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Even bulldozer drivers can follow the drift
DANCING DINOSAURS by PAUL HAM

When the bloke from Komatsu came to town, they said he was not quite your granite-jawed mining boss. For one thing, he wore tortoise-shell spectacles and a Tweed jacket. But Malcolm Barnes achieved a remarkable feat in the outback Queensland town of Kooralbyn recently: he provoked a standing ovation from 300 toughened mining engineers.

They had been herded into a hall to hear a lecture on "e-commerce" from the new e-commerce manager of Komatsu, Australia's second largest supplier of earthmoving equipment. To a Queensland miner, the occasion had all the appeal of a pavlova about to be pile-driven.

At first sight, Barnes seemed just another city geek roped in to blather on about the "importance of IT". But that was a grave misapprehension. Barnes is deeply suspicious of "IT". He believes IT departments have too much power. He sees IT as "a business tool" and IT managers as mere "implementers" of business decisions.

"Let me give you an example: I wanted to build an Intranet for our clients. But an IT manager complained that I'd be clogging up his network. His network? I told him that it was the business's network. And it was for the benefit of the business - and our customers."

Hearing those words, how many "secular" executives will recognise their own struggle against the amoebic inertia of battalions of "we-know-best" IT boffins?

Barnes's message is simple: the Internet should be harnessed to improve a company's operating efficiency and bottom line; the technology should not be surrendered as another unfathomable piece of IT property.

He said as much to the Kooralbyn miners. He said a lot more. "They thought they'd got a four-eyed geek from the city. They were wrong. I explained what the Internet is all about: it's about freeing time to put back into the business."

His argument runs: by ordering routine mining parts over a dedicated Web site, a mining company saves a great deal of time, which can be reinvested in running the company. It is worth knowing that Komatsu, like its arch rival Caterpillar, makes more than 50,000 spare part transactions per month. Its total inventory includes 23 million line items. It supplies 7,000 customers, from BHP, Rio Tinto, MIM and WMC down to mum-and-dad swimming pool digging businesses.

"That's what the Internet does: it gives time back to your business - for a large company ordering many different routine parts, it gives back as much as a day a week. Rather than spend five hours a week on purchase orders, why not spend five hours a week on growing the business?"

In Kooralbyn, Barnes's jargon-free message struck like a blinding light. Witnesses recall an event of evangelical dimensions. "Yeah, I got a standing ovation," says Barnes, modestly. "I'm doing a tour of lectures now. And it shut up all the senior managers who are so suspicious of the Internet."

Few people are as conservative as miners and earthmovers. Their job may be to shift sand but their heads are resolutely stuck in it. "They're very suspicious. Some are scared shitless," says Barnes.

But the mining industry - and its suppliers - are being hauled into the Internet era, regardless. In May the world's 14 largest mining companies, including Rio, BHP, De Beers and Anglo American, announced the formation of a Web site that would link suppliers and mining companies in one, vast online marketplace.

Under the arrangement, a mining company could demand, and the supplier deliver, any parts or supplies needed on a mine site - from dozer buckets to drill bits, washers and Portaloos - anywhere in the world. The global nature and huge cost of keeping mines running demands swift response times: "You can't leave a mine waiting for two weeks while a part is sent out from Japan," Barnes says.

Indeed, inventory management has already shifted from "just-in-time" to "just-in-case" delivery systems. The online marketplace would fine-tune this, by monitoring precise patterns of demand among individual clients.

Many suppliers to the mining industry are worried. Some fear the formation of an "e-procurement cartel" by a consortium of giant mining firms intent on forcing prices down.

But Barnes, the former product director of Bank of America, is upbeat. "I've said we should view this mining portal not as a threat but as an opportunity. There's a story going round that suppliers like us are going to get screwed and that the buyers are going to band together and demand 25 per cent off. Or there may be a price war - but price wars can't last." (Note: Komatsu's biggest dump trucks cost more than $10 million each and carry enough earth to fill a large house).

Instead, he is pushing for a "supplier-driven" portal representing the suppliers to the mining industry. It would meet the big mining groups head to head.

Would that see Komatsu join Caterpillar to combat the threat? Not even Barnes entertains such sinister thoughts - Cat and Komatsu long ago drew a line in the sand (no doubt with their largest hydraulic excavators). "But we will see some strange bedfellows. Who knows?"

Paul Ham is the publisher of e-business magazine,

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Comment:

1. ...a pavlova about to be pile-driven would be a sight to see...

2. ...inventory management has already shifted from "just-in-time" to "just-in-case" delivery systems. Well I'll be blowed.

3. ...Some fear the formation of an "e-procurement cartel" by a consortium of giant mining firms. I'm afraid that has happened already.

4. I've 'not' known the Internet to free up time. It eats time.

Posted from the big quarry called OZ - Regards etc

-- Pieter (zaadz@icisp.net.au), May 31, 2000