Fernando Lopez
Director General
Grainger
/
Insight

Safety First for Ambitious Mining Products Supplier

Wed, 10/21/2015 - 11:48

When visiting mining operations, it does not take a keen eye to notice the sheer plethora of supply needs. However, while a novice underground might dwell on drill rigs or scooptrams, the more discerning observer would see other products and equipment that are equally important for a mine’s safe running. These lines of equipment, known as indirect materials, can reach thousands of specific pieces, from motors and pumps, to personal protection equipment like boots, hats, and gloves. An entrepreneurial witness might well spot the wealth of opportunities that exists in supplying all these products to mining companies, allowing them to focus on their core business. One company has been doing this for over a century: Grainger.

Grainger’s activities in Mexico are a natural extension of its operation in the rest of North America. The exploitation of natural resources in Canada led Grainger there over a century ago and to the US 85 years ago. Some time passed before the company entered Mexico 18 years ago, but it can count on its mining expertise from the decades spent in Canada and the US. Fernando Lopez, Director General of Grainger Mexico, explains that 28 of the company’s product lines are available in Mexico, combining for over 100,000 products. This makes it tricky to speak of specific products that Grainger supplies to mining companies. Instead, Lopez dwells on product categories, stating that Safety, Material Handling, Tooling, and Motors and Pumps combine to represent over 70% of the products provided for mining, with cleaning and electrical products making up the remaining 30%.

So how hard does Grainger have to work to bring the importance of indirect materials to the attention of mining purchasing managers? To Lopez’s mind, Grainger can turn an attitude that has laid waste to certain mining suppliers into a competitive advantage. “We know the mining sector has been looking for more aggressive cost-reduction ideas in 2014. Grainger aims to remove costs from our customers’ minds. Although we provide competitive prices, our cost advantage lies in the fact that we can make operations more efficient. Usually, mining companies can have as many as several thousand suppliers for different items, and they can reduce costs in inventory management. Once that is consolidated into a supplier like Grainger that can supply all the indirect materials they need, operating costs can really go down,” he says. Grainger maintains this dynamism by concentrating on requirements that are standard across all mines, and stays away from replacement parts for machinery or specialized equipment. However, Lopez is keen to point out this does not mean that Grainger does not bring innovation to its customers. As these requirements are usually similar in many mines, a thorough analysis of each operation can turn up better products or brands that particular mines may not be taking advantage of. “Grainger has 4,800 suppliers globally, allowing it to pick and choose which products are best suited to the working and environmental conditions to be followed in each mine. Once it is embedded with a company as a trusted supplier, Grainger can begin to look for better alternatives for the products currently in use. This is where it can also rely on its own Grainger branded products, manufactured to the highest standard but at a lower price than equivalent commercial brands,” says Lopez.

Although Grainger seeks this integration, it also facilitates interaction between suppliers and customers as well as online business and easy vending options. “We bring the suppliers and introduce them to the mining customers, to allow for the provision of training or technical support,” explains Lopez. “We also provide an e-commerce platform that is compatible with ERP software. We have vending machines that can be installed on site, which save money as certain parts are available immediately. These machines also get customers to reduce spending because they can measure which people use which tools, making the workforce more careful and conscious about how they use them. Our vending machines are configured to the products needed in each mine or even each workstation. Typically, companies use them for safety products or tools.”

Although the range of Grainger products typically needed in most mines might stay similar, the timing of orders will not be so easy. This poses a massive inventory challenge that Grainger has had to answer. Lopez explains that logistics and inventory planning has had to be one of the company’s strongpoints for it to reach and maintain its position. Having the expertise about which products are right for the mining industry does not preclude the need to understand and track the requirements of each customer. As such, agreements are made with each mine, tracking which products are always needed and which are likely to be spot buys. After predicting the timeline for such requirements, Grainger invests in having inventory close to the mines. For rarer types of products, inventories in Mexico City, Monterrey, and in the US can be tapped up.

“We have done a lot of research on the mining sector to fully understand it and the conclusions were very logical. Mines are in very remote locations, making it difficult to get access to products. Furthermore, when products are needed, production cannot be stopped due to a lack of availability. This means a mine needs to have access to a product, even an indirect one, the moment it is required,” says Lopez. He explains that, oftentimes, a mining company may have a preferred vendor for a certain type of product, but this status may simply have been obtained from the vendor being near the mine. This plays right into Grainger’s skills, since it has one of the strongest logistics presences in Mexico. Lopez assures that the company covers 95% of the Mexican territory for same-day or next-day delivery. For mining customers, specifically, the remoteness of sites still requires Grainger to go the extra mile. This is why Grainger has dedicated branches in places like Cananea and Hermosillo to be able to service its mining customers as quickly as possible.