Case studies / Capital Equipment Procurement
Case studySupplier quotation comparison for a mining services group
A mining services group in Chile and Peru moved capital equipment quotes out of email into structured comparisons, tied advance payments to milestones and made purchasing decisions transparent.
Overview
A contract mining and equipment maintenance group operating at copper and gold sites in northern Chile and southern Peru, buying haul trucks, drill rigs, crushers, pumps and workshop equipment for its contracts.
Scale. Around 60 capital purchases a year worth between a few hundred thousand and several million dollars each, lead times of six to eighteen months, suppliers in North America, Europe and Asia, delivered as a phased, multi-location programme.
The challenge
Quotes were compared by email. An engineer would ask three or four suppliers for a price on a drill rig, and the replies arrived as PDFs with different specifications, currencies, delivery terms, warranty periods and payment schedules. Someone then built a spreadsheet to compare them, usually under time pressure because a contract start date was approaching.
Comparisons were rarely like for like. One supplier quoted ex works in Wisconsin, another delivered to the port of Antofagasta, a third included spare parts and training that the others priced separately. The approval committee saw a summary that showed the headline price but not the assumptions behind it, and often asked for the work to be redone.
Long lead times added risk. Equipment ordered for a new contract might take a year to arrive, and progress was tracked through occasional emails with suppliers. When a delivery slipped, site teams sometimes learned only weeks before mobilisation.
Payment terms were weak. Suppliers commonly asked for thirty to forty per cent in advance, and the group usually agreed. When one supplier ran into financial difficulty, a large deposit was tied up for months with no equipment to show for it.
The solution
Every capital purchase above the approval threshold now starts with a structured request for quotation. Suppliers respond in a common format through a supplier portal, quoting the same specification, delivery point and scope, with options such as spares packages and extended warranties priced separately.
Quotes are compared automatically on total cost of ownership, converting currencies, adding freight and duty to site, and including spares, maintenance and expected fuel or power use where engineering supplies them. The approval committee sees the comparison, the assumptions and the engineer's recommendation side by side, and records the reason for its decision.
Payments are tied to milestones: order confirmation, factory acceptance testing, shipment, arrival on site and commissioning. Advance payments are limited and, where unavoidable, backed by bank guarantees. Suppliers report progress against agreed dates, and any slip is flagged to the site team and contract manager straight away. Shared master data for suppliers, equipment types and sites connects procurement, engineering and finance, and the data warehouse holds the full history of quotes and decisions.
The engagement
- Six months
- Four specialists, with procurement, engineering, contracts and treasury leads
- Process mapping, structured quotation comparison, lead-time tracking, milestone-based advance payments, shared master data, pilot and phased rollout.
Integrations
- Supplier quotation portal
- Bank payments, guarantees and freight tracking
- Supplier price and catalogue feeds
- Data warehouse
How we delivered it
- 01
Map the work and agree measures
Four weeks
We followed recent purchases from engineering request to commissioning, working with engineers, buyers, contract managers, treasury and the approval committee. Before any design work, leadership agreed how success would be judged: like-for-like comparison, time to decision, cash paid in advance and early warning of late deliveries.
- 02
Design common processes and integrations
Nine weeks
Engineering and procurement designed a structured request for quotation by equipment type, so suppliers price the same specification, scope and delivery point. Comparisons normalise currency, freight, duty, spares and warranty into a total cost of ownership. Contracts and treasury agreed standard milestone payment schedules.
- 03
Pilot on one contract
Six weeks
Purchases for a new copper contract in the Atacama region piloted the process. Suppliers adapted quickly once the template was clear. The pilot showed that milestone definitions needed engineering sign-off, not just a supplier's word.
- 04
Roll out across sites and track results
Seven weeks
The process extended to all capital purchases in Chile and Peru. Leadership reviewed the agreed measures monthly.
Results
- Purchasing decisions became transparent
- Quotes compared like for like on total cost
- Advance payments tied to delivery milestones
- Late deliveries flagged early
Decisions became transparent. Every major purchase now has a comparison that the committee, auditors and clients can follow, and requests to redo the analysis have largely stopped. Engineers spend their time on specifications rather than spreadsheets.
Tying payments to milestones cut risk. The share of contract value paid before any delivery fell sharply, and the group has not had a deposit stranded since. Some suppliers accepted lower advances in exchange for faster, more predictable payment once milestones were met.
Lead-time tracking gave site teams earlier warning of late equipment, so mobilisation plans could be adjusted or equipment hired in the interim. Because the measures were agreed at the start, leadership could see progress plainly each month.
The committee used to argue about whose spreadsheet was right. Now we argue about the equipment, which is the conversation we should be having.
What made the difference
The buyer tied payments to milestones and cut risk. Agreeing measures at the start made success easy to recognise.
