Anglo American and Sandvik Mining followed the signing of a Global Framework Agreement (GFA) between the two companies—focusing on supply and lifetime support services for underground mining equipment—by holding the first Supplier Relationship Management (SRM) Workshop between the two companies last fall, according to Sandvik.

“The GFA ratifies an understanding between the two companies on a global scale to extract as much value as possible from the relationship in the medium to long term,” Sandvik Mining’s Strategic Account Manager Andrew Main said. “This is part of Anglo American’s supply chain initiative that aims to create additional value through more effective management of purchased materials and services.

“There is mutual acknowledgement that both parties can benefit from consolidating supply chain agreements at a global and regional level, in a way that establishes a uniform mechanism and, as far as possible, standardizes administrative arrangements for the purchase of goods and services. Our future relationship with Anglo American will now be driven by a formal supplier relationship management plan globally,” Main said.

Anglo American’s supply chain, through the implementation of its SRM program, has been shifting supplier engagement from a transactional relationship to a partnership approach. Sandvik Mining has been a long-time supplier of underground mining equipment, heavy mining equipment and plant processing equipment to Anglo American’s global operations. Sandvik said an SRM arrangement has been informally in place with since November 2011, as the company’s products proved competitive in total cost of ownership while measuring up to Anglo American’s performance standards.

Sandvik also is currently working in partnership with Anglo American on technology development and future mining innovation initiatives. Current focus areas are comminution of ore, in-pit crushing and conveying, various forms of automation, continuous hard rock cutting and energy-efficient technologies. By using the SRM approach joint Key Performance Indicators (KPIs) are agreed and managed by both parties.

“The agreement will be guided by KPIs applying to a variety of different account teams,” Main said. “These KPIs, cascaded down to the lowest level of our organization, will allow us to measure our performance very effectively. We’ll be able to incorporate the resulting feedback at an executive level, something that Sandvik Mining believes is unique and will create focus in prioritized areas. For the first time, Sandvik Mining’s account management has been formalized with a customer and we believe this is the start of an industry trend.

“From Sandvik Mining’s perspective, one of the biggest benefits of the GFA will be transparency—an opportunity to have the kind of visibility of the customer’s business that will give us insight into brownfields and greenfields projects and technology roadmaps, enabling us to deliver on expectations by forecasting and to optimise our product development accordingly,” Main said.

“It will be a lot easier to do business with Anglo American, because the GFA has laid down the terms and conditions of our transactions and Sandvik Mining no longer needs to negotiate them,” he said.