SOURCE: Kay Sever | November 29, 2024
In 2024, we linked history to your future success with optimization. During the Renaissance Period between the 1300s and 1600s, Renaissance Thinking focused on exploring and discovering “what was unknown, overlooked, missing or misunderstood”. Over the last 11 months, we used Renaissance Thinking to understand what’s missing from a traditional optimization scope and how to broaden that scope to capture millions of additional dollars with no additional capital. It was a journey based on real case studies, in-the-field observations about actions and reactions, and millions of dollars that either slipped away or were captured. I hope you gained some new perspectives about “exploring for more” operating and financial potential.
The following paragraphs (by month) summarize highlights/topics we covered… topics seldom/never considered or discussed by executives or management teams. Please feel free to access each article in its entirety on the Aggregates and Mining Today website to learn more.
JANUARY – We introduced the concept of “exploring for hidden operational and financial potential”. Traditional management systems were not designed to reveal, track or report potential, which means that executives and leadership teams do not have metrics for potential and are unaware they could be or are leaving millions of dollars on the table. Without the desire to explore outside the boundaries created by numbers on management reports, you will never know what you are missing from management decision criteria and how this void negatively impacts earnings and your ability to achieve/sustain your “best” performance.
FEBRUARY – We explored the history of accounting (how and why it was developed in Venice in the 1200s). By exploring this history, we learned that the 800-year-old accounting system we use today still works great to track “buy and sell” transactions. All dollars received from customers and spent for operating costs are tracked there… critical data needed by every company. When you budget for future dollars to be collected and spent, you use the actual dollars from the current year as a guide; IF YOUR GOAL SHIFTS to achieving optimization/“best possible” performance, the data in the financial system and the budget will not help you achieve that goal.
MARCH – We covered a list of questions that executives and management teams CANNOT ANSWER using actual or budget data and what this means to your business…
- What is the best your equipment and people can do?
- Do any of your budget targets exceed what is possible to achieve?
- Did you budget for losses linked to problems/inefficiencies “accepted” as part of the process?
- Are the problems listed on your project report your highest value problems?
- Are organizational weaknesses (the way your people work together) costing you money? The financial system will tell you what you spent on your organization, but IT WILL NOT TELL YOU how much you lost due to inefficient practices within/between departments.
- Are management system practices disconnected from your “best possible” goals?
APRIL – We examined management beliefs and perspectives about performance and capabilities that may not be true… beliefs and perspectives supported by actual and budget data used for decision-making. This month we covered two of these beliefs in detail:
- We have all the data we need to minimize our risk of loss.
- The traditional approach to variable/fixed cost analysis will tell us where to cut cost.
MAY – We explored seven management mindset shifts that must occur to “lift the lid on performance” and achieve and sustain optimization.
Perspective #1 – SHIFT FROM “Can We Meet Budget?” TO “How Good Can We Be?”
Perspective #2 – SHIFT FROM “Getting Better” TO “Getting It All”
Perspective #3 – SHIFT FROM A “Cost Reduction Focus” TO A “Loss Reduction Focus”
Perspective #4 – SHIFT FROM “I Manage My Box” TO “I Co-Manage the Value Stream”
Perspective #5 – SHIFT FROM “Us vs. Them” TO “We Are One Team”
Perspective #6 – SHIFT FROM “Barriers Can’t Be Removed” TO “No Barriers Are Acceptable”
Perspective #7 – SHIFT FROM “Change Takes a Long Time” TO “Change Happens in a Moment”
JUNE – Part 1 of 2 – There are two kinds of management strategies – objective (numbers based) and subjective (people/organization based). In June we focused on objective management strategies impacted by optimization.
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- Managing to Meet Budget
- Focusing on Cost Reduction
- Increasing Productivity/Run-Rates
- Delay Management (equipment availability/utilization)
JULY – Part 2 of 2 – There are two kinds of management strategies – objective (numbers based) and subjective (people/organization based). In July we focused on subjective management strategies impacted by optimization.
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- Degree of Centralization
- Vertical vs. Horizontal Management
- Customer/Supplier Requirements
- Management Responses to Problems
AUGUST – Part 1 of 4 – When management system data, strategies and practices are out of sync with management requirements for optimizing performance, “mismatches” occur that act like invisible barriers to a company’s ability to achieve and sustain their best performance. In Part 1 of this 4 four series, we further define these mismatches. We also talk about consequences of NOT upgrading your management system to “optimization management” standards, such as
1) Making less money than you could have,
2) Reverting back to old ways of doing things,
3) Losing the “future gains” you worked for and
4) Attributing these failures to a belief that change is just too hard or “it’s just the way it is here”.
SEPTEMBER – Part 2 of 4 – Case Study #1 – Mismatches and Haul Truck Tire Management
If you applied “optimization upgrades” to haul truck tire management, you would know
- Tire hours you paid for but lost, as well as the dollars that were wasted.
- Losses you had accepted as normal and budgeted for (maybe 20-40% of your budget).
- Losses linked to specific tire management and equipment operator practices.
- Which practices to change to extend tire life and how to communicate progress to your people.
OCTOBER – Part 3 of 4 – Case Study #2 – Mismatches and Drill Management
If you apply “optimization upgrades” to drill management data and management strategies, you would a lot more about drill utilization, actual drill hours lost or hours overestimated in the budget.
OPERATING HOURS LOST – if you have this data by reason, you would:
- Know if a delay was not being managed like it should be (a free solution).
- Know if you had extra drilling capacity that was hidden by weak drill management practices.
- Have a new tool to avoid “blasted inventory shortages” and all the problems that come with them. How many millions of dollars would that be worth?
OVERESTIMATED DRILL UTILIZATION in the budget (sometimes 20%-30% too high):
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- Explains budgeted drill targets that have been missed year after year and affects management decisions about employee bonuses/incentives, capital requirements, expansion plans, and value stream management strategies.
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- Management’s response to overestimated drill utilization has a far-reaching effect beyond drill productivity. In this case, management’s words and actions positively or negatively affect workforce relations/trust, corporate culture (“the way we work”) and management credibility.
NOVEMBER – Part 4 of 4 – Case Study #3 – Mismatches and SIPOC Processes
SIPOC (Supplier-Input-Process-Output-Customer) work touches many groups/departments…
- Production functions: drilling, blasting, loading, hauling, crushing, grinding, floatation, smelting, refining, tailings, loadout to name a few. Unmeasured losses can occur between each.
- Working relationships between internal functions and external customers/suppliers can cause millions of dollars of losses. Causes viewed as “unsolvable” are often solved, stopping the losses.
- Administrative groups that support production gain knowledge about their customers’ requirements. Knowledge is power and in this case, it’s also worth millions in extra earnings.
- External suppliers and customers can be involved, which extends the goal of “best possible” beyond your company’s borders to important business partners.
- Two case studies of incorporating optimization metrics into SIPOC work were shared.
- MISPLACED PLANT EXPANSION: $75,000,000 capital placement mistake was avoided.
- POOR ADMIN SUPPORT: Procurement gained knowledge that saved $4,000,000/year.
Thought for the year – 2024: Combining Renaissance thinking with optimization metrics and optimization management strategies positions your company for maximum earnings and long-term success. If executives and management teams have a desire to explore for hidden profit potential, they will discover information about their assets, people and management system that will give them a huge competitive advantage and answers to questions about “what’s possible to achieve”.
IN CLOSING: We cannot end this article without introducing our theme for 2025. Of course it will again involve your success with optimization. The theme for 2025 is: Sustaining Optimization Gains. You will learn about some unknown/hidden barriers that impact day to day performance and long-term trends, as well as management “moments” that can stop your progress in an instant without your knowledge.
Wishing you all the happiest of holidays… can’t wait to start down this path with you in 2025!
Kay Sever is an Expert on Achieving “Best Possible” Results. Kay helps executive and management teams tap their hidden profit potential and reach their optimization goals. Kay has developed a LIVESTREAM management training system for Optimization Management called MiningOpportunity – NO TRAVEL REQUIRED. See MiningOpportunity.com for her contact information and training information.
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- About Us
Kay has worked side by side with corporate and production sites in a management/leadership/consulting role for 35+ years. She helps management teams improve performance, profit, culture and change, but does it in a way that connects people and the corporate culture to their hidden potential. Kay helps companies move “beyond improvement” to a state of “sustained optimization”. With her guidance and the MiningOpportunity system, management teams can measure the losses caused by weaknesses in their current culture, shift to a Loss Reduction Culture to reduce the losses, and “manage” the gains from the new culture as a second income stream.
