Crossroads re-awarded Anglo contract

Anglo American has been doing business with Crossroads for over 20 years. But the improved management of inbound logistics has been a focus of attention for the industry as a whole over the last 10 years.

When the existing contract expired, Anglo American decided that they needed to re-evaluate their needs, and open the discussion on how to best deliver an increasingly complex web of inbound deliveries to their widespread mines. The objectives: lower costs, shorter lead times, and high levels of reliability.

In this new five-year contract, Anglo American requires Crossroads to consolidate supplier deliveries in one of their Cape Town or Johannesburg consolidation centres, and depending on the time requirement and nature of goods, to either deliver directly to the shaft or to regional cross dock warehouses for local delivery.

Crossroads CEO Gerhard van der Horst says, “Both mining companies and suppliers are under growing pressure to cut costs, drive up service levels and build modern supply chains that react swiftly to changes in demand, geography and market prices.”

“The basis for competition between mining groups is not in the reduction of logistics costs,” says Van der Horst. “Mining companies compete in the area of exploration and on reserves. There are in fact many stories that show collaboration between mining groups to bring down costs and improve efficiencies, which is something they are more than willing to embrace.”

This Anglo American/ Crossroads contract is one such example. Key to the saving was Anglo American’s agreement to allow Crossroads to take over what was previously a De Beers distribution centre, and to open its use to not only other Anglo American controlled groups in Anglo Platinum and Kumba Iron Ore, but also to non-Anglo American mines.

“The more volume we could push through, the lower the unit cost, and the shorter the delivery lead times. It's simple logistics, but it makes a big difference to the mine,” says Van der Horst. “We are able to cut inventory levels, increase service levels for suppliers, and substantially cut inbound transport costs.”

“We had to consider how logistics costs could be cut to optimum levels if Crossroads was to be entrusted with more of Anglo's mining consolidation work, and what we have come up with will deliver that to our primary client, Anglo American.”

“With them as the anchor tenant, we have the potential to provide them with even lower costs and lead time improvements as we add other mines to the network. In the end, it will make mining in the region more competitive. It’s a benefit that will reverberate through the industry, improving sustainability and creating jobs.”

Of course, in the mining industry, Transformation and Safety are the watchwords. This Crossroads solution delivers both in spades. No doubt the logistics company's B-BBEE rating of Level 3 was also a big factor in the decision. The cost of inbound logistics is an important and large procurement item for mining companies, and procurement is weighted heavily in the transformation measures of the mines themselves when it comes to awarding mining and exploration rights. So the decision to partner with Crossroads, who are over 43% black owned, has benefits to Crossroads' clients beyond the self-evident logistical ones.

Crossroads understands the need of mining houses to engage with local and regional subcontractors. The outbound, last-mile transport in the Moruleng section of this Anglo contract for example, which runs out of Polokwane, has been outsourced to a local contractor. The contractor is part of an empowerment deal seeking to uplift the community. Crossroads has appointed an on-site contract manager to oversee the smooth running of the project.

“Combining our capabilities, our people, our network and facilities enables us to offer both mining companies and suppliers an holistic supply chain solution that generates value and positively impact on the bottom line of all participants, and of the local communities.” says Van der Horst.

 
© Copyright Crossroads 2014