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Executing a Business Aligned Supply

Chain Value Delivery Strategy

Best-in-Whose-Class?

Newmont Mining

Ramsey MusaVice President, Supply Chain

The Hackett Group

Dr. John KamauffPrincipal, Strategy and Business Transformation

www.sig.org/eval

Best-in-Whose Class? Executing a

Business Aligned Supply Chain

Value Delivery StrategySourcing Industry Group Global Summit

October 27, 2015

Newmont Mining Corporation – Slide 3October 27, 2015

Cautionary statement

Cautionary statement regarding forward looking statements:

This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section

21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provided for under such sections.

Such forward-looking statements may include, without limitation: (i) estimates of future consolidated and attributable production and sales; (ii)

estimates of future costs applicable to sales and All-in sustaining costs; (iii) estimates of future consolidated and attributable capital expenditures;

(iv) our efforts to continue delivering reduced costs and efficiency; (v) expectations regarding the development, growth and exploration potential of

the Company’s projects, including the Turf Vent Shaft, Merian, Long Canyon Phase 1, the Tanami Expansion and the Ahafo Mill Expansion; (vi)

expectations regarding the repayment of debt from cash flows and existing cash; and (vii) expectations regarding future price assumptions,

financial performance and other outlook or guidance. Estimates or expectations of future events or results are based upon certain assumptions,

which may prove to be incorrect. Such assumptions, include, but are not limited to: (i) there being no significant change to current geotechnical,

metallurgical, hydrological and other physical conditions; (ii) permitting, development, operations and expansion of the Company’s operations and

projects being consistent with current expectations and mine plans, including without limitation receipt of export approvals; (iii) political

developments in any jurisdiction in which the Company operates being consistent with its current expectations; (iv) certain exchange rate

assumptions for the Australian dollar to the U.S. dollar, as well as other the exchange rates being approximately consistent with current levels; (v)

certain price assumptions for gold, copper and oil; (vi) prices for key supplies being approximately consistent with current levels; (vii) the accuracy

of our current mineral reserve and mineralized material estimates; (viii) the acceptable outcome of negotiation of the amendment to the Contract of

Work and/or resolution of export issues in Indonesia; and (ix) other assumptions noted herein. Where the Company expresses an expectation or

belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such

statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed,

projected or implied by the “forward-looking statements”. Such risks include, but are not limited to, gold and other metals price volatility, currency

fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, political and operational

risks, community relations, conflict resolution and outcome of projects or oppositions and governmental regulation and judicial outcomes. For a

more detailed discussion of such risks and other factors, see the Company’s Quarterly Report on Form 10-Q filed on July 23, 2015 with the

Securities and Exchange Commission (the “SEC”), as well as the Company’s other SEC filings. The Company does not undertake any obligation

to release publicly revisions to any “forward-looking statement,” including, without limitation, outlook, to reflect events or circumstances after the

date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors

should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement.

Continued reliance on “forward-looking statements” is at investors' own risk.


About the presenters

Ramsey Musa

Vice President, Supply Chain – Newmont Mining

• Elected Vice President, Global Supply Management in November 2014

• Group Executive, Supply Chain Operations and Capital Projects 2012

• Senior Director, Global Supply Chain Operations 2009

• Strategic Category Team Manager at Freeport McMoran

• Senior Manager, Supply Chain Materials Commodity Management at Intel

Dr. John Kamauff

Principal, Strategy and Business Transformation – The Hackett Group

• More than 30 years experience in Strategy & Operations including Supply

Chain, Sourcing, and Procurement Operations

• Previously partner at two large Operations and Strategy consulting firms and

a Senior Partner Advisor at another large consulting firm, and founder of his

own firm

• Trusted business advisor to senior leaders and has helped companies solve

some of the most complex supply chain and supplier challenges in industry

today


Agenda

• Company Overviews

• Background

• Approach

• Strategy

• Execution – Tactical Projects

• Looking Forward

• Key Take Aways

• Q&A


Newmont: Gold sector leader for nearly a century

Long Canyon

Yanacocha

Tanami

Carlin

Phoenix

Twin Creeks

Merian

Boddington

KCGM

% of 2015E

gold

production*

North America:

35%South America:

10%

Australia:

33%

Africa:

16%

Ahafo

Akyem

CC&V

Batu Hijau

Indonesia:

6%

NEM market data (06/09/2015):

Market cap: $12.2 billion

Enterprise value: $18.9 billion

# of operations: 13

2014A revenue: $7.3 billion

2014A attr. production: 4.8 Moz Au

*Production estimates include CC&V and assumes closing on 08/01/2015 with Waihi sale closing on 09/01/2015


The Hackett Group

• We are the global leader in operations improvement strategies, implementation know-how, and G&A agility

• We address both efficiency and effectiveness improvements to enable strategic business objectives

• Our insights are fact-based, from over 10,000performance improvement consulting engagements

• Our Best Practices Intelligence Center™ is a significant differentiator and enabler. It contains:

‒ 20,000+ performance metrics updated annually

‒ 1,500+ best practices across 95 business processes

‒ 1,000+ best practice-based process maps, requirements and configuration guides

‒ 1,000+ case studies, implementation examples and research

• We deliver results through a global team of senior practitioners using a consistent methodology and best practice-based toolset

Hackett Value Grid™

We help companies

establish and implement

business performance improvements

Intellectual capital and implementation expertise that accelerates the time to realize sustainable benefits


Where Newmont is Today Where Newmont is Heading

Newmont

Leading safety performance

Riding the “gold super cycle”

Volume over Value strategy

Positioned for strong growth

Operating costs rising 15% YOY

40+ capital expansion projects

Large headquarters staff

SAP implementation

Zero injuries and illnesses

Gold/copper price drop of 30~40%

Value over Volume strategy

Superior value, longevity, risk profile

Costs down 20% since 2012

Capital projects streamlined

Fit-for-purpose organization

SAP value realization

Supply Chain

Center-led organization infancy

Global shared services model

Traditional reporting lines

New standards, processes, metrics

Two Supply Chain groups – Ops/Proj

New Supply Chain operating model

Operational and technical integration

Clearer organizational return on

investment

Outsourcing

Change driving new Supply Chain strategy…

Coming from Moving towards


Engaging with Hackett to develop new strategy

What are our

goals and

aspirations?

Where will we

play?

How will we

succeed in

chosen

markets?What

capabilities

must be in

place to win?What

management

systems are

required?

An effective Supply Chain strategy is linked to Business Strategy by answering a cascading series of questions using quantitative analysis and modeling


Translating aspirations into actions

Stakeholder Alignment

• Engage stakeholders to assess capabilities, performance, opportunities

• Benchmark performance using industry data, surveys, capability assessments

Strategy

Development

• Understand gaps and opportunities and translate into future state targets

• Understand core competencies and how bimodal approach enables strategy

Future state

capability

enablement

• Understand strategic role of the Supply Chain

• Translate into Future State organization, systems, technologies and targets

Implementation

plan

• Develop high-level plans for implementation and communication

• Define programs to deliver future state capability

Control • Monitor and continue to improve


External benchmark: Almost world class!


Internal feedback indicates misalignment…


Refreshed Supply Chain mission and vision

Mission

Vision

Approach

Outcomes

To provide safe, sustainable, efficient, cost effective, supply chain solutions

necessary to deliver optimal life-of-mine support, achieved through

collaboration, management, and optimization of an integrated value chain

To be a trusted partner by delivering sustainable value through industry

leading lifecycle cost management and efficient delivery of goods and

services in support of our projects and operations

• Strategic realignment with the business

• Optimizing the operating model

• Strategic Sourcing and Total Cost of Ownership

• Improved capital procurement

• More strategic, efficient, and agile operating model

• Improved service delivery model to the business

• Increased return on investment on goods and services procurement


Getting tactical to close the gaps

Strategic Realignment

with the Business

Improved Service Delivery Model to the Business

Increased Return-on-Investment on Goods & Services Procurement

More Strategic, Efficient & Agile Operating Model

Operating Model

Optimization

Improved Capital

Procurement Support

Strategic Sourcing and

Total Cost of Ownership


Strategic alignment with the business

Activities & Deliverables

• Conduct stakeholder interviews

• Identify existing stories (perceptions)

• Define new perceptions

• Review in-flight initiatives

• Identify new behaviors, systems, and symbols

to drive new perceptions

• Leverage new Supply Chain PMO

Page 2

HGS Strategic Sourcing and Package Development Assessment – Steering Committee #1© 2012 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

Interviewee Survey: Overview

Average Importance

Average Capability Score

2.0

2.5

3.0

3.5

4.0

4.5

5.0

StrategicSourcing

SupplierManageme

nt

Mgt. &Strategy

CustomerMgt.

Compliance& Risk Mgt.

ProductIdeation

ProductDevelopme

nt

ProductCommercial

ization

HGS

McDonald's

OwnerOperators

Suppliers

2.0

2.5

3.0

3.5

4.0

4.5

5.0

StrategicSourcing

SupplierManagement

Mgt. &Strategy

CustomerMgt.

Compliance& Risk Mgt.

ProductIdeation

ProductDevelopmen

t

ProductCommerciali

zation

HGS

McDonald's

OwnerOperators

Suppliers

Summary of Findings

Strategic Sourcing and Mgt & Strategy capabilities

were universally viewed as strong

HGS rated itself highly with respect to supplier

management, however, other stakeholders viewed HGS’s

capabilities as closer to average

Other stakeholders rated compliance & risk management

capabilities lower than HGS indicating a gap in perceived

performance

O/O’s and HGS were aligned on Ideation, Development

and Commercialization capabilities while suppliers and

McDonald’s rated these capabilities lower indicating a

need for better communication or better process around

PD

For Importance, all stakeholders placed relatively

consistent values on the 8 process areas -

demonstrating alignment among stake-holders

Strategic Sourcing, Mgt & Strategy, Customer Mgt and

Product Ideation identified as most important areas of

focus

1

3

3

5

5

6

4

2 2

6 6

1

1

4

4

4

6

Page 3

HGS Strategic Sourcing and Package Development Assessment – Steering Committee #1© 2012 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

Interviewee Survey: Strategic Sourcing

Supply

Assurance

How would you rate HGS's current capability in assuring supply

for the McDonald's system?

Total Cost

Minimization

How would you rate HGS's current capability to minimize the

total cost of ownership for packaging supplies?

Capability Scores

Score Distribution

Stakeholder Quotes

“We are consistently qualifying second sources of supply. There are no

items in the system that I am aware of that are not dual sourced or

where a second supplier has not been qualified as a contingency” –

HGS

“It is rare that we encounter assured supply issues and HGS proactively

and actively pursues solutions in the event of any perceived risk to

assured supply” – McDonald’s

“Assured supply first - they are aggressive pursuing this and do a good

job” – Supplier

“HGS takes all measures necessary to ensure that supply is not broken.”

– Supplier

Findings

High average score across all stake holders (4.5) Supply Assurance – 4.8

Total Cost minimization – 4.3

General consensus that HGS does an outstanding job of supply

assurance. However, non-HGS stakeholders rated total cost minimization

capabilities slightly lower at 4.0

HGS is viewed by all stakeholders as having strong capabilities

related to strategic sourcing

4.84.4

4.3 4.34.5

1.0

2.0

3.0

4.0

5.0

HGS McDonald's Owner Operators

Suppliers Total

High

Average

Low

Very high

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

HGS McDonald's Owner Operators Suppliers Total

Very Low Low Average High Very High

n=45 n=12 n=18n=27 n=102

Develop an understanding of the broader organization’s expectations of Supply Chain capabilities, performance, and opportunity areas

Strategic Realignment

with the Business


Defining future state capabilities

Enterprise Service Delivery Strategy

Strategic Alignment

Organizational

Capabilities

Efficiency &

Effectiveness Goals

Design & Operating

Principles

Service Delivery Model Service Delivery

Transformation

Assess Impact of Change

Build Execution

Capabilities

Develop Implementation

RoadmapSkills &

Talent

Service

Delivery

Components

Process

Design

Service

Placement

Enabling

Technology

Governance

& Org

Process

Sourcing

Information

A strategy for what work is executed where, by whom, and its business benefit

Operating Model

Optimization

Metrics and KPIs


Outsourcing considerations

What to Outsource

• Procurement execution/transaction management

• Invoice reconciliation and auditing

• Catalog content management

• Spot buy and operation sourcing support

• Payments

• Contract management

• Select sourcing and negotiation

SLAs to Manage

• Requisition-to-PO, cycle times

• PO accuracy

• Adherence to policy & procedures

• % automated vs. manual

• Category savings

• Demand management savings

• Compliance savings

How to Choose a Supplier

• Ability to deliver savings

• Ability to deliver against SLAs

• Ability to support global operations

• Comprehensive P2P services

• Demonstrated track record

• Technology infrastructure

• Economies of scale

Why Outsource?

• Improve visibility into spending

• Focus on more strategic activities

• Access to improved pricing

• Access to category management expertise

• Lower transactional processing costs

• Access to supplier intelligence

• Reduce headcount

• Strategy enablement

Operating Model

Optimization


Supply Chain Outsourcing

Requis

itio

n &

PO

Pro

cessin

g

Supplie

r S

chedulin

g

Receip

t P

rocessin

g

Com

plia

nce M

anagem

ent

Indirect -

Supplie

r M

anagem

ent

Indirect I

nte

rnal M

anagem

ent

OPERATIONS AND COMPLIANCE

Supply

Data

Ma

nagem

ent PLANNING &

STRATEGY

Indirect E

xte

rnal M

anagem

ent

Source: Hackett Globalisation Research Center based on

Hackett Benchmarking Taxonomy

SOURCING AND SUPPLY

BASE MANAGEMENT

Indirect S

ourc

ing a

nd

Supply

Base S

trate

gy

Indirect S

upplie

r P

art

nerin

g

HighLow

High

Low

Traditional Outsourcing Candidates

(> 70% of Transactions)

Emerging Candidates

(> 30% of Transactions for some activities)

Retained Processes

Negotia

tion a

nd S

upplie

r

Contr

act

Cre

atio

n

Req.

Defin

itio

n a

nd

Supplie

r B

iddin

g

Pro

duct D

evelo

pm

ent

and D

esig

n S

upport

Direct

-S

upplie

r M

anagem

ent

Direct

Inte

rnal C

usto

mer

Ma

nagem

ent

Direct

Exte

rnal C

usto

mer

Ma

nagem

ent

Direct S

ourc

ing

& S

upply

Base

Strate

gy

Impact to the

Business

Complexity

Legend

Supply Chain and Sourcing Outsourcing is evolving to more complex processes

with common purchasing activities being strong candidates for outsourcing

Operating Model

Optimization


Align outsourcing and work rebalance

Onsite Knowledge

Transfer

Offshore

Knowledge

Transfer

Parallel Run/

Primary SupportGo-Live

Validate/Update

Processes/Systems

Validate/Update

Process

Documentation

Validate/Update

Applications

Interfaces &

Infrastructure

Post

Implementation

Support

Outsourcing Activities

Operating Model

Optimization

Decompose

processesReknit tasks

Combine

roles

Arrange

jobs

Inventory

skills

Recruit and

retrain

Knowledge

transferSupport

Work Rebalancing Activities


Enterprise Data Program

Get our house in order

Solidify our

Foundation

Optimize

ReportingContract

Mgmt

Ware-

house

Auto-

mation

Benefits

& Payroll

Infra-

structure

Process Efficiencies

Operational Analytics

& Strategic Analysis

IT

Support

Workflow

The SAP Journey

SAP

Implement

SAP Go-Live SAP Stabilization Sustain

Operating Model

Enhancements

Operations Reporting

Enterprise Data Program

2010 - 2013 2013 - 2014 2014 2016-2017

Extract further value

out of SAP

2014 - 2016

Operating Model

Optimization


Program Management Office

Program Management

Office

Standards

Processes

ToolsReporting

Training

• Align projects and

activities

• Ensure consistent

approach

• Realize planned

benefits

• Keep stakeholders

informed

Operating Model

Optimization


Life Cycle Management and the Directorate

Contractor Management• Pre-qualification processes• Audits• Streamline contracts to enable

operational ownership• Contract hand-off and

contract owner training• Monitoring performance

An emerging topic that will need to

be addressed is …

Governance

•Strategy and decision making authority

•Global representation from Operations

•Supported by Key functions (Legal, S&ER)

•Coordination with Projects

•Established cadence of communication

Category Management

•Developed and defined standard enterprise Strategic Sourcing Process

•Supplier Relationship Management

Life Cycle Management

•Developing and embedding life-cycle management

•Economic Unit Cost modeling

Technical Underpinning

•Completing commercial strategy with in-depth technical strategy

•Scope of work optimization

•Technical Services provides SME in key areas

Explore Build Operate Close

Strategic Sourcing and

Total Cost of Ownership


Align stage gate project deliverables

Stage 1 –

Identification

Stage 2A –

Selection

Stage 2B –

Confirmation

Stage 3 –

Definition

Stage 4 –

ExecutionOperation

Define work

required

Evaluate

alternatives

Ensure risks

are understood

Ensure no fatal

flaws

Complete

detailed

engineering

Operate asset

Develop

preliminary

business case

Select

preferred

alternative

Lock scope

and

configuration

Ensure risks

understood

Construct Optimize asset

Plan for

Selection stage

Recommend

single go-

forward option

Plan for

Definition

stage

Confirm

technical

viability

Commission,

ramp-up, turn-

over

Post

investment

review

Plan for

Confirmation

stage

Finalize scope,

cost, schedule

Plan for

operations

Plan for

Execution

stage

Exploration Projects Operations Closure

Gate

1

Gate

2

Gate

3

Improved Capital

Procurement Support


Cost savings focus to Trusted Partner

Supply Chain 3-year Transformation Roadmap

Sep 2014Corporate Full

Potential Phase

1 Completed

Oct 2014 Corporate Full

Potential Phase

2; Industry

Benchmarking

& End-to-End

Business

Process review

Jun 2014 Supply Chain

Integrated into

Technical

Services

July 2014Integration

Opportunities

Identified;

Technical

Underpinnings

to Supply Chain

Commercial

Strategies

May 2015Supply Chain

Business

Process Full

Potential

Improvement

Projects

Launched

Future State

• Trusted Partner to the

Business through Cross

Functional Engagement

• Enhanced Strategic/Global

Focus & Capability

• Proactive Communication,

Collaboration &

Engagement

• Enhanced Focus on

Technical & Commercial

Fundamentals

• Agile Service Model in

Alignment with Customer

Requirements

• Doing More with Less

• Improved Processes &

Systems

• Improved Return-on-

Investment

2017 Today

Strategic

Realignment with the

Business

Operating Model

Optimization

Strategic Sourcing

and TCO

Improved Capital

Procurement


• Zero-based strategy approach to improve efficiency and effectiveness

• Build in agility to support rapid strategy change

• Technical underpins that support Supply Chain strategies and initiatives

• Alignment with the business is never complete

• Top quartile benchmark results do not mean you are meeting all customer needs

• Communicate, communicate, communicate – by doing rather than telling

Creating a more efficient and effective Supply Chain

Questions?


Contact Information

John Kamauff, PhDPrincipal

270 Madison Avenue, Suite 1550

New York, NY 10016

T +1 (443) 838 - 9736

[email protected]

www.thehackettgroup.com


Newmont Mining Corporation6363 S Fiddler’s Green Circle, Suite 800

Greenwood Village, CO 80111

T 303.708.4230

[email protected]

www.newmont.com

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Session #14

Best-in-Whose-Class? Executing a Business Aligned Supply

Chain Value Delivery Strategy

www.sig.org/eval

John Kamauff, PhDPrincipal

270 Madison Avenue, Suite 1550

New York, NY 10016

T +1 (443) 838 - 9736

[email protected]

www.thehackettgroup.com


Newmont Mining Corporation6363 S Fiddler’s Green Circle, Suite 800

Greenwood Village, CO 80111

T 303.708.4230

[email protected]

www.newmont.com

Best-in-Whose-Class? - SIGsig.org/docs2/S14_Best-in-Whose-Class_Executing_a... · 2016-01-10 ·...

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Transcript of Best-in-Whose-Class? - SIGsig.org/docs2/S14_Best-in-Whose-Class_Executing_a... · 2016-01-10 ·...