Supply Chain Management
Our Supply Chain Management teams operate at the global, regional and mine site levels to manage contracts with many suppliers, ranging from multi-nationals to nearby small businesses. They manage the purchase of the hundreds of thousands of items and services that each mine requires on a daily basis, from food to tires to construction materials.
Supply Chain Management’s ability to source high-quality goods and services at the lowest price is essential to competitiveness. But in a socially and ethically responsible organization like Goldcorp, their task doesn’t end at price. Every purchase is evaluated against a long list of priorities, as established in the due diligence provisions of the Goldcorp Commercial Practice standards. They must evaluate and balance each supplier’s location and assess whether they are capable and qualified to meet the mine’s logistical requirements. Each vendor is also reviewed for their compliance with labour practices, human rights, ethics, anti-corruption, and safety standards.
The Supply Chain Management team’s work is central to our adherence to the World Gold Council’s Conflict-Free Gold Standard, which provides assurance that our actions do not contribute to human rights abuses or breaches of international law.
In 2016, the Supply Chain Management team exceeded their cost savings targets for the year, without compromising reliability, quality or ethics.
The Challenges of Reorganization
In 2016, Supply Chain Management teams were affected by the company-wide restructuring, which moved some of the purchasing responsibilities from the head office team to each mine’s supply chain team. While some services, such as catering or transportation, have traditionally been sourced locally, the local scope has been expanded. Requests for Proposals (RFPs) have been modified to open competition to more local vendors, and the final decision of vendor is now, more often, made at the mine level. Employees at the mine are often better positioned to balance price factors against the social value of employing a local supplier – without compromising our standards and requirements.
Ensuring that Suppliers Follow Our Standards for Human Rights and Ethics
Across our industry, demands for ethical compliance are increasingly strict. At Goldcorp, we need assurance that our corporate values are observed all the way down the supply chain. The Supply Chain Management team, in collaboration with the Ethics and Compliance department, have established a risk-based due-diligence process for the on-boarding of third parties, including vendors. Through a combination of procedures, including the use of external intelligence databases and a dedicated due-diligence platform, applicable third parties are checked, as part of the on-boarding process, for red flags such as previous convictions or political exposure, improving our confidence in approved suppliers.
Cutting Costs with Innovative Thinking
Innovative thinking can produce dramatic results. In 2016, the Supply Chain Management team added a new component to our tendering process. In addition to requesting that vendors meet our specifications and price, we asked them to recommend innovative strategies for improvement in the way we use their product.
In a contract for explosives, for example, one vendor suggested a new product and a new way to use explosives more effectively. Instead of recommending a traditional explosive, which comes in a limited selection of “charges” or blast strengths, they recommended a new product that allows the blasting technician to dial-in the exact strength needed. This solution has cut costs significantly. Instead of “one size fits all” blasting, far smaller amounts of explosive are used. The blast is more controlled, safer, and requires less scooping and loading of ore afterward. The result was remarkable – and it came from taking a different approach to an RFP, one that invited a partnership where the vendor could share their expertise.