Operations Management
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This document provides an overview of operations management in the context of BHP Billiton, a multinational mining company. It discusses the functions of inventory management, implications for operations management strategy, theories and concepts for assessing the efficiency of inventory management, supply chain systems, stakeholders and their influence, and recommendations for improvements.
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Running head: OPERATIONS MANAGEMENT
Operations management
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Operations management
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2
OPERATIONS MANAGEMENT
Table of Contents
Overview of the Organization.........................................................................................................3
Discussion and Analysis of the functions of Inventory...................................................................3
Implications for Operations Management Strategy.........................................................................4
Theories and Concepts for assessing the efficiency of the inventory management........................5
Figure No 1: Streams in Inventory management.........................................................................6
Supply chain systems of the company.............................................................................................7
Stakeholders of the company and their influence............................................................................8
Recommendations for improvements for the organization.............................................................9
References......................................................................................................................................11
OPERATIONS MANAGEMENT
Table of Contents
Overview of the Organization.........................................................................................................3
Discussion and Analysis of the functions of Inventory...................................................................3
Implications for Operations Management Strategy.........................................................................4
Theories and Concepts for assessing the efficiency of the inventory management........................5
Figure No 1: Streams in Inventory management.........................................................................6
Supply chain systems of the company.............................................................................................7
Stakeholders of the company and their influence............................................................................8
Recommendations for improvements for the organization.............................................................9
References......................................................................................................................................11
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OPERATIONS MANAGEMENT
Overview of the Organization
BHP which was formerly known as BHP Billiton is the trading entity of the larger, BHP
Group Limited and the BHP Group plc. The company is an Anglo Australian firm that deals in
multinational mining, metals and petroleum listed public company that is headquartered in
Melbourne, Victoria Australia (bhp.com, 2019). The main products of the company includes the
likes of Iron ore, coal, petroleum, natural gas, copper as well as Nickel and Uranium. The
company, BHP Billiton was formed in the year 2001 when the Australian Broken Hill
Proprietary Company limited and the Anglo Dutch Billiton formed a dual listed company. The
Australian registered limited has a primary listing on the Australian Securities Exchange and is
one of the largest companies in Australia in terms of the market capitalization. On the other
hand, the English registered arm has been another major area in the listing of the London Stock
Exchange along with being a constituent of the FTSE 100 index (bhp.com, 2019). Mining has
been one of the major strongholds of the company. Whooping revenue of around US$44Billion,
the company has been able to dominate the Australian as well as a considerable part of the global
market in a proper and effective manner. The company is also one of the largest employers of
Australia. The management of the company employs around 65000 employees around the globe
as well as in Australia which is a record for any Australian company (bhp.com, 2019).
Discussion and Analysis of the functions of Inventory
Inventory Management is the supervision of the non capitalized assets and the stocked
items. A component of supply chain management, inventory management supervises the flow of
goods from warehouses and from these facilities to the point of sale. The management of the
business organization has developed a particular application to tackle the inventory management.
OPERATIONS MANAGEMENT
Overview of the Organization
BHP which was formerly known as BHP Billiton is the trading entity of the larger, BHP
Group Limited and the BHP Group plc. The company is an Anglo Australian firm that deals in
multinational mining, metals and petroleum listed public company that is headquartered in
Melbourne, Victoria Australia (bhp.com, 2019). The main products of the company includes the
likes of Iron ore, coal, petroleum, natural gas, copper as well as Nickel and Uranium. The
company, BHP Billiton was formed in the year 2001 when the Australian Broken Hill
Proprietary Company limited and the Anglo Dutch Billiton formed a dual listed company. The
Australian registered limited has a primary listing on the Australian Securities Exchange and is
one of the largest companies in Australia in terms of the market capitalization. On the other
hand, the English registered arm has been another major area in the listing of the London Stock
Exchange along with being a constituent of the FTSE 100 index (bhp.com, 2019). Mining has
been one of the major strongholds of the company. Whooping revenue of around US$44Billion,
the company has been able to dominate the Australian as well as a considerable part of the global
market in a proper and effective manner. The company is also one of the largest employers of
Australia. The management of the company employs around 65000 employees around the globe
as well as in Australia which is a record for any Australian company (bhp.com, 2019).
Discussion and Analysis of the functions of Inventory
Inventory Management is the supervision of the non capitalized assets and the stocked
items. A component of supply chain management, inventory management supervises the flow of
goods from warehouses and from these facilities to the point of sale. The management of the
business organization has developed a particular application to tackle the inventory management.
4
OPERATIONS MANAGEMENT
The software system developed by the IT team of the company tracks the quantity of the goods
in the storehouse and also tracks the inflow and outflow of the goods from the storehouses. The
system is developed in such a manner that the ERP system is linked with the flow of the goods
and thus each and every flow is tracked down by the centralized system of the ERP server of the
organization. The inventory management is one of the most important aspects of the modern day
business management. The software developed by the IT team of the company has helped BHP
Billiton to analyze the amount of goods stored and accordingly manage the system.
Implications for Operations Management Strategy
The management of BHP Billiton engages itself in using much simplified and easy
operating model to ensure the ease of carrying on the business operations. The new business
operating model has been implemented by the management of the business organization just a
few years back (bhp.com, 2019). According to, Barnett, Henriques & Husted (2018) the main
aim of the management of the company is to create a more agile company which is easily
available to respond to different kinds of business challenges and take over the presented
opportunities by a rapidly changing global marketplace. The change that has been implemented
in the business organization clearly focuses on the geographic operating regions of the company
and is well supported by the globalized functional services drawing upon world class expertise
and scale. The management of the company explains that the changes undertaken by the
company are nothing but the continuation of the process to simplify the operations of the
business organization. The more the simple is the operations system; the more will be the
chances of the productivity of the business organization (Barnett, Henriques & Husted, 2018).
The better control over the operations of the business management is highly essential for the
success of the business organization in an appropriate manner. The new changes in the system
OPERATIONS MANAGEMENT
The software system developed by the IT team of the company tracks the quantity of the goods
in the storehouse and also tracks the inflow and outflow of the goods from the storehouses. The
system is developed in such a manner that the ERP system is linked with the flow of the goods
and thus each and every flow is tracked down by the centralized system of the ERP server of the
organization. The inventory management is one of the most important aspects of the modern day
business management. The software developed by the IT team of the company has helped BHP
Billiton to analyze the amount of goods stored and accordingly manage the system.
Implications for Operations Management Strategy
The management of BHP Billiton engages itself in using much simplified and easy
operating model to ensure the ease of carrying on the business operations. The new business
operating model has been implemented by the management of the business organization just a
few years back (bhp.com, 2019). According to, Barnett, Henriques & Husted (2018) the main
aim of the management of the company is to create a more agile company which is easily
available to respond to different kinds of business challenges and take over the presented
opportunities by a rapidly changing global marketplace. The change that has been implemented
in the business organization clearly focuses on the geographic operating regions of the company
and is well supported by the globalized functional services drawing upon world class expertise
and scale. The management of the company explains that the changes undertaken by the
company are nothing but the continuation of the process to simplify the operations of the
business organization. The more the simple is the operations system; the more will be the
chances of the productivity of the business organization (Barnett, Henriques & Husted, 2018).
The better control over the operations of the business management is highly essential for the
success of the business organization in an appropriate manner. The new changes in the system
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OPERATIONS MANAGEMENT
can be useful for the management of BHP Billiton to have a better and efficient grip over the
company.
The new model that has been undertaken by the organization and implemented by the
management of the business in collaboration with the technical experts of market operations are
clearly dedicated to safety, volume and cost enabled by the different kind of functions that are
integrated globally and largely located alongside the assets of the business organization. The
assets and the functions will have a fewer layers and hence fewer people required to lead and
operate the organization by the management of the enterprises (Barnett, Henriques & Husted,
2018). The mineral production unit of the company is assigned and organized into two special
units. These are namely Minerals Australia and Minerals Americas. The oil and gas exploration
sector of the business organization on the other hand ensures that the operations continue with
the housing of the global petroleum unit. The changes undertaken in the operating system has
been mostly the organizational changes that has been undertaken in order to bring in revolution
in the minerals segment of the company.
Theories and Concepts for assessing the efficiency of the inventory management
The efficient management of the supply chain of a business organization ensures the
highest quality of the customer service and strives to provide the products and services at the
minimum of costs to ensure business success. The major cause of the constantly increasing
prices is the excess of inventory levels of the organization (Wild, 2017). The presence of an
excess of inventory levels leads to the forecasting of demand of the market. The stock surplus
and the absence of a proper supply chain and inventory management is thus one of the major
reasons behind such an issue.
OPERATIONS MANAGEMENT
can be useful for the management of BHP Billiton to have a better and efficient grip over the
company.
The new model that has been undertaken by the organization and implemented by the
management of the business in collaboration with the technical experts of market operations are
clearly dedicated to safety, volume and cost enabled by the different kind of functions that are
integrated globally and largely located alongside the assets of the business organization. The
assets and the functions will have a fewer layers and hence fewer people required to lead and
operate the organization by the management of the enterprises (Barnett, Henriques & Husted,
2018). The mineral production unit of the company is assigned and organized into two special
units. These are namely Minerals Australia and Minerals Americas. The oil and gas exploration
sector of the business organization on the other hand ensures that the operations continue with
the housing of the global petroleum unit. The changes undertaken in the operating system has
been mostly the organizational changes that has been undertaken in order to bring in revolution
in the minerals segment of the company.
Theories and Concepts for assessing the efficiency of the inventory management
The efficient management of the supply chain of a business organization ensures the
highest quality of the customer service and strives to provide the products and services at the
minimum of costs to ensure business success. The major cause of the constantly increasing
prices is the excess of inventory levels of the organization (Wild, 2017). The presence of an
excess of inventory levels leads to the forecasting of demand of the market. The stock surplus
and the absence of a proper supply chain and inventory management is thus one of the major
reasons behind such an issue.
6
OPERATIONS MANAGEMENT
Figure No 1: Streams in Inventory management
Source: (Andriof & Waddock, 2017)
The arrows in the above shown diagram clearly points out to the communication between
individual chain links, which causes the information about the demand expressed in order size is
subject to the verification of the management of the business organization. A particular level of
inventory is always kept at stock in the organization to ensure customer satisfaction needs at any
point of time (Hitt, Carnes & Xu, 2016). Therefore it can be said that the safety stock is
maintained in order to maintain a suitable level of customer service, whereas its independent
building in each unit of the chain causes generation of surplus inventory throughout the logistics
chain. Aiming at ensuring the highest standard of customer service, the companies must bear the
costs of;
 Physical flow Warehousing Maintaining the stock Depletion of the stock
OPERATIONS MANAGEMENT
Figure No 1: Streams in Inventory management
Source: (Andriof & Waddock, 2017)
The arrows in the above shown diagram clearly points out to the communication between
individual chain links, which causes the information about the demand expressed in order size is
subject to the verification of the management of the business organization. A particular level of
inventory is always kept at stock in the organization to ensure customer satisfaction needs at any
point of time (Hitt, Carnes & Xu, 2016). Therefore it can be said that the safety stock is
maintained in order to maintain a suitable level of customer service, whereas its independent
building in each unit of the chain causes generation of surplus inventory throughout the logistics
chain. Aiming at ensuring the highest standard of customer service, the companies must bear the
costs of;
 Physical flow Warehousing Maintaining the stock Depletion of the stock
7
OPERATIONS MANAGEMENT
 Other costs
Supply chain systems of the company
The presence of an effective supply chain is utmost essential for the success of a business
organization. It is important for the business organization to ensure the success of the business
organization in the market. According to, Hitt, Carnes & Xu (2016) the management of BHP
Billiton revealed at the second annual global Block chain Summit that the company has decided
to use the block chain in order to record the movements of the different categories of rocks that
are studied by them and also to better secure the real time data that is generally generated during
the time of delivery. The management of the organization has the belief that the application of
the new system will enable benefits for the improvement of the internal efficiency of the
business organization (Stadtler, 2015). The Management of BHP totally relies on the vendors at
nearly each and every stage in the mining process by signing contracts with the geologists and
the different logistics and shipping companies in order to reach their products to the different
areas of demand.
The block chain system is being utilized by the business organization more because the
suppliers and the vendors of the business organization has shifted to the modern block chain
supply chain management system and have limited their use of the other traditional supply chain
management systems (Hitt, Carnes & Xu, 2016). The new application will provide a cutting edge
advantage to the management of the company that will help the organization to ensure the
success of the business in the market. The management of the company has plans to induct the
following technology in their ranks in order to ensure their success in the business market.
OPERATIONS MANAGEMENT
 Other costs
Supply chain systems of the company
The presence of an effective supply chain is utmost essential for the success of a business
organization. It is important for the business organization to ensure the success of the business
organization in the market. According to, Hitt, Carnes & Xu (2016) the management of BHP
Billiton revealed at the second annual global Block chain Summit that the company has decided
to use the block chain in order to record the movements of the different categories of rocks that
are studied by them and also to better secure the real time data that is generally generated during
the time of delivery. The management of the organization has the belief that the application of
the new system will enable benefits for the improvement of the internal efficiency of the
business organization (Stadtler, 2015). The Management of BHP totally relies on the vendors at
nearly each and every stage in the mining process by signing contracts with the geologists and
the different logistics and shipping companies in order to reach their products to the different
areas of demand.
The block chain system is being utilized by the business organization more because the
suppliers and the vendors of the business organization has shifted to the modern block chain
supply chain management system and have limited their use of the other traditional supply chain
management systems (Hitt, Carnes & Xu, 2016). The new application will provide a cutting edge
advantage to the management of the company that will help the organization to ensure the
success of the business in the market. The management of the company has plans to induct the
following technology in their ranks in order to ensure their success in the business market.
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OPERATIONS MANAGEMENT
Stakeholders of the company and their influence
Stakeholders of the organization are the most important people in the business structure.
The stakeholders of the organization are the ones who are directly linked with the organization
and face an impact on the profit and loss of the business organization. According to, Heizer et al.
(2017) the major stakeholders of the organization are namely the Government, Non
Governmental organizations and service providers, industry and peripheral business
organizations, Aboriginal groups of Australia, landholders of the selected lands for mining, the
general public who holds shares of the company or are directly or indirectly involved with the
tasks of the company (Reid & Sanders, 2015). Apart from this, the employees of the business
organization and the different relevant communities are also termed as the stakeholders of the
organization. The analysis of the stakeholder has been shown in a table below;
Category Group
Government Australian, State Governments, Territory
Governments, State Agencies, Service
Providers, Local Government representatives
Non-Government Organization and Service
Providers
Community Groups, Research Groups, Private
Service Providers, Environmental groups
Industry and Business Developmental Boards of the companies, Local
and regional developmental boards
Aboriginal Groups Different groups of local and national
companies
Landholders The leaders and owners of pastoral lands s
well as the lands where the mining activities
will be taking place
General Public Local public, national public, State public,
Territory Public
Relevant communities Far North, Darwin and Alice Springs, Roxby
Downs, Eyre Peninsula
Employees and contractors The employees of BHP Billiton and the staffs of
the other subsidiaries of the company
OPERATIONS MANAGEMENT
Stakeholders of the company and their influence
Stakeholders of the organization are the most important people in the business structure.
The stakeholders of the organization are the ones who are directly linked with the organization
and face an impact on the profit and loss of the business organization. According to, Heizer et al.
(2017) the major stakeholders of the organization are namely the Government, Non
Governmental organizations and service providers, industry and peripheral business
organizations, Aboriginal groups of Australia, landholders of the selected lands for mining, the
general public who holds shares of the company or are directly or indirectly involved with the
tasks of the company (Reid & Sanders, 2015). Apart from this, the employees of the business
organization and the different relevant communities are also termed as the stakeholders of the
organization. The analysis of the stakeholder has been shown in a table below;
Category Group
Government Australian, State Governments, Territory
Governments, State Agencies, Service
Providers, Local Government representatives
Non-Government Organization and Service
Providers
Community Groups, Research Groups, Private
Service Providers, Environmental groups
Industry and Business Developmental Boards of the companies, Local
and regional developmental boards
Aboriginal Groups Different groups of local and national
companies
Landholders The leaders and owners of pastoral lands s
well as the lands where the mining activities
will be taking place
General Public Local public, national public, State public,
Territory Public
Relevant communities Far North, Darwin and Alice Springs, Roxby
Downs, Eyre Peninsula
Employees and contractors The employees of BHP Billiton and the staffs of
the other subsidiaries of the company
9
OPERATIONS MANAGEMENT
Recommendations for improvements for the organization
Some of the major recommendations for the improvement of the supply chain
management of BHP Billiton are as follows;
a. Automatic Purchasing- The continuous monitoring of the inventory levels takes too
much time. New kind of ERP system with the supply chain management functionality
can feature automated purchasing which will be helpful for the success of the business
organization in the market.
b. Standardization- The management of BHP Billiton can ensure the centralization of the
process standardization policy of different kinds of the supply chain strategy.
Standardized ERP system will help in the increase of the efficiency of the organization.
c. Increase in Transparency- The increase of transparency will help the business
organization to avoid waste and mistakes. This can be fixed with the implementation of
the best ERP system. The selection of the best ERP system will ensure the success of the
business in a proper and effective manner.
d. Gaining a clear and transparent data insight- Decision making for the supply chain
often depends on accurate and timely data and information. Having real-time reports
available at all times will provide valuable insight into the supply chain health of your
manufacturing business. ERP software allows both users and management to be able to
instantly access inventory, purchasing and production data for critical decision-making
purposes.
e. Real Time Inventory management- The company must avoid using traditional
inventory management system and must opt for better and much advanced ERP
OPERATIONS MANAGEMENT
Recommendations for improvements for the organization
Some of the major recommendations for the improvement of the supply chain
management of BHP Billiton are as follows;
a. Automatic Purchasing- The continuous monitoring of the inventory levels takes too
much time. New kind of ERP system with the supply chain management functionality
can feature automated purchasing which will be helpful for the success of the business
organization in the market.
b. Standardization- The management of BHP Billiton can ensure the centralization of the
process standardization policy of different kinds of the supply chain strategy.
Standardized ERP system will help in the increase of the efficiency of the organization.
c. Increase in Transparency- The increase of transparency will help the business
organization to avoid waste and mistakes. This can be fixed with the implementation of
the best ERP system. The selection of the best ERP system will ensure the success of the
business in a proper and effective manner.
d. Gaining a clear and transparent data insight- Decision making for the supply chain
often depends on accurate and timely data and information. Having real-time reports
available at all times will provide valuable insight into the supply chain health of your
manufacturing business. ERP software allows both users and management to be able to
instantly access inventory, purchasing and production data for critical decision-making
purposes.
e. Real Time Inventory management- The company must avoid using traditional
inventory management system and must opt for better and much advanced ERP
10
OPERATIONS MANAGEMENT
management systems that will be able to tackle the inventory issues and will help to
manage the organization in a much better manner.
OPERATIONS MANAGEMENT
management systems that will be able to tackle the inventory issues and will help to
manage the organization in a much better manner.
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OPERATIONS MANAGEMENT
References
Andriof, J., & Waddock, S. (2017). Unfolding stakeholder engagement. In Unfolding stakeholder
thinking (pp. 19-42). Routledge.
Barnett, M., Henriques, I., & Husted, B. (2018). The rise and stall of stakeholder influence: How
the digital age limits social control. Academy of Management Perspectives, (ja).
BHP. (2019). BHP | BHP Billiton Announces Simplified Operating Model To Accelerate
Productivity and Value Creation. [online] Available at: https://www.bhp.com/media-and-
insights/news-releases/2016/02/bhp-billiton-announces-simplified-operating-model
[Accessed 13 May 2019].
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Heizer, J., Render, B., Munson, C., & Sachan, A. (2017). Operations management: sustainability
and supply chain management, 12/e. Pearson Education.
Hitt, M. A., Carnes, C. M., & Xu, K. (2016). A current view of resource based theory in
operations management: A response to Bromiley and Rau. Journal of Operations
Management, 41(10), 107-109.
Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.
Mangan, J., Lalwani, C., & Lalwani, C. L. (2016). Global logistics and supply chain
management. John Wiley & Sons.
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and
supply chain management. Cengage Learning.
OPERATIONS MANAGEMENT
References
Andriof, J., & Waddock, S. (2017). Unfolding stakeholder engagement. In Unfolding stakeholder
thinking (pp. 19-42). Routledge.
Barnett, M., Henriques, I., & Husted, B. (2018). The rise and stall of stakeholder influence: How
the digital age limits social control. Academy of Management Perspectives, (ja).
BHP. (2019). BHP | BHP Billiton Announces Simplified Operating Model To Accelerate
Productivity and Value Creation. [online] Available at: https://www.bhp.com/media-and-
insights/news-releases/2016/02/bhp-billiton-announces-simplified-operating-model
[Accessed 13 May 2019].
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Heizer, J., Render, B., Munson, C., & Sachan, A. (2017). Operations management: sustainability
and supply chain management, 12/e. Pearson Education.
Hitt, M. A., Carnes, C. M., & Xu, K. (2016). A current view of resource based theory in
operations management: A response to Bromiley and Rau. Journal of Operations
Management, 41(10), 107-109.
Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.
Mangan, J., Lalwani, C., & Lalwani, C. L. (2016). Global logistics and supply chain
management. John Wiley & Sons.
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and
supply chain management. Cengage Learning.
12
OPERATIONS MANAGEMENT
Muller, M. (2019). Essentials of inventory management. HarperCollins Leadership.
Parpia, I. H., & Singh, G. (2016). U.S. Patent No. 9,280,757. Washington, DC: U.S. Patent and
Trademark Office.
Reid, R. D., & Sanders, N. R. (2015). Operations Management, Binder Ready Version: An
Integrated Approach. John Wiley & Sons.
Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.
Wild, T. (2017). Best practice in inventory management. Routledge.
OPERATIONS MANAGEMENT
Muller, M. (2019). Essentials of inventory management. HarperCollins Leadership.
Parpia, I. H., & Singh, G. (2016). U.S. Patent No. 9,280,757. Washington, DC: U.S. Patent and
Trademark Office.
Reid, R. D., & Sanders, N. R. (2015). Operations Management, Binder Ready Version: An
Integrated Approach. John Wiley & Sons.
Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.
Wild, T. (2017). Best practice in inventory management. Routledge.
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