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What if you could reduce your operating costs by 16% and realize $40M in savings through contract renegotiations?

With Proudfoot, you can.

   

AN ONGOING DECLINE IN COPPER PRICES was squeezing the profits of a large mining company. Having outsourced most of its operations, the company’s cash cost was already among the most efficient of the industry.

The CEO knew that discounts from suppliers alone would not be enough to adequately reduce the cost position. He was certain that improved collaboration, greater efficiency and operational improvements would not only benefit the procurement department, but the entire organization.

He decided to partner with Proudfoot to identify productivity and efficiency improvements that would not only drive contractor performance, but would also give the company leverage in contract renegotiations.

TRANSFORMATIONAL APPROACH

Working together with Proudfoot, the team:

1

Capitalized on productivity, equipment utilization, materials and inventory management opportunities in six major service contracts – totaling $250 million in annual costs.

2

Defined and implemented improvements to engineering; maintenance; trucks, loaders, excavators and equipment; explosives; and road maintenance.

3

Created comprehensive business cases each contract to identify specific actions that proved to be advantageous in contract renegotiations.

4

Coached client personnel prior to negotiation meetings and provided one-on-one mentoring sessions to strengthen collective bargaining skills.

5

Provided training sessions with negotiators and contract administrators to develop a greater understanding of the opportunities at hand and a culture of continuous improvement.

6

Identified additional operational opportunities for continuous improvement.

“Simply imposing cost reductions onto suppliers would have upset the balance. It would have a negative impact on customer/supplier relationships and limit the chances for lasting results. We defined a transparent, fact-based approach that would promote all stakeholders working together.”

EVP Client Delivery at Proudfoot

REMARKABLE RESULTS

Improved systems, tools, KPIs and skills gave the client’s procurement team the momentum to renegotiate six major service contracts.

  • 6 service contracts renegotiated, improving service level quality and reducing costs
  • $20M in savings realized due to contract negotiation training and coaching during the project
  • 16% overall cost reduction due to establishing stronger terms in all six contracts
  • $20M additional benefits secured with the culmination of favorable terms in all six contracts
  • 27-46% in purchase price reductions through contract renegotiations
  • 10% increase in productivity
  • 80% reduction in overtime
  • 21% increase in overall equipment effectiveness
  • 18% improvement in packaging cycle time
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