Published July 14, 2016 by Gabriele Middendorf
The mining and metals industries have reached a crossroads: It’s time for them to leave the past behind and embrace new ways of working. The International SAP Conference for Mining and Metals provided glimpses of what the future might hold.
When they think of mining, most people picture men with blackened faces and pick-axes slung over their shoulders disappearing into dark and perilous underground tunnels. Yet this image will soon be a thing of the past. Because robots and self-driving trains controlled by personnel above ground could potentially take over the dangerous work of extracting raw materials from the earth and transporting them to the surface.
In fact, this concept is already on the way to becoming reality: At Australian mining project Roy Hill, for example, an operations center located at company headquarters in Perth monitors mines in remote areas, analyzing and forecasting production output levels and other parameters in real time. This means that the company can take preventive action before a problem negatively impacts production.
To discuss these and other developments, professionals from the mining and metals industries joined SAP experts for the International SAP Conference for Mining and Metals in Frankfurt, Germany, on July 12 to 14. Many of the approximately 300 participants had traveled to the event from as far afield as South America, Asia, and Australia. And they could hardly have found the choice of event venue – the kap europa convention center – more apt. Because its avant-garde architecture is a striking symbol of new beginnings ahead.
Tough Times for the Mining and Metals Industries
Shrinking productivity ‒ despite investment ‒ and rising costs fueled by higher energy prices and a halving of raw materials prices in the last two years: These are the main challenges currently facing the mining industry, as Eckhardt Siess, Global Vice President, Mill Products and Mining Business Solutions, at SAP, explained in his opening address to the conference.
As for the metals industry, he added, many companies are working at only 70% capacity at the moment, due largely to a slump in demand from China. “It’s no secret; both industries are under great pressure,” Siess told his audience. “The time to act is right now. Because despite these big challenges, there are great opportunities to be had.”
The answer to both industries’ most pressing challenges could well lie in burgeoning technology trends such as hyper-connectivity, Big Data – with its analysis and forecasting capabilities – cloud computing, the Internet of Things, and smart manufacturing. And this is precisely where SAP comes in. “SAP is here to help you,” was his closing message.
The Digital Transformation is Happening Right Now
In his presentation, Christoph Behrendt, Executive Vice President for Industry & Custom Development, at SAP, focused on two examples to illustrate how digital innovation works in practice. He set up a live link between a basic sensor and the SAP HANA Cloud Platform and was then able to receive readings for vibration, light, temperature, and changes in position transmitted by the sensor in real time. This kind of sensor could be fitted to a caterpillar, truck, or other piece of machinery, explained Behrendt, pointing to the practical benefits of this innovative technology for the mining and metals industries.
In his second example, Behrendt demonstrated how a smartphone app could benefit asset maintenance workers when they receive instructions to repair a pump, for example. They can use the smartphone app to reserve the necessary spare parts and ensure that they are placed in the appropriate maintenance vehicle without delay. Additionally, they can call up recommendations for repairing the specific pump in question and record the time needed to complete the repair job.
SAP S/4HANA, Networks, and IoT Could Help Solve the Current Dilemma
These two examples provided vivid evidence of how the digital transformation is revolutionizing business processes, business models, and traditional ways of working. Through its innovation strategy, said Behrendt, SAP was endeavoring to facilitate these trends and the digital transformation itself: “We’re trying to understand these trends and put them into a solution portfolio. We want to make sure you have options – options that bring value to you and your business.”
SAP’s strategy, he explained, covers applications, particularly SAP S/4HANA as the digital core, as well as networks and platforms. And it takes account of all the stakeholders and elements involved – from suppliers and customers to employees and assets. Business collaboration across networks was playing an ever greater role, he said. In purchasing, for example, more and more enterprises were deploying the SAP Ariba Network: “In many industries, people have stopped having fixed suppliers and fixed supplier contracts. They are moving to networks that function as huge online marketplaces.”
Citing another example of networks, Behrendt referred to the SAP Asset Intelligence Network, which brings together information from manufacturers, services providers, and asset operators on a cloud-based platform to enable predictive machinery maintenance and more. SAP, he said, was there to help enterprises master the digital transformation at their own pace. “There is no need to renovate the entire stack at once – you can proceed step by step,” he added.
Companies Tackling the Transformation Head-On
Aurelian Popa, CIO Long Products EMEA at ArcelorMittal, the world’s largest integrated steel and mining company, spoke in his keynote of the growing importance of the digital transformation in meeting customer expectations. He mentioned that digitalization is something customers expect, but it is also a benefit for companies to pursue as it impacts productivity. He noted that today’s customers demand an Amazon-style shopping experience. Not only do they want digital interaction all the way from placing an order through to paying for delivered goods, they also expect constant access to data, such as the supply chain.
Companies have to digitalize the supply chain otherwise, the reaction from the customer is, “If I don’t have a full view on the supply chain to track my orders, I won’t stay with you.” He also pointed to the increasingly key role being played by business intelligence (BI), particularly in sales. ArcelorMittal, he said, was using CRM and BI solutions from SAP to provide a 360-degree view of the customer throughout the organization and to ensure that all the necessary insights were available for reporting.
Darren Hadfield, Group Information Systems Manager at PanAust, stressed that business users were among the groups to benefit most from the digital transformation. PanAust, a gold, silver, and copper producer headquartered in Australia, implemented SAP Business Suite powered by SAP HANA in 2013 and opted to develop SAP Fiori apps for various scenarios. This had resulted in significant improvements in the user experience, Hadfield explained. Between 40 and 50% of the workforce were now accessing the SAP system solely through the user-friendly SAP Fiori apps. “We didn’t provide any training for SAP Fiori users. Which saved us a lot of time and effort,” he said, adding, “SAP HANA dramatically reduced the complexity of our environment – it’s about simplicity.”
The resounding message from the speeches, panel discussions, and customer presentations was that companies in the mining and metals industries are rolling up their sleeves and tackling the digital transformation head-on. And they’re looking to SAP in particular as an innovation partner.
In the words of Emilie Ditton, Associate Research Director, IDC Australia, “Discussions at this event have shown how engaged mining companies are in thinking about how to move forward with in their digital initiatives and transformation. As the dominant enterprise platform in place in the mining sector, SAP and its partners have an enormous role to play in supporting companies deliver the visibility and control that can be achieved through integration of IT and operational technology. The sector is on quite a journey.”
For more information about the digital transformation in the mining and metals industries, read this Digital Transformation in Mining white paper.