Freeport-McMoRan Global Supply Chain has developed a unique initiative called the “Hourglass”.

Examining The Supply Chain Process

The Hourglass approach requires Freeport-McMoRan and its suppliers to jointly examine the supply chain process from

• operational need identification to
• supplier material purchase and production to
• material and service delivery to
• payment settlement. 

Working Together to Reduce Waste and Increase Profit

The objectives are to understand each business and all related activities that impact both companies. The intent is not to shift costs but rather to seek out opportunities that jointly eliminate waste and inefficiencies, creating shared savings and greater profitability for both companies. This strategic relationship focuses heavily on using data to make better business decisions.

The Hourglass Model illustrates Freeport-McMoRan’s total supply chain cost to Freeport-McMoRan, including the negotiated contractual pricing (the narrowest point) to supplier and Freeport-McMoRan costs that occur before, during, and after need identification. Some of the business processes and costs analyzed in the Hourglass project are represented in the boxes in the upper and lower triangles of the Hourglass. These processes and costs include:

• planning
• sourcing
• emergency ordering
• order fulfillment
• freight & shipping
• stock-out process
• component failure tracking
• receiving & inventory management
• invoicing & billing
• warranty management
• payment processing 

A typical Hourglass project will analyze two to three of these supplier and Freeport-McMoRan processes/costs areas.

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