute considerably to economic diversification in their local economies by consolidating – through collaborating with other mines and industries in their areas.

Mines can also make good use of the review systems offered by most shared platforms – as travellers have seen on the popular Tripadvisor portals. Reviewing of suppliers offers another way in which mines can support high-performing local suppliers in growing their market reach. These possibilities create a strong argument for mines not to limit themselves to their own procurement platforms – and to engage proactively with collaborative platforms.

The success of various regional business-to-business portals – such as Invest in Africa’s African Partner Pool in Ghana, for example – is testament to the value that global corporates see in and gain from these initiatives. There is still plenty of scope in South Africa to progress down this path. Where mining companies may be concerned about data sharing and security, the technology today can invariably resolve these. Also, not all products and services required by a mine need to be included on a shared portal.

The key issue for mining procurement – in terms of its social licence to operate and the growing compliance requirements – is to explore all avenues in boosting local impact and economic diversification. While there is potential risk associated with all innovation, management’s strategic task is to ensure that systemic risk avoidance does not create unnecessary hurdles for continuous improvement. Global experience shows that shared supplier portals offer plenty of low-hanging fruit for mines to advance in their transformation journeys.

Pullinger and Van Zyl are principal consultant: sustainability and director and principal consultant respectively at SRK Consulting, while Geipel is MD: Mining Shared Value, Engineers Without Borders Canada – lfair@skr.co.za