Anglo American local procurement
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Transcript of Anglo American local procurement
Local Procurement in Anglo AmericanJon SamuelHead of Social Performance, Anglo American 6 March 2012
2
LOCAL PROCUREMENT
ANGLO AMERICAN CONTEXT
DEFINITIONS
Local Procurement: relationship between location of supplier and location of recipient of goods/ services. Divided into 3 levels:
Plus additional criteria depending on country
NationalSupplier registered or based within the same country as the operation
ProvincialSupplier registered or based within the same province / region / state / territory as the operation.
LocalisedSupplier registered or based within the same immediate area as the operation.
X
4
• Procurement budget of $10 billion+ per annum, about 75% in emerging markets.
• Equivalent to about 100 x annual social investment budget
• Anglo American aims to be the industry leader and global benchmark for Supply Chain value creation
• Procurement seen as a key business enabler:– Cost efficiencies– Value-in-use– Strong focus on lifecycle costs and benefits of procurement
decisions, including non-financial variables – Recognition of the broader developmental contribution of
procurement• Strong focus on responsible procurement
SUPPLY CHAIN CONTEXT
5
LOCAL PROCUREMENT
ANGLO AMERICAN’S APPROACH
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7
8
BUSINESS CASE-LED APPROACH
Reduce risks associated with
closure
Assure our right to mine
Ensure reliable access to critical
supply
Create supply chain
efficiencies
Attract and develop talent
Investment of choicePartner of choice
Employer of choice
Exceed local community
expectations to participate in local
procurement
Strengthen relationships with local communities and government by building company
ambassadors
Excel at meeting government
objectives for local content, supplier dev.
and GDP growth
Reduce logistical costs, such as the
cost of transporting people and equipment
Competitive labour costs in service
contracts
Increase the competitiveness of supplier markets
Pursue long term partnerships with
local suppliers critical to operations
Continuously improve the service
provided by suppliers/
contractors to Anglo
Minimise community
dependency by creating
transferable business skills
which equip entrepreneurs to
access other markets and
diversifying the local economy
Contribute to developing thriving
and healthy communities, and attractive places to
live and work
Be seen as employer of choice, by making
a real, lasting difference to local communities and
acting with integrity
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Dem
and
-sid
e M
eas
ure
s
Policy: Local Procurement Strategy
Resources: Appropriate people and budget
SC Local Procurement Initiatives (eg Ring Fencing)
Set framework, show leadership support
Demonstrate commitment
Operationalise commitments
SC and Social
SC with support from Social
SC with support from Social
Communication and Reporting: Targets and KPIs
Build Anglo American capacity and incentivise
SC with support from Social
Support for Small and Medium-size Business Start-ups (e.g. Emerge / Zimele)
Supplier Development Programmes (building capacity of existing suppliers)
Alternative Livelihoods and Micro-credit ProgrammesSupporting the grass-roots
Creating formal businesses
Build capability, capacity and size of suppliers
Objective Anglo American Lead
Social with ED
Social with support from SC & ED
SC with support from Social & ED
Su
pp
ly-s
ide
Mea
sure
s
Localising Suppliers (e.g. near-mine supplier parks)
Encouraging more suppliers to locate in mining areas
SC with support from Social and ED
INTEGRATED APPROACH TO LOCAL PROCUREMENT
Social = social and community development functions; ED = enterprise development; SC = supply chain (Group and BU)
SUPPLIER DEVELOPMENT PROGRAMMES
Supply and demand side
analysisMatching of
SMEs to Supply Chain
demand
SME assess-ment and
improve-ment plan
SME mentoring and training
Access to finance
Business linkages and
tendering assistance
Monitoring and evaluation
SUPPLIER CLUSTERS
• Objective is to bring existing suppliers, and the jobs they create, into our mining areas
• Co-locate large and small businesses.
• Add in Anglo American’s enterprise development expertise and support the creation of partnerships between large and small firms
AABusiness
Unit
5-10 larger suppliersto AA Business Unit
20-30 SME suppliersto AA Business Unit and it’s
larger suppliersC
omm
itmen
t and
rela
tions
hips
Proxim
ity and synergies
Incubating business environment
ENTREPRENEUR INTERNSHIP PROGRAMME
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Selection Process
Existing Anglo American
Employees
Zimele EntrepreneursGeneral Population (Entrepreneurs Talent)
Entry Criteria
Training/learning programme (Internship)
Supply Chain Partner Companies
Matching entrepreneurs and businesses
Filtration based on criteria
Attraction and Selection
Exit out of Anglo American
MAKING OPPORTUNITIES AVAILABLE TO LOCAL ENTREPRENEURS
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• Simplifying tender and contract documents and processes
• Embed local procurement into procurement processes and daily operational activities
• “Supplier linkage” person• Guidelines for implementing
preferential sourcing methodologies e.g. ring-fencing, unbundling, appropriate payment terms
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LOCAL PROCUREMENT
CONCLUSIONS
15
CONCLUSIONS
• Local procurement needs strong buy-in from Supply Chain – they make the purchases
• Supply Chain should be supported by multiple functions, including social performance, enterprise development and communications
• No magic “silver bullet” to boost local procurement– Optimising local procurement requires a range of initiatives– Takes time to get it right– Need a combination of supply-side and demand-side measures
• There should be a strong business case driving local procurement to ensure it is sustainable over the economic cycle