Key problem and the need
In the Pilbara region of Western Australia, Rio Tinto operates the world’s largest integrated portfolio of iron ore assets with industry-leading margins.
Rio Tinto is well positioned to benefit from continuing demand across China and the developing world. Their premium product suite, including the flagship Pilbara blend, drives strong customer relationships and is supported by technical and commercial marketing expertise. The business continues to be the world’s largest autonomous truck operator and a proud leader in automated mining technologies.
Rio Tinto Pilbara operations – including a world-class, integrated network of 16 iron ore mines, four independent port terminals, a 1,700 kilometre rail network and related infrastructure – are designed to respond rapidly to changes in demand, supported by their Operations Centre in Perth.
Rio Tinto Iron Ore had spent almost $57 billion over 7 years with Western Australian businesses and wanted to improve in a number of ways. Management wanted to take the system on-line through a web portal, aiming to provide improved visibility of upcoming contracts and allowing more WA businesses to lodge their interest for future work. It was also an expressed aim to assist more WA and Pilbara Aboriginal businesses to obtain work with Rio Tinto through improved accessibility.
Rio Tinto operations has a number of operation centres across WA and many different cost centres and budgets, with procurement happening across the state – from office supplies to mining, technical and safety equipment to food and other consumables.
Rio Tinto’s Pilbara iron ore business has more than 1,200 WA suppliers. As such, Rio Tinto Iron Ore is one of the biggest businesses in WA and they value their place in the community. They are proud that 77 per cent of procurement is already with WA local suppliers, but they want to increase supplier engagement and also demonstrate this openly and easily in the normal course of operations.
The company planned to use a dedicated in-house procurement team and a new portal to detail and publish the company’s procurement opportunities and spending with WA suppliers.
Rio Tinto is committed to building and maintaining strong communities wherever they operate. One way that they strive to do that, is through a policy of local procurement directly delivering benefits for local supply businesses and communities. In the process, Rio Tinto also benefits by receiving cost competitive, reliable and high quality services from committed and local providers.
In May 2017 Rio Tinto Iron Ore sought a Local Procurement Solution for their needs at the Pilbara operation. The requirement was for a robust, company-branded online system and support designed to deliver an easy to use, cost effective means of identifying and engaging capable local businesses.
Online Procurement Services was invited to participate in the tender process to select the suitable platform for Rio Tinto Local procurement portal. The company undertook an assessment of available platforms and decided to implement the OPS platform, as their Local Procurement Portal. This platform plays a vital role across all RTIO local procurement activities, by very successfully connecting local capable suppliers to RTIO procurement activity.
The initial workshop with all the stakeholders was instrumental in getting the project requirements finalised and agreement on the proposed solution, with all required system customisation. Online Procurement Services suggested some key improvements to Rio Tinto business requirements based on their experience operating in the local procurement space.
The process was seamless from the finalisation of the system requirements to implementation of the solution and successfully launching by the required Go Live date. Due to the dedication of our team, working through day and night, the solution was provided in a record time of one month from finalisation of the system requirement.
The Local Procurement Portal provided to Rio Tinto exceeded their initial system requirements.
The solution provided was based on an ‘ease of use’ principle at the core of our development, which resulted in minimal internal user training and almost nil supplier user training.
As a part of the solution package, Online Procurement Services also provided simple and well-structured user guides for suppliers and Rio Tinto users.
Rio Tinto is currently engaging Online Procurement Services to roll out the portal to additional sites throughout Australia.
Success of the implementation
Just over a period of 9 months, Rio Tinto local program has achieved the following numbers and statistics:
The volume of suppliers registered and EOIs published using the portal, is key indicator of success of the program and the solution provided by Online Procurement Services.