If you manage procurement for a mining operation, you've seen the spreadsheet. Six vendors, three columns: part number, price, lead time. You pick the lowest number in column two. Done. Simple. Right?
I thought so too. For about three years.
The Problem Isn't the Part Price
When I took over purchasing for our 400-person operation in 2020, our biggest expense line was Epiroc drill rig consumables—buttons, rods, shanks, the works. Roughly $1.2M annually across eight vendors. My predecessor left me a tidy spreadsheet. I followed it. Lowest price, every time.
By mid-2021, I had a problem.
We were saving maybe $60,000 annually on per-unit cost. But our field team was complaining about shorter service intervals. Our maintenance budget crept up. And I spent every Monday chasing backorders from the cheapest supplier.
The question isn't 'Which vendor has the lowest price?' It's 'What does that price actually cost you?'
The Hidden Costs Nobody Lists
Looking back, I should have asked better questions. At the time, I didn't know what I didn't know. Here's what I learned the hard way.
Inconsistent quality. The cheapest Epiroc replacement shank we bought that year lasted 40% fewer hours than the OEM-sourced part. The vendor's spec sheet said 'compatible.' My drill operators said 'junk.'
That $200 savings turned into a $1,500 problem when the substandard shank caused a drill string failure at 2 AM on a Friday. Overtime. Emergency freight. A very unhappy shift supervisor.
Inventory risk. The cheapest vendor had a 14-day lead time. Our regular supplier delivered in 4. When our drill rig went down on a Tuesday, that 10-day difference cost us 200 tons of lost production per day. At $80/ton, do the math.
It's tempting to think 'always get three quotes' is the answer. But that advice ignores something: the transaction cost of vetting six vendors, the relationship value of a supplier who stocks your parts proactively, and the operational cost of a part that doesn't quite fit.
The Deeper Problem: Misunderstanding 'Value'
Here's where it gets interesting. The real issue isn't that cheap parts break. It's that we evaluate purchasing decisions in a vacuum.
In 2022, our company merged with a regional competitor. I had to consolidate orders for 850 employees across five locations. Suddenly, my simple spreadsheet was useless. Each site had different Epiroc rig models, different usage patterns, different vendor relationships. One location swore by a small Parts supplier with 3-day delivery. Another had locked into a bulk contract with a large distributor at 15% below market rate.
Which was the better deal?
Neither. Not on their own. The question was: what worked for that specific context?
Why does this matter? Because purchasing isn't a math problem with one variable. It's a system.
The Math That Changes Everything
Let me walk you through one calculation that changed how I buy Epiroc spare parts.
Standard print resolution requirements for a brochure are 300 DPI. But that's a different industry. For mining equipment, the relevant standard is Total Cost of Ownership (TCO). And it's not complicated.
Take a hydraulic breaker wear part:
- Vendor A: $400/unit, 4-day lead time, 500 operating hours lifespan
- Vendor B: $310/unit, 14-day lead time, 350 operating hours lifespan
Vendor B is 22.5% cheaper per unit. But the cost per operating hour? Vendor A: $0.80/hour. Vendor B: $0.89/hour. Vendor A is actually 11% cheaper when you measure what matters.
And that's before you factor in the cost of downtime.
(note to self: I really should write this up as a standard template for our new vendors)
The Cost of Not Solving This
So what happens if you keep optimizing for unit price?
You train your suppliers to optimize against you. The vendor who can't compete on quality competes on price. They cut corners. You buy more parts. They lower the price. The cycle continues until something breaks—usually, a critical component at the worst possible time.
In my experience managing roughly $6M in annual Epiroc parts procurement over five years, the lowest quote has cost us more in 60% of cases. Not every time. But more often than not.
That unreliable supplier I mentioned earlier? The one from 2021? They couldn't provide proper invoicing (handwritten only). Finance rejected $2,400 in expenses. I ate it out of my department budget. Now I verify invoicing capability and quality consistency before placing any order.
The market rate for quality Epiroc drill rig components (as of January 2025, at least) varies by region and volume. But the calculation doesn't change.
A Better Way (Briefly)
I'm not going to give you a 7-step vendor selection framework. You don't need one. You need one shift in perspective.
Stop asking 'What's the price?' Start asking 'What's the cost?'
Include downtime. Include lifespan. Include the cost of your team's time managing failures. Include the relationship cost of a vendor who doesn't carry your stock.
Simple.
In Q3 2024, we tested 4 Epiroc part vendors and found pricing variations of 40% for identical specifications. But the cheapest vendor's parts failed 2x faster. The most expensive vendor offered the best service but charged a premium that didn't make sense for our volume.
We ended up with two suppliers: one for routine consumables (competitive price, consistent quality, 4-day lead time) and one for critical spares (higher price, 1-day emergency delivery, proactive inventory management).
The total cost? Lower than either extreme. The process? Took three months of testing. Was it worth it? Yes.
If I could redo that first year in 2020, I'd invest in better specifications upfront. But given what I knew then—which was next to nothing about how part quality actually affects drill rig uptime—my spreadsheet approach was reasonable. I just didn't know what I didn't know.
Now I do. And hopefully, you do too.
