RIO TINTO ON LEAN MANUFACTURING IN THE MINING SECTOR – by Paul Smith (Shinka – December 20, 2012)

In November following the completion of our 2012 Lean Japan Tour I was fortunate to attend the 40th Anniversary of the establishment of the Australian and New Zealand Chamber of Commerce in Japan. It was an enjoyable night in Tokyo’s beautiful Peninsula Hotel, with the Australian Food and Beverage Manager treating guests to a superb meal, and singer Sarah Àlainn entertaining us early in the night with a number of songs from her recent debut album.

The highlight of the evening for myself was the keynote address from Sam Walsh AO, Executive Director of Rio Tinto. Sam opened his address by talking about the trade relationship between Australia and Japan and the growth and development of the broader Asia Pacific region.

Sam then turned to his own background with Japan and Rio Tinto’s iron ore business. To my pleasant surprise Sam focused his talk on his 20-year experience in the automotive industry and how lessons learned from lean manufacturing have been critical to Rio Tinto’s mining operations.

Sam began by addressing the seemingly unrelated industries of automotive manufacturing and large-scale mineral resource extraction.

“To the uninitiated, the two industries might seem worlds apart. One manufactures highly engineered, precision vehicle components to exacting specifications. It’s an extremely competitive industry. It requires complex, hugely sophisticated and wherever possible automated plant and equipment. It demands first rate forecasting and scheduling, tight inventory and costs control and a keen customer focus. It depends upon top-flight engineering, electronics and technical expertise and lean, high performance business practices.

The other? It’s just digging big holes and scooping the dirt into trucks isn’t it? Well, no, it isn’t, not by any means. The holes are not big, they are gigantic. So are the shovels, trucks, plants, trains, loaders and ships.”

Sam impressed upon the audience the scale of Rio Tinto’s operations and the modernity, complexity, technological sophistication and similarity to other complex production processes such as automotive production.

“If I had to name one thing I have transitioned from what the automotive industry taught me across to what Rio’s mining operations are doing today, it would be an intense, laser-like focus on value and efficiency.

Many of us are familiar with the systems that fall under the banner of ‘Lean Six Sigma’. Pioneered by companies like Toyota and General Electric, they are far from confined to any particular industry or process. At base level it represents a concentrated intent to eliminate variation or waste at every stage of production.”

Sam went on to address a question that is often asked by industries unrelated to automotive production, and is not immediately obvious to those not experienced in the fundametals that drive lean manufacturing.

“But, you might ask, what does operating a collection of large mining pits in the Pilbara have in common with producing precision engine components or wheel bearings?

The answer is that that these approaches to process and production are about bigger and more general questions than a specific product or sector. At their heart they are about solving problems and the essential problem is the same for everyone. What is wasting our time, our labour, our workforce skills, our energy consumption, our resources and our money? How do we discover it, isolate it, analyse it and eradicate it?”

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