BHP Billiton Supply Chain Analysis

This assignment examines BHP Billiton's supply chain operations. It explores their global logistics networks, partnerships with third-party distributors, and commitment to sustainability, particularly regarding water usage. The analysis also highlights the company's utilization of information technology (IT) to enhance inventory management, reduce uncertainties, and improve overall supply chain efficiency.

Running head: LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Logistics and Supply chain management
Name of Student:
Name of University:
Author’s Note:
Executive Summary

1LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Table of Contents
Introduction:....................................................................................................................................2
Inventory management and strategic planning............................................................................2
Supply chain management in a globalised world........................................................................2
Sustainable practice in supply chain management......................................................................3
Managing inventory is Part 1.......................................................................................................4
Supply chain management: the Impact of Information Technology...........................................5
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

2LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Introduction:
The modern-day application of logistics management is seen to achieve various types of
competitive advantages for the business. Logistics is defined as the mechanism of efficient flow
of the materials. It has been further related to control the various types of effective forward and
reverse flow of the goods and services from the point of origin to the point of consumption. The
ones of the supply chain are related to efficient utilisation of sourcing, procurement, promotion
and distribution of the materials.
Inventory management and strategic planning
Despite of the increasing inventory is from 2011 at 2012, in the recent times BHP Billiton
has faced significantly declining inventories. Carrying amount of the inventory is in the balance
sheet is less than all the valuation and the allowances. It is in for the same to exclude the non-
current inventory balance. The main strategy of the company has been seen in terms of operating
large, low cost and ensured the upstream of the assets but maintaining a diversified community.
The diversified strategy of the company has focused on maintaining low cost for that year one
assets. This will be able to ensure the resilience of the cash flows and reduce exposure to one of
the commodity currency which will be able to provide a more robust financial performance.
Strategic planning of the company has allowed it to grow through various economic cycles by
delivering improved service to the shareholders. The main strategy is also focused on the
diversification. It has been done in terms of commodity, market and geography (Stock Analysis
on Net. 2017).

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Supply chain management in a globalised world
Based on the requirements of supply chain in the globalisation of various types of
materials and the products for the business, it has been found that certain products may be
manufactured offshore and further sold in various countries. This is mainly done to gain a
competitive advantage by identifying the trends of the world market for the various types of
products. BHP Billiton has been able to significantly reduce its cost by maintaining a particular
skill of economies for production and purchasing of the manufacturing and assembly operations.
The company has been further able to utilise the channels of global logistics to supply different
parts of offshore assembly plants. In certain areas where it is appropriate to the company has
managed the distribution through third-party companies.
Figure: General Supply chain procedure
(Source: Dezen-Kempter et al. 2015)
Sustainable practice in supply chain management
The sustainability aspect of the supply chain management involves incorporation of
financially viable and environmental friendly practices in the life cycle of SCM. The important

4LOGISTICS AND SUPPLY CHAIN MANAGEMENT
aspects of sustainability practice have been able to encompass risk, waste and environmental
damage. This has been further identified as an improved measure for sustaining a profitable
logistics management.
The important consideration for sustainability has been seen in terms of permitting
projects which has a useful life of 50 years. This comprises of initiatives such as expand growth
opportunities and contracts with average processing capacity of 95,000 tonnes every day for
production of copper. The company has been able to treat 800 litres of water and supply the same
to the concentrator. The company’s supply chain model is designed to make sure that the supply
has been able to significantly minimise the use of aquifers. The main construction process started
in August 2013 by the end of December 2016, for enabling the project to achieve new
milestones. The supply innovation in the company has been facilitated the sources of finance,
suppliers and the government at large (Bhp.com. 2017).
Managing inventory is Part 1
Based on the semi annual depictions and inventory turnover of BHP Billiton has been
measured as $ 65968 Million. The total inventory of the company at the end of December 2016
has been further discerned as $3,455 Mil. Based on the day sales of inventory formula, the total
inventory of BHP Billiton for the six month ended December 2016 has been discerned to be $
33.55 Mil every year. The company has been further ability to my inventory ratio count; this has
been conducive for managing the overall inventory levels. On measuring the percentage of
inventory held by the company this trend is currently being monitored for the purpose of revenue
(NASDAQ.com. 2017). As per the inventory information provided in the website, it has been
observed that the inventory turnover on Jun 2013 has been 11.33, this has been identified as an
increase of 0.26 percent when compared to that you preserved in 2012. The company computes

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the inventory turnover ratio by dividing the revenues with current inventories (Dezen-Kempter et
al. 2015).
Figure: Role of inventory in SCM
(Source: Bruccoleri, Cannella and La Porta 2014)
Supply chain management: the Impact of Information Technology
The determination of impact of IT in the inventory management is popular with vendor
managed inventory system and warehouse management system. The main incorporation of
information technology in supply chain management has been seen to be done with incorporation
of information sharing. The importance of IT with SCM is largely dealt with the variability in
terms of ordering. In several studies it has been observed that IT is having an important role in
building collaborative relationship for better inventory management (Schwalbe 2015). BHP
Billiton has used the incorporation of IT with supply chain to increase the information processing
capability and providing better support through reducing uncertainty. IT has played a

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revolutionary role in reducing the costs among the suppliers and buyers and created a more
cordial governance structure for achieving a closer buyer supplier relationship
(Erepository.uonbi.ac.ke. 2017).
Figure: Role of IT integration in SCM
(Source: Shalle, Guyo and Amuhaya 2014)

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Conclusion
Based on the analysis it has been found that BHP Billiton is able to utilise the channels of
global logistics to supply different parts of offshore assembly plants. In certain areas where it is
appropriate to the company has managed the distribution through third-party companies. The
sustainability has been focused with significantly minimise the use of aquifers. The outstanding
inventory of BHP Billiton at the end of December 2016 has been further discerned as $3,455
Mil. BHP Billiton has used the incorporation of IT with supply chain to enhance its information
processing capability and providing better support through minimising the possibilities of
uncertainty.

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References
Bhp.com. (2017). [online] Available at: http://www.bhp.com/-/media/documents/media/reports-
and-presentations/2017/170807_bhpsustainabiltiyreportbhpchile2016.pdf [Accessed 30 Aug.
2017].
Bruccoleri, M., Cannella, S. and La Porta, G., 2014. Inventory record inaccuracy in supply
chains: the role of workers’ behavior. International Journal of Physical Distribution & Logistics
Management, 44(10), pp.796-819.
Dezen-Kempter, E., Soibelman, L., Chen, M. and Müller Filho, A.V., 2015. An integrated laser
and image surveying approach in support of model-based information technology for inventory
of campus historic buildings. In CIB W78 Conference, Eindhoven, the Netherlands.
Erepository.uonbi.ac.ke. (2017). [online] Available at:
http://erepository.uonbi.ac.ke/bitstream/handle/11295/93313/Kithinji_Impact%20of
%20information%20technology%20on%20inventory%20management%20in%20supermarkets
%20in%20Nairobi%20city%20county.pdf?sequence=1 [Accessed 31 Aug. 2017].
NASDAQ.com. (2017). BHP Billiton Limited (BHP) Stock Report – NASDAQ.com. [online]
Available at: http://www.nasdaq.com/symbol/bhp/stock-report [Accessed 31 Aug. 2017].
Schwalbe, K., 2015. Information technology project management. Cengage Learning.
Shalle, N.I., Guyo, W. and Amuhaya, I.M., 2014. Role of inventory optimization. Journal of
supply chain Management, 32(7), pp.139-142.

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Stock Analysis on Net. (2017). BHP Billiton Ltd. (BHP) | Inventory. [online] Available at:
https://www.stock-analysis-on.net/NYSE/Company/BHP-Billiton-Ltd/Analysis/Inventory
[Accessed 30 Aug. 2017].