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Master Drilling ( Pty) Ltd " N ecessity is the mother of invention," the old saying has it, and that seems to be so in the case of Master Drilling. Located in Fochville, South Africa, the fi rst entity that became the company was established in 1986 as a specialised raisebore contracting company. Raisebore drilling is the underground mining practice of excavating a circular hole between two levels of a mine, without the use of explosives. The company's founder, Danie Pretorius, established the business while he was working for a mining and construction company. He recognised that there was a business opportunity in providing such a service to the South African mining and construction industry. It began small, with used equipment, and has grown to a company with just over R600 million turnover, employing around 1,300 people. Master Drilling breaks out of the standard industry practice of utilising equipment made by others by manufacturing its equipment itself. " We can make just about everything ourselves in its final form," says Koos Jordaan, technical director of Master Drilling. The vertical integration strategy came about when the company was young and struggling to establish itself, because of the prices being charged by equipment OEMs and their control on availability. " Those factors prevented the company from being competitive, in terms of price and availability of a plant to execute work, with established contractors. Vertical integration was seen as a strategy necessary for survival." It has gone beyond that, now. Master Drilling's control of its supply chain is giving it a competitive advantage, albeit one that has to be managed with care. On the one hand, its own equipment production increases its ability to meet all its commitments with confi dence and security; on the other, it needs a certain volume of throughput in order to justify the investment. It's also vital to avoid exposing the company's income to excess risk. But the investment itself, in R& D as well as production, is a tool for managing costs, risk, and for differentiation within the market through effi ciency. " Owning our own fabrication facilities means that we are able to ensure that our equipment has more regular maintenance intervals and that we have better response times on unforeseen occurrences, such as breakdowns," says Jordaan. " It also helps us to control our inventory and manage the value of completed stock we hold." Master Drilling does not make everything for itself, however; where it makes sense, in terms of resource allocation and management time, it seeks to establish and maintain relationships with suppliers. With all the emphasis on economic and commercial effi ciency, it would not be a surprise to fi nd that the company July 09 www. bus- ex. com 39

40 www. bus- ex. com July 09 has a formal lean manufacturing, six sigma, or other business improvement programe in place- but that isn't the case. " We have no formalised programe except common sense and getting respected opinions, I suppose," Jordaan says. " We recognise the need to standardise operations, resolve quality- related issues and improve efficiency. Part of the company is ISO certified, and we definitely see value in pursuing that route. Within the organisation, we raise and manage ' non- conformance reports'. We measure frequency of occurrence and as a factor of direct cost or opportunity cost. Our improvement programe was developed in the last five years and is evolving continually. We have consulted various parties, internally and externally, considered the best practices and set improvement measurement parameters related to value creation in various forms in terms of safety, cost, availability and utilisation of resources." The company has already gained benefits in all those areas and expects improvement to continue. Despite the fact that it has not followed northern hemisphere competitors down the lean/ six sigma route, its effectiveness and competitiveness