NATURAL RESOURCESTHE PATH TO MINING

EXECUTION EXCELLENCEThe Benefits of Operational Stability

CONTENTS

Introduction: The Benefits of Operational Stability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Operational Stability is the First Step to Transforming the Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Why Operational Stability is the Foundation for Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The Important Connection to Short Interval Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

The Benefits of Stability-enabling Technology: An Example from Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Technology-driven Variation Reduction: A Manufacturing Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Lean Manufacturing Principles and Technology Applied in Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

From Operational Stability to Agility and the Virtual Mine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Dassault Systèmes Natural Resources Industry Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

The Virtual Mine

The Path to Mining Execution Excellence 1

INTRODUCTION: THE BENEFITS OF OPERATIONAL STABILITYMining company profits are being pressured by the uncertainty that remains in the global economy and by a cost and profitability curve that has grown tight over the past twenty years. This is why it is critical Operational Stability – the predictability of expected mine production, costs, and performance levels – be attained. Getting there requires mining and plant processing activities function at higher levels of productivity and efficiency so that conformance plan is always realized.

The quickest avenue to improved Operational Stability begins with reducing the variability in the planning and execution of mining and processing. This requires comprehensive planning, optimized scheduling, and disciplined work management.

Stability increases throughput, reduces waste and associated costs, and ensures production and quality targets are met. The key lies in harnessing operational data. While “big data” may be produced in mining in terms of volume, it must become visible, analyzable, and it must be made actionable to executives, mine management, and frontline workers. If it is, the path to Mining Execution Excellence, and eventually Business Agility, is paved. As we will see, enabling technology is one of the most important requirements to begin the journey.

Figure 2 . EXAMPLE BENEFITS OF OPERATIONAL STABILITY Improvements realized by companies from three different industries where technology was used as the enabler for operational stability .

IMPROVEMENT DRIVEN BY: IMPROVEMENT DRIVEN BY: IMPROVEMENT DRIVEN BY:

The Path to Mining Execution Excellence 2

Operational Stability is the First Step to Transforming the EnterpriseEstablishing predictability in operations is the first step towards transforming mining businesses in a meaningful way . Without control over operations, attempts at becoming agile may not deliver the desired value . If mining businesses do not understand how healthy their operating processes are (including their inputs, plans, equipment, labor, and supporting activities), and how well they are functioning in the now, they will continue to waste resources (capital, equipment, labor, and even the mineral assets) .

Mining operations that continue to operate in the dark, without information fed back into processes, will continue to see variability in operating efficiency, and planned versus actual production will perpetuate .

Many industries have achieved a level of execution discipline well beyond what the mining industry is experiencing today . Advances in technology have led a number of waves of increased execution performance . The industrial internet is driving the latest wave of execution excellence and setting the standard with which most must meet just to stay competitive .

Decades ago, manufacturing established process and systems to support Operational Stability, setting a foundation for agile decision-making and dramatic transformations . Today, companies from a wide variety of industries can design, simulate, and manage their businesses by leveraging seamless collaborative environments, connecting their operations, employees, suppliers, and even their customers . This technology exists today for mining companies, if they choose to embrace it .

Why Operational Stability is the Foundation for Change Toyota is recognized as being one of the most efficient companies in the world . It is also one of the most studied since it pioneered key methods of reducing variation, with stability being the first and most critical step, because it underpins everything else that follows . Stability includes the general predictability and consistent availability in terms of manpower, machines, materials, and methods . Under each of these basic building blocks of these basic building blocks of manufacturing, Toyota tries to establish consistency and predictability .1

Figure 3 . LEAN MANUFACTURING A former Toyota Chief Engineer identified 7 wastes of manufacturing, all of which apply to mining: • Overproduction • Transportation • Unnecessary Inventory • Inappropriate Processing • Waiting • Excess Motion • Defects2

The Path to Mining Execution Excellence 3

The Benefits of Stability-enabling Technology: An Example from Manufacturing

Figure 4 . SHORT INTERVAL CONTROL Short Interval Control is performed several times per shift and combines historical analysis, identification of future risks, and proactive action planning .

Short Interval Control (SIC) is a factory-floor process for driving production improvements during the shift . Each shift is split into short intervals of time, within which plant-floor employees use data to identify and implement improvement actions . These improvement actions may be countermeasures to ongoing or emerging problems, or they may be actions to improve existing production . SIC can be seen as a form of Kaizen, as it encourages teams to work together to achieve regular, incremental improvements to the manufacturing process .3

A key feature of SIC is the use of real-time production data to guide instantaneous front-line decision making . Teams are trained to collect, analyze, and react to this data in order to drive significant performance improvement . The core principle behind Short Interval Control: the past cannot be changed, but we can learn from it to improve the future .4

When AGCO, the world’s largest manufacturer of tractors and third largest supplier of agricultural machinery, decided to build the world’s most modern tractor factory capable of producing 20,000 tractors a year, it knew it had an opportunity to significantly improve upon the performance of its existing factors .

AGCO’s factories implemented a Manufacturing Operations Management (MOM) platform which captures real-time production data to enable quick visibility to all production activity with drill-down options to the machine level . A production dashboard provides key performance indicators which are updated continuously for management review . The system automatically captures machine/production states (running, downtime, set-up) . AGCO’s system downloads work orders from their ERP system, which are then updated with production data to form a seamless continuous improvement loop .

With its MOM, AGCO has:• Documented a doubling of production volume without reducing efficiency, as measured by

fixed cost KPIs (efficiency and productivity) or production time and variable cost per unit, resulting in a higher profit margin .

• In its first year improved Overall Equipment Effectiveness by 22% in core machining area .

• Projected that assembly line productivity will increase by 25-30% in the first three years .

• With increased transparency improved allocation and utilization of capital invested for machines .

• Standardized, reliable and objective process performance data such as production times, setup times, and non-productive times has allowed better management of valuable capital equipment and product quality .

• Monitoring, improving and accelerating the machine maintenance processes has reduced downtime leading to a lower operating costs .

• Consistent, automated data acquisition and KPI calculations which provide greater transparency on the shop-floor in support of waste elimination and performance improvements – including comparisons across sites .5

The Important Connection to Short Interval Control

The Path to Mining Execution Excellence 4

Technology-driven Variation Reduction: A Manufacturing Example To meet production and quality targets, and control costs, manufacturing has strived to optimize the performance of the business processes that see inputs of material and labor turned into outputs and finally finished products . By monitoring and analyzing processes, manufacturing has found ways reduce variation by making them more efficient and predictable .

A good example is Cummins, a global manufacturer of engines, filtration, and power generation products, who sought to improve production efficiency and to deliver zero-defect products to its customers . To realize this goal, it recognized that technology had a key role to play . Its solution was to employ a holistic, Manufacturing Execution System (MES) to gain real-time visibility into, and greater control over, the performance and efficiency its manufacturing operations .

With its MES, Cummins directs manufacturing processes that are synchronized with product conveyance systems and in-line, order specific quantity measurement, test-cell and camera systems . Its MES also enables Cummins to precisely align both kitting and sub-assembly operations with final assembly processes in a complex assembly environment where no two engineers in a row on the line are typically the same .

The synchronization of its processes has translated into greater efficiency, higher manufacturing productivity and competitive differentiation . It has realized throughput improvements up to 25%, due in part to significant quality improvement and waste reduction .6

Lean Manufacturing Principles and Technology Applied in Mining The key causes of instability in mining include:

• Planning: Not all required tasks/activities are planned sufficiently .

• Scheduling: Not all planned tasks are robustly scheduled based upon specifications (sequence, time, duration, tons, grade, maintenance, safety, regulatory compliance, etc .) .

• Execution: Not all scheduled tasks are completed or tracked to specifications (sequence, time, duration, tons, grade, maintenance, safety, regulatory compliance, etc .) .

By focusing on tactical and operational control, mining companies can achieve increased stability and conformance to plan . While mining faces some factors such as geology and weather conditions that manufacturing does not, a great deal of variation can be reduced in mining activities . If planning and operational data is utilized effectively, it can provide rapid insight into how well activities are performing, enabling fast adjustments as operating conditions change . The analytics it enables will also drive continuous improvement .

While many mining companies have elements of MES/MOM, only a few are just starting to adopt the ISA-95 architecture found in manufacturing . Level 3 deploys MES/MOM, or in the case of mining what might be called Mining Execution Systems (MES) and Mining Operation Management (MOM) platforms .

Figure 5 . MANUFACTURING INDUSTRY’S STANDARD ARCHITECTURE: ISA-S95 Alignment

The Path to Mining Execution Excellence 5

MES/MOM enables superior work management through increased visibility and control over performance . It does this through up-to-the-minute tracking and management of: mining and processing activities; equipment; maintenance; labor; support; and other inputs and outputs to provide:

• The ability to update activities and tasks between scheduling cycles .

• Real-time visibility into capacity, availability, and performance .

• Enhanced ability to manage activities and tasks and priorities to account for changes in production and unexpected events .

• Communication of new and updated work orders instantly wherever they are required .

• Assurance that activities and tasks are completed to specification (sequence, time, duration, tons, grade, maintenance, safety, regulatory compliance, etc .) .

• Efficient handover of incomplete activities and tasks between shifts .

An additional level of stability is enabled when scheduling can be connected to the MES/MOM to achieve Short Interval Control . When continuous feedback loops become part of the scheduling process for production, blending, waste, maintenance, and support schedules, adjustments can be rapidly made to keep production on track . With wireless infrastructure, MES/MOM can gather data from any part of the mine, even underground, and dispatch work orders digitally to employees in real-time .

Standardized work processes, when Business Process Modeling capabilities are available in the MES/MOM, are another key aspect that underpins stability . While some mining companies have undertaken great efforts to document procedures, it is difficult to ensure that they are followed if they remain on paper and filed away . Through MOM systems, work instructions, review and approvals become routine and consistent, since they are embedded in employees’ job tasks . This ensures better execution every day, month and quarter .

Lean Manufacturing concepts used in manufacturing are starting to be applied in mining . One example is has seen an early adopter double production and achieved a 44% improvement in unit cost, without adding additional equipment .

From Operational Stability to Business Agility and the Virtual MineOperational Stability is the first and most important step a mining company can take to begin transforming itself . It not delivers the benefits of greater productivity and conformance to plan; it ensures improvements gained are sustainable . Operational Stability is also the foundation for Business Agility and the Virtual Mine . The digital mine will provide access to all data, from every mining operation . This “big data” will be analyzable to yield patterns, trends, new ideas and game-changing improvements that could not otherwise be discovered .

Figure 6 . SHORT INTERVAL CONTROL driven by Integrated Work Management

Figure 7 . Work Instructions Generated in MES/MOM Delivered Digitally and Instantaneously .

Our 3DEXPERIENCE platform powers our brand applications, serving 12 industries, and provides a rich portfolio of industry solution experiences. Dassault Systèmes, the 3DEXPERIENCE® Company, provides business and people with virtual universes to imagine sustainable innovations. Its world-leading solutions transform the way products are designed, produced, and supported. Dassault Systèmes’ collaborative solutions foster social innovation, expanding possibilities for the virtual world to improve the real world. The group brings value to over 190,000 customers of all sizes in all industries in more than 140 countries. For more information, visit www.3ds.com.

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The Virtual Mine will form a platform for innovation by being the virtual environment to try out innovative, perhaps challenging ideas that would never tried out in real life due to risk or cost of failure . It will offer immersive, 3D simulation which allow all ideas, small and large, to be explored, so they can be proved and improve upon before being implemented in the real world .

Manufacturing and many other industries have benefited from digital environments of their own . They are commonly known as Product Lifecycle Management systems, and are the norm in manufacturing engineering and innovation .

DASSAULT SYSTÈMES NATURAL RESOURCES INDUSTRY EXPERIENCEDassault Systèmes, the 3DEXPERIENCE® Company, provides business and people with virtual universes to imagine sustainable innovations . Its world-leading solutions transform the way products are designed, produced, and supported . Dassault Systèmes’ collaborative solutions foster social innovation, expanding possibilities for the virtual world to improve the real world . The group brings value to over 190,000 customers of all sizes, in all industries, in more than 140 countries .

Leveraging Dassault Systèmes’ capabilities proven to transform major industries, it is reimagining how productivity is addressed in mining, through its next-generation technologies, to enable Operational Stability . To enable mining companies to exploit and respond to changes in the economy, operating conditions, and within the industry as a whole, it provides its customers with the capabilities required to introduce and ignite Business Agility .

Companies using Dassault Systèmes solutions across different industries to plan and manage the execution of their operations have increased operating margins 2-4%, and reduced variation to plan by 20% or more . One mining company has improved mine production output by 44% and doubled mine production .

To learn more about Dassault Systèmes solutions for mining, visit 3DS.COM.

References1 . Achieving Basic Stability by Art Smalley

2 . Lean Manufacturing by EMS Consulting Group

3 . Short Interval Control by PerfectProduction .com

4 . Short Interval Control by LeanProduction .com

5 . AGCO Sows Seeds for Greater Visibility, Control and Efficiency with Apriso by Apriso

6 . Cummins Revs up Production with Apriso by Apriso

The Virtual Mine