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Executing a Business Aligned Supply
Chain Value Delivery Strategy
Best-in-Whose-Class?
Newmont Mining
Ramsey MusaVice President, Supply Chain
The Hackett Group
Dr. John KamauffPrincipal, Strategy and Business Transformation
www.sig.org/eval
Best-in-Whose Class? Executing a
Business Aligned Supply Chain
Value Delivery StrategySourcing Industry Group Global Summit
October 27, 2015
Newmont Mining Corporation – Slide 3October 27, 2015
Cautionary statement
Cautionary statement regarding forward looking statements:
This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provided for under such sections.
Such forward-looking statements may include, without limitation: (i) estimates of future consolidated and attributable production and sales; (ii)
estimates of future costs applicable to sales and All-in sustaining costs; (iii) estimates of future consolidated and attributable capital expenditures;
(iv) our efforts to continue delivering reduced costs and efficiency; (v) expectations regarding the development, growth and exploration potential of
the Company’s projects, including the Turf Vent Shaft, Merian, Long Canyon Phase 1, the Tanami Expansion and the Ahafo Mill Expansion; (vi)
expectations regarding the repayment of debt from cash flows and existing cash; and (vii) expectations regarding future price assumptions,
financial performance and other outlook or guidance. Estimates or expectations of future events or results are based upon certain assumptions,
which may prove to be incorrect. Such assumptions, include, but are not limited to: (i) there being no significant change to current geotechnical,
metallurgical, hydrological and other physical conditions; (ii) permitting, development, operations and expansion of the Company’s operations and
projects being consistent with current expectations and mine plans, including without limitation receipt of export approvals; (iii) political
developments in any jurisdiction in which the Company operates being consistent with its current expectations; (iv) certain exchange rate
assumptions for the Australian dollar to the U.S. dollar, as well as other the exchange rates being approximately consistent with current levels; (v)
certain price assumptions for gold, copper and oil; (vi) prices for key supplies being approximately consistent with current levels; (vii) the accuracy
of our current mineral reserve and mineralized material estimates; (viii) the acceptable outcome of negotiation of the amendment to the Contract of
Work and/or resolution of export issues in Indonesia; and (ix) other assumptions noted herein. Where the Company expresses an expectation or
belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such
statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed,
projected or implied by the “forward-looking statements”. Such risks include, but are not limited to, gold and other metals price volatility, currency
fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, political and operational
risks, community relations, conflict resolution and outcome of projects or oppositions and governmental regulation and judicial outcomes. For a
more detailed discussion of such risks and other factors, see the Company’s Quarterly Report on Form 10-Q filed on July 23, 2015 with the
Securities and Exchange Commission (the “SEC”), as well as the Company’s other SEC filings. The Company does not undertake any obligation
to release publicly revisions to any “forward-looking statement,” including, without limitation, outlook, to reflect events or circumstances after the
date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors
should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement.
Continued reliance on “forward-looking statements” is at investors' own risk.
Newmont Mining Corporation – Slide 4October 27, 2015
About the presenters
Ramsey Musa
Vice President, Supply Chain – Newmont Mining
• Elected Vice President, Global Supply Management in November 2014
• Group Executive, Supply Chain Operations and Capital Projects 2012
• Senior Director, Global Supply Chain Operations 2009
• Strategic Category Team Manager at Freeport McMoran
• Senior Manager, Supply Chain Materials Commodity Management at Intel
Dr. John Kamauff
Principal, Strategy and Business Transformation – The Hackett Group
• More than 30 years experience in Strategy & Operations including Supply
Chain, Sourcing, and Procurement Operations
• Previously partner at two large Operations and Strategy consulting firms and
a Senior Partner Advisor at another large consulting firm, and founder of his
own firm
• Trusted business advisor to senior leaders and has helped companies solve
some of the most complex supply chain and supplier challenges in industry
today
Newmont Mining Corporation – Slide 5October 27, 2015
Agenda
• Company Overviews
• Background
• Approach
• Strategy
• Execution – Tactical Projects
• Looking Forward
• Key Take Aways
• Q&A
Newmont Mining Corporation – Slide 6October 27, 2015
Newmont: Gold sector leader for nearly a century
Long Canyon
Yanacocha
Tanami
Carlin
Phoenix
Twin Creeks
Merian
Boddington
KCGM
% of 2015E
gold
production*
North America:
35%South America:
10%
Australia:
33%
Africa:
16%
Ahafo
Akyem
CC&V
Batu Hijau
Indonesia:
6%
NEM market data (06/09/2015):
Market cap: $12.2 billion
Enterprise value: $18.9 billion
# of operations: 13
2014A revenue: $7.3 billion
2014A attr. production: 4.8 Moz Au
*Production estimates include CC&V and assumes closing on 08/01/2015 with Waihi sale closing on 09/01/2015
Newmont Mining Corporation – Slide 7October 27, 2015
The Hackett Group
• We are the global leader in operations improvement strategies, implementation know-how, and G&A agility
• We address both efficiency and effectiveness improvements to enable strategic business objectives
• Our insights are fact-based, from over 10,000performance improvement consulting engagements
• Our Best Practices Intelligence Center™ is a significant differentiator and enabler. It contains:
‒ 20,000+ performance metrics updated annually
‒ 1,500+ best practices across 95 business processes
‒ 1,000+ best practice-based process maps, requirements and configuration guides
‒ 1,000+ case studies, implementation examples and research
• We deliver results through a global team of senior practitioners using a consistent methodology and best practice-based toolset
Hackett Value Grid™
We help companies
establish and implement
business performance improvements
Intellectual capital and implementation expertise that accelerates the time to realize sustainable benefits
Newmont Mining Corporation – Slide 8October 27, 2015
Where Newmont is Today Where Newmont is Heading
Newmont
Leading safety performance
Riding the “gold super cycle”
Volume over Value strategy
Positioned for strong growth
Operating costs rising 15% YOY
40+ capital expansion projects
Large headquarters staff
SAP implementation
Zero injuries and illnesses
Gold/copper price drop of 30~40%
Value over Volume strategy
Superior value, longevity, risk profile
Costs down 20% since 2012
Capital projects streamlined
Fit-for-purpose organization
SAP value realization
Supply Chain
Center-led organization infancy
Global shared services model
Traditional reporting lines
New standards, processes, metrics
Two Supply Chain groups – Ops/Proj
New Supply Chain operating model
Operational and technical integration
Clearer organizational return on
investment
Outsourcing
Change driving new Supply Chain strategy…
Coming from Moving towards
Newmont Mining Corporation – Slide 9October 27, 2015
Engaging with Hackett to develop new strategy
What are our
goals and
aspirations?
Where will we
play?
How will we
succeed in
chosen
markets?What
capabilities
must be in
place to win?What
management
systems are
required?
An effective Supply Chain strategy is linked to Business Strategy by answering a cascading series of questions using quantitative analysis and modeling
Newmont Mining Corporation – Slide 10October 27, 2015
Translating aspirations into actions
Stakeholder Alignment
• Engage stakeholders to assess capabilities, performance, opportunities
• Benchmark performance using industry data, surveys, capability assessments
Strategy
Development
• Understand gaps and opportunities and translate into future state targets
• Understand core competencies and how bimodal approach enables strategy
Future state
capability
enablement
• Understand strategic role of the Supply Chain
• Translate into Future State organization, systems, technologies and targets
Implementation
plan
• Develop high-level plans for implementation and communication
• Define programs to deliver future state capability
Control • Monitor and continue to improve
Newmont Mining Corporation – Slide 11October 27, 2015
External benchmark: Almost world class!
Newmont Mining Corporation – Slide 12October 27, 2015
Internal feedback indicates misalignment…
Newmont Mining Corporation – Slide 13October 27, 2015
Refreshed Supply Chain mission and vision
Mission
Vision
Approach
Outcomes
To provide safe, sustainable, efficient, cost effective, supply chain solutions
necessary to deliver optimal life-of-mine support, achieved through
collaboration, management, and optimization of an integrated value chain
To be a trusted partner by delivering sustainable value through industry
leading lifecycle cost management and efficient delivery of goods and
services in support of our projects and operations
• Strategic realignment with the business
• Optimizing the operating model
• Strategic Sourcing and Total Cost of Ownership
• Improved capital procurement
• More strategic, efficient, and agile operating model
• Improved service delivery model to the business
• Increased return on investment on goods and services procurement
Newmont Mining Corporation – Slide 14October 27, 2015
Getting tactical to close the gaps
Strategic Realignment
with the Business
Improved Service Delivery Model to the Business
Increased Return-on-Investment on Goods & Services Procurement
More Strategic, Efficient & Agile Operating Model
Operating Model
Optimization
Improved Capital
Procurement Support
Strategic Sourcing and
Total Cost of Ownership
Newmont Mining Corporation – Slide 15October 27, 2015
Strategic alignment with the business
Activities & Deliverables
• Conduct stakeholder interviews
• Identify existing stories (perceptions)
• Define new perceptions
• Review in-flight initiatives
• Identify new behaviors, systems, and symbols
to drive new perceptions
• Leverage new Supply Chain PMO
Page 2
HGS Strategic Sourcing and Package Development Assessment – Steering Committee #1© 2012 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Interviewee Survey: Overview
Average Importance
Average Capability Score
2.0
2.5
3.0
3.5
4.0
4.5
5.0
StrategicSourcing
SupplierManageme
nt
Mgt. &Strategy
CustomerMgt.
Compliance& Risk Mgt.
ProductIdeation
ProductDevelopme
nt
ProductCommercial
ization
HGS
McDonald's
OwnerOperators
Suppliers
2.0
2.5
3.0
3.5
4.0
4.5
5.0
StrategicSourcing
SupplierManagement
Mgt. &Strategy
CustomerMgt.
Compliance& Risk Mgt.
ProductIdeation
ProductDevelopmen
t
ProductCommerciali
zation
HGS
McDonald's
OwnerOperators
Suppliers
Summary of Findings
Strategic Sourcing and Mgt & Strategy capabilities
were universally viewed as strong
HGS rated itself highly with respect to supplier
management, however, other stakeholders viewed HGS’s
capabilities as closer to average
Other stakeholders rated compliance & risk management
capabilities lower than HGS indicating a gap in perceived
performance
O/O’s and HGS were aligned on Ideation, Development
and Commercialization capabilities while suppliers and
McDonald’s rated these capabilities lower indicating a
need for better communication or better process around
PD
For Importance, all stakeholders placed relatively
consistent values on the 8 process areas -
demonstrating alignment among stake-holders
Strategic Sourcing, Mgt & Strategy, Customer Mgt and
Product Ideation identified as most important areas of
focus
1
3
3
5
5
6
4
2 2
6 6
1
1
4
4
4
6
Page 3
HGS Strategic Sourcing and Package Development Assessment – Steering Committee #1© 2012 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Interviewee Survey: Strategic Sourcing
Supply
Assurance
How would you rate HGS's current capability in assuring supply
for the McDonald's system?
Total Cost
Minimization
How would you rate HGS's current capability to minimize the
total cost of ownership for packaging supplies?
Capability Scores
Score Distribution
Stakeholder Quotes
“We are consistently qualifying second sources of supply. There are no
items in the system that I am aware of that are not dual sourced or
where a second supplier has not been qualified as a contingency” –
HGS
“It is rare that we encounter assured supply issues and HGS proactively
and actively pursues solutions in the event of any perceived risk to
assured supply” – McDonald’s
“Assured supply first - they are aggressive pursuing this and do a good
job” – Supplier
“HGS takes all measures necessary to ensure that supply is not broken.”
– Supplier
Findings
High average score across all stake holders (4.5) Supply Assurance – 4.8
Total Cost minimization – 4.3
General consensus that HGS does an outstanding job of supply
assurance. However, non-HGS stakeholders rated total cost minimization
capabilities slightly lower at 4.0
HGS is viewed by all stakeholders as having strong capabilities
related to strategic sourcing
4.84.4
4.3 4.34.5
1.0
2.0
3.0
4.0
5.0
HGS McDonald's Owner Operators
Suppliers Total
High
Average
Low
Very high
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
HGS McDonald's Owner Operators Suppliers Total
Very Low Low Average High Very High
n=45 n=12 n=18n=27 n=102
Develop an understanding of the broader organization’s expectations of Supply Chain capabilities, performance, and opportunity areas
Strategic Realignment
with the Business
Newmont Mining Corporation – Slide 16October 27, 2015
Defining future state capabilities
Enterprise Service Delivery Strategy
Strategic Alignment
Organizational
Capabilities
Efficiency &
Effectiveness Goals
Design & Operating
Principles
Service Delivery Model Service Delivery
Transformation
Assess Impact of Change
Build Execution
Capabilities
Develop Implementation
RoadmapSkills &
Talent
Service
Delivery
Components
Process
Design
Service
Placement
Enabling
Technology
Governance
& Org
Process
Sourcing
Information
A strategy for what work is executed where, by whom, and its business benefit
Operating Model
Optimization
Metrics and KPIs
Newmont Mining Corporation – Slide 17October 27, 2015
Outsourcing considerations
What to Outsource
• Procurement execution/transaction management
• Invoice reconciliation and auditing
• Catalog content management
• Spot buy and operation sourcing support
• Payments
• Contract management
• Select sourcing and negotiation
SLAs to Manage
• Requisition-to-PO, cycle times
• PO accuracy
• Adherence to policy & procedures
• % automated vs. manual
• Category savings
• Demand management savings
• Compliance savings
How to Choose a Supplier
• Ability to deliver savings
• Ability to deliver against SLAs
• Ability to support global operations
• Comprehensive P2P services
• Demonstrated track record
• Technology infrastructure
• Economies of scale
Why Outsource?
• Improve visibility into spending
• Focus on more strategic activities
• Access to improved pricing
• Access to category management expertise
• Lower transactional processing costs
• Access to supplier intelligence
• Reduce headcount
• Strategy enablement
Operating Model
Optimization
Newmont Mining Corporation – Slide 18October 27, 2015
Supply Chain Outsourcing
Requis
itio
n &
PO
Pro
cessin
g
Supplie
r S
chedulin
g
Receip
t P
rocessin
g
Com
plia
nce M
anagem
ent
Indirect -
Supplie
r M
anagem
ent
Indirect I
nte
rnal M
anagem
ent
OPERATIONS AND COMPLIANCE
Supply
Data
Ma
nagem
ent PLANNING &
STRATEGY
Indirect E
xte
rnal M
anagem
ent
Source: Hackett Globalisation Research Center based on
Hackett Benchmarking Taxonomy
SOURCING AND SUPPLY
BASE MANAGEMENT
Indirect S
ourc
ing a
nd
Supply
Base S
trate
gy
Indirect S
upplie
r P
art
nerin
g
HighLow
High
Low
Traditional Outsourcing Candidates
(> 70% of Transactions)
Emerging Candidates
(> 30% of Transactions for some activities)
Retained Processes
Negotia
tion a
nd S
upplie
r
Contr
act
Cre
atio
n
Req.
Defin
itio
n a
nd
Supplie
r B
iddin
g
Pro
duct D
evelo
pm
ent
and D
esig
n S
upport
Direct
-S
upplie
r M
anagem
ent
Direct
Inte
rnal C
usto
mer
Ma
nagem
ent
Direct
Exte
rnal C
usto
mer
Ma
nagem
ent
Direct S
ourc
ing
& S
upply
Base
Strate
gy
Impact to the
Business
Complexity
Legend
Supply Chain and Sourcing Outsourcing is evolving to more complex processes
with common purchasing activities being strong candidates for outsourcing
Operating Model
Optimization
Newmont Mining Corporation – Slide 19October 27, 2015
Align outsourcing and work rebalance
Onsite Knowledge
Transfer
Offshore
Knowledge
Transfer
Parallel Run/
Primary SupportGo-Live
Validate/Update
Processes/Systems
Validate/Update
Process
Documentation
Validate/Update
Applications
Interfaces &
Infrastructure
Post
Implementation
Support
Outsourcing Activities
Operating Model
Optimization
Decompose
processesReknit tasks
Combine
roles
Arrange
jobs
Inventory
skills
Recruit and
retrain
Knowledge
transferSupport
Work Rebalancing Activities
Newmont Mining Corporation – Slide 20October 27, 2015
Enterprise Data Program
Get our house in order
Solidify our
Foundation
Optimize
ReportingContract
Mgmt
Ware-
house
Auto-
mation
Benefits
& Payroll
Infra-
structure
Process Efficiencies
Operational Analytics
& Strategic Analysis
IT
Support
Workflow
The SAP Journey
SAP
Implement
SAP Go-Live SAP Stabilization Sustain
Operating Model
Enhancements
Operations Reporting
Enterprise Data Program
2010 - 2013 2013 - 2014 2014 2016-2017
Extract further value
out of SAP
2014 - 2016
Operating Model
Optimization
Newmont Mining Corporation – Slide 21October 27, 2015
Program Management Office
Program Management
Office
Standards
Processes
ToolsReporting
Training
• Align projects and
activities
• Ensure consistent
approach
• Realize planned
benefits
• Keep stakeholders
informed
Operating Model
Optimization
Newmont Mining Corporation – Slide 22October 27, 2015
Life Cycle Management and the Directorate
Contractor Management• Pre-qualification processes• Audits• Streamline contracts to enable
operational ownership• Contract hand-off and
contract owner training• Monitoring performance
An emerging topic that will need to
be addressed is …
Governance
•Strategy and decision making authority
•Global representation from Operations
•Supported by Key functions (Legal, S&ER)
•Coordination with Projects
•Established cadence of communication
Category Management
•Developed and defined standard enterprise Strategic Sourcing Process
•Supplier Relationship Management
Life Cycle Management
•Developing and embedding life-cycle management
•Economic Unit Cost modeling
Technical Underpinning
•Completing commercial strategy with in-depth technical strategy
•Scope of work optimization
•Technical Services provides SME in key areas
Explore Build Operate Close
Strategic Sourcing and
Total Cost of Ownership
Newmont Mining Corporation – Slide 23October 27, 2015
Align stage gate project deliverables
Stage 1 –
Identification
Stage 2A –
Selection
Stage 2B –
Confirmation
Stage 3 –
Definition
Stage 4 –
ExecutionOperation
Define work
required
Evaluate
alternatives
Ensure risks
are understood
Ensure no fatal
flaws
Complete
detailed
engineering
Operate asset
Develop
preliminary
business case
Select
preferred
alternative
Lock scope
and
configuration
Ensure risks
understood
Construct Optimize asset
Plan for
Selection stage
Recommend
single go-
forward option
Plan for
Definition
stage
Confirm
technical
viability
Commission,
ramp-up, turn-
over
Post
investment
review
Plan for
Confirmation
stage
Finalize scope,
cost, schedule
Plan for
operations
Plan for
Execution
stage
Exploration Projects Operations Closure
Gate
1
Gate
2
Gate
3
Improved Capital
Procurement Support
Newmont Mining Corporation – Slide 24October 27, 2015
Cost savings focus to Trusted Partner
Supply Chain 3-year Transformation Roadmap
Sep 2014Corporate Full
Potential Phase
1 Completed
Oct 2014 Corporate Full
Potential Phase
2; Industry
Benchmarking
& End-to-End
Business
Process review
Jun 2014 Supply Chain
Integrated into
Technical
Services
July 2014Integration
Opportunities
Identified;
Technical
Underpinnings
to Supply Chain
Commercial
Strategies
May 2015Supply Chain
Business
Process Full
Potential
Improvement
Projects
Launched
Future State
• Trusted Partner to the
Business through Cross
Functional Engagement
• Enhanced Strategic/Global
Focus & Capability
• Proactive Communication,
Collaboration &
Engagement
• Enhanced Focus on
Technical & Commercial
Fundamentals
• Agile Service Model in
Alignment with Customer
Requirements
• Doing More with Less
• Improved Processes &
Systems
• Improved Return-on-
Investment
2017 Today
Strategic
Realignment with the
Business
Operating Model
Optimization
Strategic Sourcing
and TCO
Improved Capital
Procurement
Newmont Mining Corporation – Slide 25October 27, 2015
• Zero-based strategy approach to improve efficiency and effectiveness
• Build in agility to support rapid strategy change
• Technical underpins that support Supply Chain strategies and initiatives
• Alignment with the business is never complete
• Top quartile benchmark results do not mean you are meeting all customer needs
• Communicate, communicate, communicate – by doing rather than telling
Creating a more efficient and effective Supply Chain
Questions?
Newmont Mining Corporation – Slide 27October 27, 2015
Contact Information
John Kamauff, PhDPrincipal
270 Madison Avenue, Suite 1550
New York, NY 10016
T +1 (443) 838 - 9736
jkamauff@thehackettgroup.com
www.thehackettgroup.com
Ramsey MusaVice President, Supply Chain
Newmont Mining Corporation6363 S Fiddler’s Green Circle, Suite 800
Greenwood Village, CO 80111
T 303.708.4230
Ramsey.Musa@Newmont.com
www.newmont.com
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Session #14
Best-in-Whose-Class? Executing a Business Aligned Supply
Chain Value Delivery Strategy
www.sig.org/eval
John Kamauff, PhDPrincipal
270 Madison Avenue, Suite 1550
New York, NY 10016
T +1 (443) 838 - 9736
jkamauff@thehackettgroup.com
www.thehackettgroup.com
Ramsey MusaVice President, Supply Chain
Newmont Mining Corporation6363 S Fiddler’s Green Circle, Suite 800
Greenwood Village, CO 80111
T 303.708.4230
Ramsey.Musa@Newmont.com
www.newmont.com
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