Tyres. Explosives. Hydrocarbons – Procurement the Rio Tinto way!

A Rio Tinto Mining - A truly global procurement challengeRio Tinto is a world leader in finding, mining and processing the earth’s mineral resources, so as you can imagine they are up against some of the most extreme Procurement challenges on the planet.

Martyn Lawns, the Procurement General Manager for Rio Tinto Europe, Middle East & Africa  spoke to TheValueChain.net to tell us more about his operation’s unique challenges that all procurement professionals can learn from.

1. How is procurement structured at Rio Tinto?

Procurement at Rio Tinto is a corporate function reporting into the board of Rio Tinto. It is centrally lead with the Head of the function based in Australia. Global teams are primarily based in our Singapore and Shanghai offices. To compliment the global activity we have 4 regions, Australia West, Asia Pacific, Europe Middle East and Africa, and the Americas.

2. What are the company’s core categories?

Tyres, Explosives, Hydrocarbons, Heavy Mobile Equipment, Services and Carbon Products.

3. What is your most recent success?

We have just established back-office procurement activity in Mexico and India with Rio Tinto’s Business Process Outsourcing partner, serving 20 operations across the Rio Tinto footprint within the Europe, Middle East & Africa region. As Rio Tinto continues to expand its operations in top tier, long-life low-cost assets, they are consistently challenged to ensure they have the right supply chain and logistics capabilities to support their growing business, and this will be my focus for the coming months.

4. What key challenges are you currently facing?

Having the right procurement resources with the appropriate skills to meet our growing demand, primarily in non-OECD geographies.

5. What do you see as the top 3 challenges facing the procurement function in the next 12 months?

  • Ensuring that we maintain the best suppliers working for our business
  • Ensuring our growth projects are delivered on time and on budget
  • Securing access to our key inputs

6. How mature is procurement in the mining sector? How can it be improved?

Procurement in this sector is reasonably mature; you find pockets of excellence but we still have a long way to go. Supplier integration and demand management as well as integrated logistics are all areas of improvement we as an industry are developing.

7. What are the major lessons for procurement in the mining sector that have emerged from the recession?

More than anything, how quickly things can change from a downturn to upturn… and vice versa.

8. How do you see the procurement function evolving in the next few years?

I envisage seeing a more remote service offering to the end customer, better use of demand management and in some sectors we have to be looking at the replacement of existing suppliers and materials that may not be sustainable for the future.

Martyn will featuring on a panel at ProcureCon CPO Roundtables on 7 June discussing ‘Commodities risk management, hedging decisions and how to achieve true innovation with suppliers’