Information Technology & Cleaner Production Assignment Help
Report on Business Improvement
ABSTRACT
Information technology (IT) and Environment Management (EM) are two important areas of business which require a dynamic approach for continuous improvement to maintain competitive advantage. While IT is the backbone and the nervous system of most business operations, regulatory frameworks make it imperative for all organizations to also focus on EM. Improvements in technology, whether it is for improved productivity, cleaner production or waste management, involves extensive use of IT and Information Systems (IS). Use of software and intelligent hardware increases efficiencies in production, and reduces adverse impact on the ecosystem. Importance of technology and EM is utmost in mining companies. In this report, aspects of IT, technological innovation and EM practices of Rio Tinto Ltd, a global mining giant, have been studied. The discussions focus on the existing policies and systems, and the future plans. Some suggestions for improving future performance have also been included.
INFORMATION TECHNOLOGY – PRESENT & FUTURE
Introduction
Rio Tinto (RT) is a leading international mining group that focuses on finding, mining and processing the Earth’s mineral resources in order to maximize shareholder value (Rio Tinto 2013). RT’s turnover in 2012 was $9.3 billion, and the capital expenditure was $17.4 billion. The company operates in several countries and different economic and political environments, and has more than 71000 employees working for it. It faces competition from numerous companies for resources and markets. Technology, innovation and environment management (EM) are high priority areas of RT, and it has clear strategies and policies to support the focus.
Key business activities
Since RT’s business is exploration of and production from the mines, the key to its competitive advantage lies in cost-efficient and sustainable operations. As per Rio Tinto (2013), the company aims to improve performance of its existing businesses through improvements in productivity, reduction in operating and support costs and controlling capital expenditure. In fact, the company plans to achieve a savings in cost in excess of $5 billion over the next 2 of fiscal years. The company is, therefore, highly dependent on continuous improvements in mining technology which is supported by IT Systems. RT is structured as five product groups, Aluminum, Copper, Diamonds & Minerals, Energy and Iron Ore which are supported by two other groups, “Exploration” and “Technology & Innovation” (Rio Tinto 2011, p.3).
Current planning system overview
As per the corporate governance structure of Rio Tinto, the board is responsible for framing the strategy and reviewing the implementation. The day-to-day management of the business is the job of the CEO and the Executive Committee (EC). As part of the annual financial planning process, the board sets annual performance targets after discussions with the groups. The CEO sets the targets for EC members who further delegate it to their management teams. Each product group is responsible for its planning and implementation based on the technical, financial and other data available in the information system. A more detailed review is held at the annual strategy-setting meeting between the board and the EC. The outcome of this meeting sets the tone for strategic direction and financial planning by efficient allocation financial and other resources.
IT & IS are the key supporting elements in this exercise. Firstly, like in most organizations, past data (financial and other) is a basis of evaluating the performance and deciding on future course of action. Secondly, for an organization like RT, capital budgeting is a major part of strategic planning and implementation. Capital budgeting decisions involve assessing the viability of mines. These decision are based on analysis of technical data performed by highly sophisticated software programs and tailor-made, internally created IS.
Current information technology needs & practices
For understanding the current and future IT needs of the company, it is important to get an overview of how IT is practiced and perceived in RT. The business model of RT involves Exploration and evaluation, development, mining & processing, marketing & delivering of the products and close down & rehabilitation. It has to face relatively higher uncertainty in the macro economic environment due to fluctuations in commodity prices and global competitive factors. Further, environmental and safety concerns are much higher due to the nature of its business, and also because it has to operate in numerous regimes with different political structures. For Rio Tinto, IT is, therefore, not just required for faster transactions or easier information flow. It is the most important tool they have for remaining competitive in the global environment. IT / IS help them in capital budgeting decisions and also optimize the utilization of operational resources. Each wrong decision can cost the company billions of dollars, and hence it is imperative that the strategic decision-making process is supported by accurate scientific and technical data analyzed by sophisticated software. For operational matters, the support of IT helps in getting historical data and also in extrapolation for future planning.
Due to the importance of IT / IS, RT has a separate Technology and Innovation group (T&I) which continuously works to identify the scope for improvement in mining and other technology. T&I provides technical insights for improving operational performance, technical assurance, delivery of projects, and innovation. The budget for this group itself was $415 million in 2012.
All the work done by T&I is dependent on the IT and the IS being continuously iterated in the organization. The group presently has the mandate to focus on safety, embedding operational improvements in business units, maximizing use of technology for developing business strategies, using technological solutions for adding value to systems and processes, designing and building viable investment projects, and enhancement of potential of ore-bodies which require alternative and new techniques. To achieve these objectives, the T&I is divided into various sub groups (Rio Tinto n.d).
One of the main sub-groups is Innovation (for R&D) for developing mining technologies for increasing productivity, efficiency and safety (Rio Tinto n.d). Innovation philosophy is based on “step-change technologies” and the management’s “Mine of the Future” program. This program has been created for improving mining operations, reducing environmental impact, and improving safety. The key focus of this program is automation in mining and their remote management. The program has led to visible improvements like improving capacity at Pilbara operations by 7 million tonnes due to investment in technology (Crozier, November 2012). Other focus areas include continuous efforts on automated tunneling, remote operation of trains, block cave mining and sensitive airborne gravity measurement systems (Deloitte 2011).
For operational efficiency, payload management, enhanced recovery from ore-bodies, better management of stockpiles and even relatively minor issues like off-road tyre demand reduction etc. are considered. For example, payload optimization has led to reduction of its truck fleet by 43 trucks (Crozier, October 2012). Strategic Production Planning (SPP) helps the respective business units evaluate various investment options. Project Development & Implementation (PDI) wing is responsible for the execution of capital projects in a professional manner. It has a centralized Project Management Office (PMO) and Project Delivery Hubs in different locations for effective project implementation and management (Rio Tinto n.d). The T&I maintains a “post-investment review database” which helps in organizational learning from past experiences (Crozier, October 2012).
Future requirements and significant Issues
The future requirements of IT mainly relate to development of more and better systems for automaton of mines and for remote monitoring. This is because mines are usually located in extremely remote areas where quality human resources are difficult to find. Automated processes can provide technical and operational data on a real time basis. RT has already set up an “Operations Center” in Perth, and a pilot project to remotely manage automated mines in Australia’s Pilbara region is underway. It is felt that there is an urgent need for expanding its scope and operations for mines in other countries of the world. This will lead to cost savings and also improve management control. For this, there may be a need for significant investment in IT hardware and software systems so that the implementation is efficient.
Another are of concern is cyber security (Rio Tinto 2013). Since the company is likely to increasingly depend on technology, it is imperative that its systems are protected adequately to avoid threats of accidents, environmental damage, financial loss and inefficient operations. Enhancement of security systems has to be given due priority as more systems are automated and remotely managed.
CLEANER PRODUCTION – STATUS REVIEW & SUGGESTIONS
Introduction
RT has a comprehensive and global level policy document on Sustainable Development which focuses on social, environmental, economic and governance impact of its operations around the world (Rio Tinto 2012). Here we focus on the environmental part of the policy.
Environment policy overview:
As mentioned in RT (2012), sustainable development is ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’. For RT, sustainable development philosophy is an important focus area of its business plans at all the stages of the business cycle.
The attempt is to inculcate this objective in the culture of the organization by communication through properly documented policies. For cleaner production, all stages of the product life cycle are improved. Importantly, the same standards are expected from the vendors and other business associates
As per their policy ‘Wherever possible we prevent, or otherwise minimize, mitigate and remediate, harmful effects of the Group’s operations on the environment’ (RT 2012). Compliances are an essential part of the EM approach and voluntary commitments lead to further improvements. International standards are also given due importance and internationally recognized management systems are practiced and improved. Community involvement is also recognized so that their inputs about the local eco-system are not ignored. This also helps in gathering data on the local market regarding demographic profile, labor market etc. so that potential impact of any future project can be assessed in a holistic manner. The “Mine of the Future” program is also likely to help in reducing the environment impact due to automation and remote monitoring.
The company has a “Materiality Matrix” base on which issues of highest importance are reported in the Annual Report.
The Mineral Technology Services Center, which is a part of the T&I, provides the technological and innovation support to approaching EM.
