Deloitte Consultingresearch report

Construction of mining comprehensive budget management system From Industry application of digital financial transformation

The following is the Construction of mining comprehensive budget management system From Industry application of digital financial transformation recommended by And this article belongs to the classification: Deloitte Consulting , research report.


According to Xu Bin, managing partner of Deloitte’s China mining and metals industry, “mining industry has made remarkable progress in the past year, with many mining companies streamlining their investment portfolios and strengthening the robustness of their balance sheets in order to be in a favorable position in the face of unknown challenges. At the same time, they are also striving to address climate change, create new opportunities, strengthen ties with local communities, and seek new ways to create value. ” In such a new era of coexistence of “crisis” and “opportunity”, the mining industry needs to adapt to the new normal of economic pattern change and actively respond to the new requirements of social development.

In March 2020, the Standing Committee of the Political Bureau of the CPC Central Committee proposed to strengthen the progress of major projects and new infrastructure. “New infrastructure” emphasizes the infrastructure construction driven by technological innovation, providing services such as digital transformation, intelligent upgrading and integrated innovation, which puts forward new requirements for the development of the mining industry. At the same time, the national development and Reform Commission, the national energy administration and other eight departments jointly issued the “guidance on accelerating the intelligent development of coal mines”, which requires accelerating the intelligent transformation of the coal industry, promoting the integrated development of artificial intelligence, Internet of things and other new technologies with the coal industry, and improving the intelligent level of coal mine production and management.

Considering the reference of coal industry in mining application, we take coal industry as an example“ The intelligent technology in the wave of “new infrastructure” has impacted every link of the coal industry chain. In coal production, the use of 5g + Internet of things can reduce resource waste and improve the flexibility of production scheduling; The adoption of machine learning and Internet of things technology will improve the cycle efficiency of transport vehicles and increase the annual material volume. In the operation and management capability, the Internet of things technology is used to digitize the engineering and asset information in the asset life cycle, connect to the Internet, and start sensors and remote devices; Wearable devices are used to provide real-time guidance for on-site maintenance and machine detection, and provide the maintenance level and safety of operators. In the ability of decision-making analysis, information technology is used to support trend analysis, multi perspective cost insight, and cognitive technology is used to realize enhanced data exploration, provide more intelligent insight, and provide more convenient and insightful analysis tools for management. The above-mentioned “new infrastructure” will undoubtedly provide better intelligent technical support for the production capacity, sales forecast, asset management and other budget contents.

In order to respond to the “new infrastructure” wave and release the strategic value of intelligent transformation, coal enterprises need to take comprehensive budget management as the starting point, coordinate production and operation work, escort the effective implementation of intelligent measures from the perspective of management, and adopt budget management closed loops such as budget objectives, budget preparation, budget control and budget analysis, The intelligent “new thinking” will be transmitted to all departments of the enterprise, and the intelligent management means will be fully reflected in the target calculation, production activities, decision-making and analysis of the work.

Industry application: Construction of comprehensive budget management system in mining industry

Based on the construction of comprehensive budget management system of mining industry, starting from the leading ability of enterprise value, we sort out the key points of budget management, including target measurement, industry finance integrated budget driven by production plan, and decision analysis system to meet the needs of benefit management. Based on the key points of production and operation management and control of mining industry, this paper takes the coal industry as an example to introduce.

Based on the group strategy, the enterprise comprehensive budget management system transforms the strategy into a reasonable management portfolio, decomposes the strategic objectives to achieve effective management consistency, resource allocation and benefit realization, balances the objectives and resources among major business sectors or business units, and finally sinks into basic business activities to guide production and operation activities. As the support of lean management, comprehensive budget management takes the closed-loop of budget management as the foothold to ensure the effective implementation of the group’s strategy.

To undertake, decompose and realize the group’s strategic initiatives and link up the value objectives of the business plan, the construction of the budget system needs to rely on the real business scenarios and improve the financial results driven by business problems. Based on Deloitte’s deep accumulation in the coal industry, this paper summarizes the key value drivers of the coal energy industry, and based on Deloitte’s own enterprise value map, achieves the purpose of revenue growth, cost reduction, and improving asset utilization efficiency. Based on these three value objectives, the paper clarifies the value driving factors of coal industry, evaluates the strategic importance and performance importance, and identifies and clarifies the budget management focus with the value leading ability.

“As the support of lean management, comprehensive budget management takes the closed-loop budget management as the foothold to ensure the effective implementation of the group’s strategy  

According to the key points of budget management sorted out by value leading ability, the promotion of comprehensive budget management of coal industry needs to focus on three key links: target calculation, improving the ability of enterprise to allocate resources; Deep integration of industry and finance to improve the operation efficiency of enterprises; Multi perspective cost analysis, intelligent decision analysis.

Target prediction

Before an enterprise formulates its annual budget target, it should start from the strategic perspective and gradually deduce it. First, according to the strategic objectives of the group, the medium and long-term planning of the enterprise is formulated. Then, from the medium and long-term planning to the annual business plan, the key activities such as market, resource allocation and investment projects of the next year are planned and arranged

The annual target measurement should be based on the business plan and form the financial connection. The selection of target needs to be based on the key value drivers of the industry, and the most important value drivers in coal enterprises are output and unit consumption quota. The output is determined by the production capacity of the coal mine, which is the decisive factor of the sales revenue; The unit consumption quota determines the unit production cost of coal, which is an important grasp of cost control.

Production target prediction now in the process of mining, intelligent production management means will be introduced to improve the accuracy of mining and production planning. As the basis of target calculation, we can undoubtedly greatly improve the accuracy of production target calculation. Intelligent production usually adopts the management means of combining production technology and software information system to collect and store the drilling data in the process of geological drilling. Based on the geological grid of drilling data, combined with geophysical and roadway exploration data, the geological mining model is formed. On this basis, the mining efficiency of mining equipment is established by using the information system, and the production plan is automatically arranged, Generate medium and long term production continuity plan. On this basis, the annual budget takes geological prediction as the starting point, links up the production continuity plan, forms the industry finance integration prediction model, and accurately measures the output target.

Unit consumption quota target prediction in each production link of coal mining, there are many factors affecting unit consumption, and there is no linear relationship. With the accumulation in the field of data analysis, Deloitte can use neural network algorithm and other high-order analysis technology to more accurately predict the budget quota in coal production based on big data.

Deep integration of industry and Finance

The construction of the comprehensive budget management system of the coal industry needs to closely focus on the production operation links, based on the eight basic operation links of “mining and washing” and “mechanical transportation management and measurement”, with the help of intelligent means, get through the front-end business links and financial results, and realize the deep integration of industry and finance.

In terms of revenue growth, the budget details will sink into the production process. Through machine learning to optimize the process parameters in coal washing process, improve the recovery rate to maximize the clean coal production. In coal mining and tunneling, 5g network and Internet of things are used to realize dynamic scheduling and monitoring, reduce transportation time and improve production and operation efficiency.

In terms of cost reduction, we should pay full attention to the analysis of coal unit production cost management. Based on production activities and cost elements, the type of budget quota is defined, and more accurate quota prediction is achieved through high-level analysis of big data (such as neural network, artificial intelligence algorithm) and other technologies. Through the unit consumption quota of standardized cost, the enterprise can predict the unit production cost of coal, so as to eliminate the influence factors of scale and analyze the production benefit of similar enterprises.

Due to the impact of epidemic situation, economy and industry cycle, the coal industry will significantly reduce capital expenditure. In the budget, enterprises should pay attention to investment plan management, pay attention to process tracking, control the total amount of investment, rationalize expenditure, and take corrective measures for abnormal budget deviation in time.

In terms of improving asset utilization efficiency, we can use the Internet of things technology to improve equipment maintenance strategy and prediction ability, and more accurately prepare maintenance investment budget and equipment repair budget, so as to achieve the purpose of reducing costs and improving equipment maintenance effect.

Multi perspective cost analysis system

The cost analysis of coal industry can provide multi perspective cost analysis from the perspective of management demand. According to Deloitte’s experience in the coal industry, comprehensive perspective, budget management perspective and activity management perspective are important analysis perspectives of coal cost analysis.

The comprehensive perspective is based on the overall analysis of the enterprise and reflects the total cost. This perspective mainly serves the energy enterprises of multi business sectors, analyzes the full cost and unit full cost of commercial coal by sector or coal mine, compares the historical data trend, and horizontally compares and analyzes the unit full cost of different coal mines.

From the perspective of budget management, based on the caliber of budget management, this paper analyzes the structure and budget deviation of various costs, including total cost, labor cost, controllable cost, period cost, etc. Take the budget management as the demand point, focus on the actual amount of controllable expenses, period expenses and other expenses, and compare with the budget.

The perspective of activity-based management reflects the situation of various types of activity-based costs, and focuses on the activities that cause cost changes from the perspective of activity-based activities. For example, pay attention to the unit of coal mining, tunneling, coal washing, mechanical and electrical, and auxiliary transportation, and pay attention to the labor cost, electricity cost, and material cost in each operation. Through the comparison with historical data and the comparative analysis of budget cost quota, the operation links of cost change are clarified and focused.

At the same time, on the basis of full precipitation of historical data in enterprises, high-level analysis of big data is used to provide more intelligent insight. Using the prediction of time series, the law of cost change is found, and the expected value of future time is predicted; Using clustering algorithm, the cost drivers are intelligently grouped, and the segmentation is automatically created on different types of data in the organization, so as to get a deeper understanding of the cost changes. The following is the interface diagram of mining budget analysis in Deloitte’s past projects.

Through the global business map, we can clearly show the global business layout, as well as the distribution of key indicators such as revenue, production and sales.

Global business map analysis

Through the map of subordinate coal mines, click coal mines to display the planned value, actual value, completion rate, over and under rate and warning level of coal production.

Coal production budget analysis

Through the map of sales channels, click the terminal to show the sales plan, actual sales and completion rate of commercial coal.

Coal sales budget analysis

Deloitte’s experience helps the value budget construction of mining enterprises

Deloitte management consulting has rich experience, knowledge and tools in comprehensive budget management of mining industry.

Deloitte management consulting has been working closely with SASAC of the State Council and SASAC of Shandong, Sichuan, Beijing and other major provinces and cities for more than ten years to carry out training on enterprise planning and budget management and draft a number of planning and budget guidance opinions.

Deloitte management consulting has provided comprehensive budget management system construction and system implementation services for many large state-owned energy groups. We have customized solutions for customers to help them realize intelligent transformation more effectively, achieve faster development and create higher enterprise value.

We suggest that the mining industry, represented by coal enterprises, should deeply consider the intelligent transformation under the wave of “new infrastructure”, take the construction of comprehensive budget management system as the starting point, improve enterprise operation efficiency and create long-term enterprise value. In order to upgrade the intelligent management with value budget management, mining enterprises must make up their minds to learn from the management experience of advanced enterprises, deeply combine the intelligent management with business scenarios, consolidate the management foundation with the closed-loop comprehensive budget management, and achieve the success of intelligent transformation.

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