By: Miguel Arancibia Condor, Minsur.

Abstract

This paper presents an overview of the current business relationship between local businesses within our area of influence, such as Antauta, and the contractor companies of the San Rafael mining unit. It also highlights the importance of closing digital gaps within the commercial processes managed by both parties.

Minsur, as part of its sustainability strategy, seeks to contribute to the progress of its stakeholders by promoting development opportunities for all. This principle is aligned with the International Council on Mining and Metals (ICMM) and guided by our purpose: “Improving lives by transforming minerals into well-being.”

To date, the Crecemos Juntos platform has been implemented under a phased rollout strategy, starting with a select group of users in order to gather feedback, make adjustments, and ensure adoption of the platform among local businesses, contractors, and Minsur. All of this aims to strengthen the capabilities and competencies of local businesses.

The primary objective of the platform is to connect local businesses with their clients (the contractors), enabling them to become more competitive in the services they provide, such as food services, lodging, laundry, transportation, and rentals, while fostering comprehensive and sustainable growth that drives the economic development of the area of influence.

The Crecemos Juntos initiative emerged from the need of local businesses in Antauta to manage and oversee the services they provide to contractors of Minsur’s San Rafael mining unit. Minsur’s contracts team identified two main challenges: improving the traceability and visibility of payments for service orders, and the lack of adoption of digital tools among local entrepreneurs.

To address these needs, the design of a digital platform was initiated. During the research phase, it was found that local businesses aspired to grow in different aspects of their lives (work, professional, and personal), which is why the platform was named Crecemos Juntos. The name felt familiar and motivating to them. The platform seeks to support the management and control of services provided by local entrepreneurs to contractors, promoting comprehensive growth at the San Rafael mining unit.

The platform, designed in collaboration with local businesses, is intuitive and user-friendly. It incorporates the main processes for managing service orders, valuation, payment tracking, and claims. Its objective is to provide proper traceability throughout the entire contracting cycle between contractors and their suppliers, particularly local businesses within the San Rafael mine’s area of influence.

In a limited pilot conducted in the town of Antauta during the fourth quarter of 2022, with the participation of 4 contractors and 10 local entrepreneurs, more than 150 orders were generated, helping to bridge the gap between traditional business management practices and mechanisms that accelerate business growth. In addition, new technologies were explored to encourage adoption by local entrepreneurs.

Keywords: Commercial Management, Contractors, Local Businesses. Competitiveness.

Introduction

The San Rafael Mining Unit - Minsur, located at 4,500 meters above sea level in the Puno region and dedicated to tin production, began operations in the early 20th century, becoming the world’s second-largest tin producer.

Currently, the unit works with more than 40 mining contractor companies and over 300 local entrepreneurs, distributed across the districts of Ajoyani and Antauta, both within its area of influence. Given the nature and pace of operations, the San Rafael Mining Unit contracts specialized services through contractor companies, which in turn subcontract basic services (food, lodging, laundry, etc.) from local entrepreneurs.

The commercial management of contractor companies and local businesses is currently supported by manual processes. For this reason, field research was conducted, yielding the following key findings:

Local Businesses

ν Achieve better control of payments

ν Grow as a business

ν Receive consumption records in advance

ν Access training to improve their services

Contractors

ν Strengthen training programs for entrepreneurs

ν For the entrepreneur to improve the quality of their services

ν For the entrepreneur to improve the recording and control of their sales

ν For the entrepreneur to avoid late submission of valuations

Minsur

ν Have a record of agreements between entrepreneurs and contractors

ν Maintain an updated database of the local supply

ν Ensure that payments are made on time

In this sense, why is this initiative important for contractors and local businesses in Antauta?

The answer lies in the lack of digital tools and the limited business management and digital literacy among local entrepreneurs. As highlighted by the Instituto de Estudios Peruanos (IEP): “A mobile phone constitutes an enabler of alternatives (Donner, 2008). Access to and use of internet-connected mobile phones presents alternatives and major opportunities to improve the well-being of the population”.

For this reason, providing a digital solution that allows them to optimize their current manual processes, communicate more efficiently with their clients (contractors), generate valuations without delays, and achieve digital evolution to become more competitive will give them the opportunity to continue growing and strengthening the entire value chain.

Objectives

General Objectives

Improve commercial management between contractors and local businesses, in terms of quality, costs, and satisfaction, in order to enhance the competitiveness of the local service supply.

Specific Objectives

ν Increase digital management of orders and valuations by entrepreneurs.

ν Reduce delinquency rates through the implementation of preventive alerts.

ν Ensure transparency in commercial management between contractors and entrepreneurs.

ν Generate a fair commercial balance for entrepreneurs.

ν Increase the satisfaction level of both local entrepreneurs and contractors.

Development and Data Collection

State of the Art

Business relationships between local businesses and contractor companies: The contracting of services by contractor companies from local businesses is a common practice across various economic sectors. These business relationships are based on the subcontracting of specialized services to meet the needs of contractor companies, which in turn provides opportunities for growth and development for local businesses.

Digital solutions in commercial management: In recent years, there has been growing interest in the implementation of digital solutions to optimize commercial processes and improve transaction efficiency.

Digital platforms and business management systems have become increasingly relevant in strengthening communication, traceability, payments, and control of service orders between contractors and local businesses. These solutions aim to streamline processes, reduce errors, improve transparency, and promote competitiveness.

Challenges and opportunities: Despite progress in the implementation of digital solutions, challenges remain in the business relationship between local businesses and contractor companies. Some of these challenges include the lack of access to technology and digital training among local businesses, resistance to change, the need to adapt to new tools, and data security concerns. Nevertheless, the successful implementation of digital solutions can provide significant opportunities to improve competitiveness, increase efficiency, and foster comprehensive growth within the contractors’ area of influence.

In summary, the state of the art in business relationships between local businesses and contractor companies highlights the growing use of digital solutions to optimize processes and enhance competitiveness. The implementation of digital platforms and technologies has created new opportunities to strengthen commercial management, improve transparency, and promote economic growth in the areas of influence of contractor companies. Despite existing challenges, the outlook for the adoption of digital solutions in this field is promising.

Why Entrepreneurs Do Not Use Digital Tools?

Field research was conducted to better understand entrepreneurs, contractors, and Minsur personnel of different sectors, sizes, and experiences, providing contrasts and similarities in behaviors for analysis.

The people in charge of the business have a high level of digital adoption, as they own mid- to high-range smartphones and use productivity applications, email, and other tools.

However, a barrier arises when it comes to business management: they prefer to keep service-related information in physical form because it is more convenient, easier to record service orders with pen and paper, and in some cases, there is distrust toward applications such as banking apps used for money transfers. This group of users represents 50.5% of local entrepreneurs.

This finding is supported by a study conducted by After Access to measure digital skills in rural areas, i.e. assessing whether users can solve their own technology-related problems without relying on technical support, family, friends, neighbors, etc. As shown in Guatemala, Peru, and Paraguay, the largest gaps in digital skills between men and women are found in rural areas (See Figure 1).

Elements that Improve Digital Adoption

Digital Literacy

Building knowledge on the use of digital tools through training, workshops, and talks for local businesses is key to developing digital competencies.

Digital Partner

Identifying a family member, friend, neighbor or other person who can answer questions and/or provide guidance to entrepreneurs on the use of the platform.

Implementation and Feedback

Close follow-up with opportunities to apply acquired knowledge and receive feedback from the entrepreneur.

Recognizing Progress

Valuing and highlighting achievements and progress in digital adoption helps build trust and facilitates wider use of the platform.

Value Proposition

After empathizing with local entrepreneurs and defining the problem, possible solutions were designed. Together with all stakeholders, co-creation sessions were held to prototype a tailored digital tool that addresses the main pain points.

This is how Crecemos Juntos was created: a digital platform consisting of a web application that allows contractors to place service orders and confirm valuations, and a mobile app that enables entrepreneurs to manage service orders, generate valuations, track payments, and submit claims.

This solution is structured into three modules developed under the guidelines of our IT & OT department, which are described below:

Entrepreneur App Module

This is a mobile application designed for use by local businesses and co-developed with the entrepreneurs (See Figure 2).

Entrepreneur and Their Businesses: Through the platform, entrepreneurs can register their business and list all the services they provide, such as lodging, food, laundry, and more. They can personalize each service and create a business profile. In this way, the entire local service offering can be updated online (See Figure 3).

Service Order Management: Entrepreneurs can manage and monitor all their service orders by handling different statuses such as accepted, rejected, and delivered. They can also view a daily list of all orders, along with the details of each request (See Figure 4).

Generation of Valuations: Entrepreneurs can submit their valuations and track them through different statuses, such as submitted, invoiced, overdue, and paid (See Figure 5).

Contractor Web Module

Through this web platform, contractors can register, add or remove community-based suppliers, place service orders, review their consumption, track their paid documents (valuations), and monitor messages and claims submitted to local businesses, as well as file service-level complaints against local businesses. In addition, contractors can view their performance rating in terms of timely payments to their suppliers and subcontractors, particularly suppliers from the area of influence (See Figures 6 and 7).

Minsur Web Module

Through this web platform, the Minsur administrator can register contractors and entrepreneurs (See Figures 8 and 9).

Framework

For the field research, the Design Thinking methodology was applied. This approach focuses on understanding the real needs of users and, by combining logic, imagination, and systematic reasoning, explores the possibilities of what can be achieved in order to design a prototype that addresses the main needs of users (contractors and local entrepreneurs).

Having a clear understanding of what is going to be built (a prototype validated by users), we use Scrum, which is a set of best practices for collaborative work. Through incremental deliveries of the final product, prioritized by the value they provide, we obtain a high-quality digital product called Crecemos Juntos.

Based on Design Thinking and Scrum, Minsur developed its own working process, which is divided into six elements. Each element consists of specific steps and activities to be completed.

L0 – Generating an Idea

The first step is to focus attention on local businesses and contractors in order to identify opportunities.

L1 – Defining the Idea and Scope

After gathering all the information in the first phase, the next step is to define it. This is undoubtedly one of the most challenging phases, since it requires selecting what is most relevant in order to move forward along a single path.

In this case, the problem identified was “improving the traceability and visibility of payments in the orders, and addressing the lack of adoption of digital tools by local entrepreneurs”.

L2 – Developing Potential Solutions

This is the solution-generation phase. It requires imagination and the use of techniques that foster creativity. Brainstorming and mind mapping are particularly useful at this stage.

L3 – Planning Execution

At this point, the solution must be designed and materialized through a physical or digital prototype, which is then tested by end users. Also, a work plan is developed, including risk identification.

L4 – Implementation Initiative

We began developing the solution through iterations prioritized according to the value they provide.

L5 – Adoption and Value Capture

Finally, the solution is tested within the process and with identified users, measuring the level of user adoption. Additionally, the defined KPIs are monitored to validate the generated impact.

Population and Sample

This study covers more than 300 local businesses and over 40 contracting companies at the San Rafael unit, located in the town of Antauta. The scope encompasses the processes of service procurement, valuation, and claims management for lodging, food, and laundry services.

The research conducted was based on an analysis carried out before and after the implementation of a pilot project at the mine described above. In particular, the pilot aimed to measure improvements in the delinquency ratio affecting local entrepreneurs, as well as the degree of adoption.

The periods analyzed in this research study cover the following dates (See Table 1).

Work Process Prior to the Technological Application

The process began when Servicios Generales Externos (External General Services), a Minsur department whose objective is to support local businesses, sent contractors the list of entrepreneurs approved by the local committees, so that contractors could decide which ones to work with.

Communication between local entrepreneurs and contractors to request service orders was conducted via WhatsApp or phone calls.

Similarly, entrepreneurs recorded service orders manually (pen and paper), including some supporting photographs at the time of delivery, so that at the end of the month they could consolidate the information and generate the valuation.

Pilot Results

The implementation of this initiative began with the definition of the roles assumed by each member of the team, involving key management areas such as Social Management, General Services, and even our Operations Manager for Peru (See Figure 10).

The process had the technical support of the Information Technology and Digital Transformation teams. Likewise, close communication was maintained with local entrepreneurs and contractors, which made it possible to incorporate improvements and additional information into the platform.

A gradual strategy has been followed to reach more than 300 entrepreneurs and 40 contractors, with the aim in this first stage of achieving digital adoption by 10% of this universe.

To this end, we have a field team that provides support and monitors the use of the platform on a daily basis. During the pilot period (July-December 2022), the evolution of the different indicators that demonstrate value capture was reviewed. In this way, the results in Table 3.

Discussion of Results

The results obtained during the July-December 2022 period with 10 entrepreneurs and 4 contractors (see Tables 2 and 3) were favorable, achieving a reduction in the default rate and an increase in the use of digital channels.

During this period, more than 150 service requests were generated, resulting in 45 valuations. It is worth noting that results began to show less variability since September 2022, which evidences the integration of the platform into the traditional process.

Similarly, when reviewing the default rate of the four contractors that participated in the pilot, the total average, calculated by applying the relative weight of each contractor according to the number of service requests managed, was 11.87%, representing an improvement compared to the baseline of 17.4%. This indicates that most local entrepreneurs were able to receive payment for the services provided. To preserve the confidentiality of the participating contractors, they have been treated anonymously.

In the same way, it was possible to evaluate how the process interacts within the platform for lodging, dining, and laundry services, generating more than 200 service requests that represented over 1,000 daily orders. These daily orders are generated from a monthly and/or weekly service request.

The main achievement reflected in these indicators is that they have enabled the continued, gradual adoption of local entrepreneurs.

Recommendations

1. Establish a clear vision: Define a clear and compelling vision for the digital initiative, highlighting the benefits for the company and the local community. Communicate this vision to all employees and stakeholders involved.

2. Analysis and planning: Carry out a thorough analysis of local needs and capacities. Identify opportunities to collaborate with entrepreneurs and local contractors. Develop a detailed plan that sets goals, objectives, and the necessary steps to achieve them.

3. Engage employees: Train employees on the importance of the initiative and how it aligns with the company’s objectives. Encourage participation and the exchange of ideas. Establish open communication channels to collect feedback and address concerns.

4. Establish strategic partnerships: Identify relevant local organizations, such as chambers of commerce, business associations, or educational institutions. Establish strategic partnerships with these organizations to promote collaboration and mutual support.

5. Training and development programs: Design specific training and development programs for local entrepreneurs and contractors. Provide them with the necessary skills to participate in digital mining projects. These programs may include workshops, online courses, or mentoring.

6. Constant communication: Maintain constant communication with the local entrepreneurs and contractors involved. Share progress, provide feedback, and acknowledge achievements. Keep everyone informed about the tangible benefits obtained through the initiative.

7. Evaluation and continuous improvement: Conduct periodic evaluations to measure the progress and impact of the initiative. Identify areas for improvement and take corrective actions. Learn from mistakes and adapt the strategy as necessary to ensure successful and sustainable adoption.

Conclusions

1. This document focuses on the digital evolution we seek to foster with local entrepreneurs and contractors, aiming to close technological gaps reflected in limited digital knowledge and skills.

2. In light of this reality, it is essential to propose solution alternatives, such as introducing digital tools (Crecemos Juntos) as part of a development program like the one led by the General Services team, which seeks to enhance the competitiveness of local entrepreneurs.

3. Moreover, accelerating the development of digital skills, particularly among the younger generations, is as important as learning to read and write.

4. Finally, since “digital evolution” is part of our DNA and guided by our purpose of “improving lives by transforming minerals into well-being,” we expect the Crecemos Juntos platform to become an enabler that allows for full control of the process between Minsur, contractors, and local entrepreneurs, ensuring an adequate level of service, reducing digital gaps, and fostering integral growth.

Acknowledgments

To the teams of External General Services, Social Management, Digital Transformation, IT Systems, and Legal for their support in making this initiative a success.

References

Donner, Jonathan. 2008. Research approaches to mobile use in the developing world: A review of the literature. In The Information Society, 24(3):  140-159.  Available at: <https://doi.org/10.1080/01972240802019970>

Instituto de Estudios Peruanos. 2020. Digitalización y Desarrollo Rural: ¿Hasta qué punto van de la mano? Available at: http://repositorio.iep.org.pe/handle/IEP/9

Porter, M. & Kramer, M. 2021. Creating Shared Value.