The mining industry for precious metals is currently facing a period of considerable uncertainty. Volatility in global markets, driven by geopolitical tensions and environmental concerns, has led to fluctuating prices and supply chain disruptions.

Analysing the competitive landscape reveals:

• Internal Rivalry: Intense competition exists among global and local mining firms, striving for market share and access to dwindling high-grade ore deposits.
• Supplier Power: Limited due to the high concentration of equipment and service providers specialized in the mining sector.
• Buyer Power: Increasing, as buyers demand more sustainable and ethically sourced metals, influencing market dynamics and pricing.
• Threat of New Entrants: Relatively low, given the high capital investment and regulatory hurdles required to start new mining operations.
• Threat of Substitutes: Minimal, with precious metals playing unique roles in technology, jewelry, and investment.

Emerging trends in the industry include the adoption of green mining technologies, increasing regulatory pressures for environmental and social governance (ESG) compliance, and a shift towards more sustainable practices. These changes present both opportunities and risks:

• Increasing demand for ethically sourced and environmentally friendly metals opens new markets but requires significant investment in technology and compliance.
• Technological advancements in mining processes offer efficiency gains but necessitate substantial capital expenditures and upskilling of the workforce.
• Global supply chain disruptions highlight the need for more resilient sourcing strategies, presenting a risk to uninterrupted operations but also an opportunity to innovate in supply chain management.

The STEEPLE analysis indicates that technological, environmental, and legal factors are increasingly influential, driving the need for sustainable practices, adoption of new technologies, and compliance with global standards.

The organization boasts significant expertise in precious metal extraction and a strong global footprint, yet faces challenges in operational efficiency and supply chain resilience.

SWOT Analysis

Strengths include a well-established brand and access to key markets. Opportunities lie in leveraging technology for operational efficiency and tapping into emerging markets with high demand for precious metals. Weaknesses stem from a heavy dependence on traditional mining methods and a centralized supply chain model. Threats include regulatory changes, environmental activism, and potential disruptions in key sourcing regions.

4 Actions Framework Analysis

The analysis suggests the need to eliminate dependencies on single-source suppliers, reduce operational inefficiencies, raise standards for environmental and social governance, and create value through sustainable practices and technological innovation.

Organizational Design Analysis

The current hierarchical structure limits agility and responsiveness to market changes. A more decentralized approach would empower regional operations with decision-making authority, enhancing flexibility and innovation in sourcing strategies.

• Develop a Diversified Sourcing Strategy: This initiative aims to reduce reliance on single-source suppliers by identifying and developing relationships with alternative suppliers in politically stable and economically advantageous regions. The strategic goal is to enhance supply chain resilience and reduce raw material cost volatility. This will require investment in market research, supplier evaluation, and possibly joint ventures or partnerships.
• Adopt Advanced Analytics for Risk Management: Implement cutting-edge analytics tools to better predict supply chain disruptions and commodity price fluctuations. The goal is to create a more agile and responsive sourcing strategy, capable of adapting to market changes swiftly. This initiative is expected to reduce operational risks and improve decision-making, requiring investment in technology and training for staff.
• Enhance Sustainability in Sourcing Practices: Focus on developing sustainable sourcing policies that prioritize environmental and social governance (ESG) criteria. This strategic goal aims to meet the increasing demand for ethically sourced precious metals, creating long-term value for the company and its stakeholders. It will involve auditing current suppliers, engaging with local communities, and investing in sustainable mining technologies.

Sourcing Strategy Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.

• Supplier Diversification Index: Measures the spread of suppliers across different regions and sectors, aiming for a balanced and resilient supplier base.
• Cost Variance: Tracks fluctuations in sourcing costs, with a goal to stabilize prices through diversified and strategic sourcing.
• ESG Compliance Rate: Assesses suppliers' adherence to environmental and social governance standards, aiming for continuous improvement.

These KPIs offer insights into the effectiveness of the new sourcing strategy, highlighting areas for continuous improvement and ensuring the organization's sourcing practices are sustainable, cost-effective, and resilient.

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Stakeholder Management

Success in implementing the strategic initiatives relies on the active engagement of both internal and external stakeholders, including the procurement team, suppliers, regulatory bodies, and local communities.

• Procurement Team: Responsible for developing and executing the diversified sourcing strategy.
• Suppliers: Critical for adhering to the new sustainability and risk management standards.
• Regulatory Bodies: Ensure compliance with environmental and mining regulations.
• Local Communities: Key stakeholders in sustainable mining practices, whose support is essential.
• Technology Partners: Provide the analytics and tools needed for advanced risk management.

We've only identified the primary stakeholder groups above. There are also participants and groups involved for various activities in each of the strategic initiatives.

Sourcing Strategy Deliverables

• Sourcing Strategy Roadmap (PPT)
• Risk Management Framework (PPT)
• Supplier Sustainability Assessment Toolkit (Excel)
• ESG Compliance Tracking Dashboard (Excel)

The organization utilized the Resource-Based View (RBV) to guide the development of its diversified sourcing strategy. RBV is a framework for identifying and leveraging a firm's resources and capabilities to gain competitive advantage. It was particularly useful for this strategic initiative as it allowed the organization to assess its internal capabilities in relation to the external sourcing environment, identifying unique opportunities for diversifying its supplier base. The team executed the framework through the following steps:

• Conducted an internal audit to identify key resources and capabilities that could provide leverage in negotiating with new suppliers and entering into new sourcing markets.
• Mapped out potential suppliers and regions not previously considered, evaluating them against the organization's strategic needs and resource capabilities.
• Developed strategic partnerships with suppliers in politically stable and economically advantageous regions, leveraging the organization's unique resources for mutual benefit.

Additionally, the Value Chain Analysis was employed to understand the organization's activities and how they contribute to value creation in the sourcing process. This analysis helped identify critical areas where new suppliers could contribute to efficiency and innovation, further supporting the diversified sourcing strategy. The implementation process included:

• Breaking down the organization's sourcing process into primary and support activities to identify where value was added.
• Identifying potential suppliers who could enhance these activities through innovative practices or cost efficiencies.
• Integrating new suppliers into the sourcing process, ensuring they aligned with the organization's value creation goals.

The results of implementing these frameworks were significant. The organization successfully diversified its supplier base, reducing its reliance on single-source suppliers and mitigating risks associated with geopolitical tensions and supply disruptions. This strategic move not only enhanced the organization's supply chain resilience but also positioned it to better leverage global market opportunities for precious metals sourcing.

The Scenario Planning framework was pivotal in adopting advanced analytics for risk management. Scenario Planning enabled the organization to explore and prepare for various future states, considering multiple external factors that could impact its sourcing strategy. This framework was instrumental because it provided a structured approach for anticipating and mitigating risks in a volatile global sourcing environment. Following this approach, the organization:

• Identified key external drivers of change in the global sourcing landscape and developed a range of plausible future scenarios.
• Assessed the impact of each scenario on the organization's sourcing strategy, using advanced analytics to model potential outcomes.
• Developed contingency plans for the most critical risks identified through the scenario analysis, incorporating predictive analytics to monitor risk indicators.

The Dynamic Capabilities Framework was also applied to enhance the organization's ability to adapt its sourcing strategy in response to changes in the external environment. This involved:

• Assessing the organization's current capabilities in risk management and identifying areas for development.
• Implementing advanced analytics tools to enhance the organization's ability to sense, seize, and transform according to dynamic market conditions.
• Training the procurement team in the use of these tools, ensuring they could effectively respond to emerging risks and opportunities.

The implementation of these frameworks significantly improved the organization's risk management capabilities. By leveraging advanced analytics, the organization was able to anticipate potential disruptions in its supply chain and develop effective strategies to mitigate these risks. This proactive approach to risk management not only safeguarded the organization's operations but also provided a competitive edge in navigating the complexities of global sourcing for precious metals.

To enhance sustainability in its sourcing practices, the organization turned to the Stakeholder Theory and the Triple Bottom Line (TBL) framework. Stakeholder Theory was essential for understanding and prioritizing the needs and interests of all parties affected by the sourcing strategy, including suppliers, local communities, and environmental groups. This perspective was crucial for developing a sustainable sourcing strategy that balanced economic, social, and environmental considerations. The organization implemented the framework through:

• Identifying key stakeholders in the sourcing process and assessing their interests and potential impact on sustainability goals.
• Engaging with these stakeholders through forums and consultations to gather insights and build consensus around sustainability objectives.
• Integrating stakeholder feedback into the sourcing strategy, ensuring practices were aligned with broader sustainability goals.

The Triple Bottom Line (TBL) framework complemented this approach by emphasizing the importance of not just economic, but also social and environmental performance. The organization applied TBL by:

• Conducting a comprehensive assessment of the environmental and social impact of its sourcing practices, alongside economic considerations.
• Setting measurable goals for improvement across all three dimensions of the TBL and integrating these into the sourcing strategy.
• Monitoring progress against these goals using a set of sustainability KPIs, and adjusting practices as needed to ensure continuous improvement.

The application of these frameworks led to a more sustainable sourcing strategy that not only reduced the organization's environmental footprint but also strengthened its relationships with suppliers and communities. This holistic approach to sustainability in sourcing practices not only met regulatory and consumer demands for responsible sourcing but also contributed to the long-term resilience and success of the organization's operations in the precious metals sector.