In Depth: Global Supply Chain  Making Global Supply Chains Work

For many supply and demand chain practitioners, globalization isn't a newfound political issue; it's a reality they've been contending with for years. As companies have sought to lower their costs and expand their markets by taking a more international...


On the technology front, Newmont based its selection of solutions on the company's objective of digitizing and integrating all the key systems that touch the supply chain. The specific technologies selected included Quadrem, a mining industry-sponsored e-marketplace; and a buying, or e-procurement, application called Envoy from Mincom, the Australian provider of Newmont's Ellipse enterprise resource planning system. Additional supporting technologies included Quadrem's SupplyCentre, a hosted order-management application that lets suppliers connect with Newmont to exchange such electronic documents as requests for quote (RFQs), purchase orders, change orders, advanced shipping notices (ASNs), invoices and remittance advice notices. Mincom also built a middleware product, called Axis, that lets Newmont connect to Quadrem.

The advantages of using Quadrem to link with suppliers were several, according to Throneberry. First, Newmont had been involved with the e-marketplace, to one degree or another, essentially since Quadrem launched at the height of the B2B bubble in 2000. Second, Quadrem had significant experience integrating with an array of industry suppliers, so Newmont could lean on the e-marketplace to help integrate with the company's own target supply base. This alleviated Newmont of the need to create time-consuming, expensive one-to-one linkages with a multitude of suppliers, and, thanks to the SupplyCentre application, it allowed the company to connect even with suppliers in remote locations that lacked sophisticated back-end systems. And finally, the e-marketplace was willing to work with Newmont to develop functionality that the gold producer viewed as critical to its own supply chain initiative, such as a more flexible suite for managing procure-to-pay documents.

Bob Bush, Newmont's vice president of Administration and Human Resources serves as an executive sponsor for a multitude of Newmont improvement efforts, including e-business and supply chain. With over 30 years of supply chain management experience, Bush immediately recognized the efficiency provided by the e-business-related supply chain project and championed the initiative. "Use of Quadrem, coupled with the standardization of both our ERP and supply chain business practices is expected to drive operational value throughout the Newmont organization. We see such technology as a key to remaining competitive and a leader in mining."

Currently Newmont's 12 buying locations around the world are connected with more than 800 of the company's suppliers through Quadrem. Transaction volume running through the e-marketplace stands at about 60,000 electronic documents and $250 million to $300 million in electronic orders on an annual basis, figures that Newmont expects to rise as the company works to digitize 100 percent of its transactions.

Newmont's goals for the buying application, which to date has been implemented at the company's Nevada and Australian locations, are to allow users throughout the company, right down to the shop floor, to use an Amazon.com-like interface to navigate through suppliers' online catalogs and electronically purchase pre-approved items at agreed-upon prices through a "shopping cart" metaphor. This, the company believes, will help reduce stock, remove the cost of manual requisitioning and reconciliation processes for both Newmont and the suppliers, and provide the added benefit of ensuring that purchases are driven to preferred suppliers.

Finally, Newmont intends to capture and track its global spend data through a spend analytics initiative currently being implemented by Ketera. Under this initiative Newmont's global spend will be categorized to a UNSPCS 4 tiered classification schema, allowing for opportunity identification and eventually sustainability of the strategic sourcing process.

The End Game

The challenges in moving this initiative forward have included all those mentioned at the beginning of this article, ranging from culture and language to regulatory variations and legal risks. Throneberry says that the project has not presented insurmountable technical challenges, although Newmont has occasionally had to be creative in resolving IT issues. For example, it became clear that many of the company's smaller suppliers in more remote locations like the Peruvian Andes would have difficulty connecting to the Quadrem e-marketplace because they simply did not have Internet connections onsite. Newmont worked with Quadrem and local businesses to provide the suppliers with Web access through Internet cafes and kiosks.

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