In this “Lower for Longer” business environment and the “Volume at all costs” operating model, what is the best way to maximise profits and returns?
Lower for longer refers to the current market expectation that commodity prices will remain at levels lower than they have been for decades. As resource prices start to improve such as the recent small gains in iron ore and coal prices, operators are returning to the “Volume at all costs” operating model which has led to inefficiencies and minimal innovation investment in the “supercycle” era.
So what factors support the new business environment and operating philosophy?
Undoubtedly, there will be numerous factors that relate to cost minimisation and increased availability of assets but with this “Volume at all costs” model, means that =a business’s focus will be on constant production. The 2 factors considered here that have the ability to affect constant production are;
- Scheduled stoppages –for instance regulatory, compliance activities
- Unscheduled stoppages– unpredicted breakdowns.
Based on those factors there are three activities that can minimise the downtime associated with both factors and support the constant production requirement. They are:
- Effective planning and scheduling
- Spares Strategies
- Resourcing strategies