A Comprehensive Analysis of Operations Management at BHP Billiton

This report analyzes the operations management of BHP Billiton, a leading global resources company. It delves into the company's operational strategies within a global context, emphasizing low-cost options and value creation. The report examines BHP Billiton's approach to quality management and process design, highlighting its focus on customer-centric marketing, risk management, and innovation. Furthermore, it explores the company's multidivisional structure, capital allocation framework, and strategies for maximizing shareholder value and returns, including the utilization of advanced technologies and a commitment to safety and sustainability. The report also covers manufacturing processes and inventory management to showcase the company's approach to effective operations.

Running head: OPERATIONS MANAGEMENT
Operations management of BHP Billiton
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OPERATIONS MANAGEMENT
Table of contents
Introduction................................................................................................................................2
Company profile.........................................................................................................................2
Discussion..................................................................................................................................3
Operational strategy in a global context.................................................................................3
Quality management and process design...............................................................................5
Conclusion..................................................................................................................................8
References................................................................................................................................10

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Introduction
Operations management is the discipline, which deals with management of efficiency
within the companies and organizations. The main objective here is to transform the labour
invested by the staffs through the judicious use of the resources. The typical components of
operational management are planning, organizing and supervision, which upgrades the
standards and quality of the operations for achieving higher profitability (Choi, Wallace and
Wang 2018). In this assignment, the aim is to peek into the strategies adopted by BHP
Billiton for managing and controlling the operations. Specifically, the focus would be on
quality management and process design along with operational strategies within the global
context.
Company profile
BHP Billiton has achieved accolades and glory by emerging as one of the reputed
trading entity of BHP Group Limited and BHP Group PLC. With its headquarters in
Melbourne, Australia, the company deals in mining materials like metals and petroleum. It is
enlisted as one of the ASX listed companies, trading as LSE: BLT, NYSE: BHP. The
operations of the company are spread worldwide. As a matter of specification, the company
deals in iron ore, coal, petroleum, copper, natural gas, nickel and uranium (Bhp.com 2019).
According to the annual reports of 2018, the annual revenue of the company was 43.638
billion US$. The operating income was 17.561 billion US$. The net income was 4.823 billion
US$. The major drive behind this is the hard labour of more than 62000 employees.
Discussion
Operational strategy in a global context
The strategy of BHP Billiton is considered to be simple and diversified in terms of the
low cost options and value creations, upon which the focus is placed for the achievement of
growth and development. Consciousness towards the preservation of the cultural values with

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due consideration to the safety and productivity is assistance in terms of attracting the foreign
clients. Mention can be made of the deployed technologies, which enables the personnel to
add an innovative touch to the operations (Bhp.com 2019). Focus is shifted to the maximum
utilization of the capital benefits for increasing the returns for the shareholders. In this, the
business model plays an important role. Multidivisional structure is assistance for the
company in terms of achieve effective and productive solutions for the crucial problems.
One of the main domains of the operational strategy of BHP Billiton caters to the
maximization of the values and returns for the stakeholders and shareholders. Industry
leading capabilities are applied by the research and development teams for enhancing the
attractiveness of the commodities. Culture and capabilities are one of the important elements
of the strategy is culture and capability analysis. This is done prior to the initiation of the
activities in order to assess whether the resources are adequate for accomplishing the
identified and specified targets (Haksever and Render 2017). Attractiveness in the
commodities is aligned with the potential to evaluate the capabilities. This is done through
the means of calculating the utility value, which would be achieved.
Fig: Strategy of maximizing the values and returns of BHP Billiton
The assets and liabilities of the company are experimented by the experts for
detecting the presence of any defects. Consistency is maintained in these experiments, which
helps in upgrading the standards and quality of the products and services. Succession
Best commodities
Best assets
Culture and capabilities

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planning is done in order to plan the stages of growth and development. It was in the era of
2016, that the volumes of production have been increased with reduction in the costs. This is
with due consideration to the safety of the staffs. Mention can be made of the Health and
Safety Act (1974), where reference can be cited of the health insurances, which the staffs can
avail. Typical evidence of this lies in the completion of the four latent capacity projects and
exploration of the pipelines in petroleum and copper (Hitt, Xu and Carnes 2016). The
immediate result of this was enhancement of the capital margin by 50%.
Capital allocation is done through the means of a framework, which enables the
company in undertaking effective decisions. Balance sheets have strengthened the income by
16 billion US$ reduction. Reinvestments through development options have acted
opportunity to expand the scope and arena of the supply chain network. One of the other
strengths of the capital allocation framework is increasing the shareholder returns by US$ 25
billion (Mahadevan 2015).
The upcoming financial years would witness the following:
 Transformation- 10% unit cost reduction at the bulk operations
 Future options- 17% average returns on the long term opportunities
 Exploration- projects for increasing the prospects of the copper exploration prospects
Policy indicates the conscious approach of the staffs towards increasing the wealth of
the shareholders. There is a lack of support regarding the superior capital management
system, which needs inclusion in the policies. Investment in high return growth opportunities
is assistance for the company in terms of generating higher capitals. Typical reference can be
cited of share buybacks and dividend return programs, which increases the values and returns
for the shareholders (Mahadevan 2015).

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Quality management and process design
Quality management
‘License to Operate’ creates heavy impact on the operations of BHP Billiton in terms
of globalizing the operations. The vision is to improve the standards of living for the
community people and preserve the ecological biodiversity. Process quality and control
measures are considered to be vital sources for improvising on the standards of performance.
For example, the emissions from the gases are reported for checking the quality of air, which
might get degraded and cause environmental pollution (Hitt, Xu and Carnes 2016). Five year
targets are identified and evaluated for regulating the consumption of water and energy.
Customer focused marketing is an agent in terms of standing out from the contemporaries in
terms of quality.
Risk management is a core activity in terms of upgrading the standards and quality of
the operations. This includes improving the efficiency of the energy by reducing the costs and
emissions through greenhouse gases; increasing the plant life through reduction of the
maintenance cycles and reducing wastes through lowering the operational costs. Adding
innovation in the processes and services supports the staffs of BHP Billiton to enhance the
organizational attractiveness in terms of sustainable development (Bhp.com 2019). Along
with this, mention can be made of verifying the quality of site data, which is done by
considering the number of interventions for processing queries related to the developed data.
The reports of the investigations are prepared by external agencies with the assistance
of the board panel members. Examination of the reports is assistance in terms of assessing
whether the operations are in alignment with the identified and the specified targets. In this,
information management systems are used for controlling the processing of the information,
which are navigated to the clients. However Data Protection Act (1998) is assistance in terms

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of enhancing the security in the confidential codes and information (Choi, Wallace and Wang
2018).
Process design
Marketing and supply are the two core elements of the operations of BHP Billiton.
Globalization of the operations establishes essential links customers, local and global
suppliers. Business models are productive in terms of adding value to the operations.
Understanding the need of the clients and the customers is assistance in terms of delivering
the right product. The marketing team is consulted for coming up with the ways in which the
value of the upstream activities can be maximized (Haksever and Render 2017). Optimizing
freight and distribution costs is also accounted as important components of the processes
undertaken by BHP Billiton to achieve better placement in the markets. Focus on safety,
production and cost is an agent in terms of extracting the necessary labour from the staffs in
terms of preserving the workplace culture.
Fig: Manufacturing process of BHP Billiton
Stake
Build
Drill
Complete
Connect

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As a matter of specification, the manufacturing process of BHP Billiton revolves
around the parameters of stake, build, drill, complete and connect. In stake, the main
activities include development plans and site selections for the projects, negotiations and
permitting. The component of building involves the actions of clearing and construction, pads
and supporting systems and equipment. Drilling includes execution of the projects in
different locations through well designed supporting systems (Hitt, Xu and Carnes 2016).
Inventory management comprises of developing effective systems for regulating the
availability of water. Mention can be made of SIMOPS, which helps in maintaining the
consistency in the operations.
Contact is established with the overseas clients and the customers through
procurement. Herein lays the effectiveness of the divisional organizational structure, which is
assistance for enhancing the unity and coordination. Specifically, the pipeline projects assist
in achieving infrastructural development. Negotiations is assistance for the yielding positive
results in the construction (Haksever and Render 2017).
Conclusion
BHP Billiton takes pride in conducting quality assurance and controls for delivering
services according to their needs and requirements. The external agencies collaborate with
the Board panel for preparing the reports after the experiments. The process of building,
connecting, drilling enhance the efficiency, indicating increase in the profit margin. The
capacity management systems indicates the efforts invested by the research and development
team and the engineers in adding value to the upstream and downstream activities. Strategic
approach is beneficial in terms of maximizing the value and returns for the shareholders. The
focus in this context is on cost, volume and safety, reflecting the consciousness towards
preserving the organizational culture.

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References
Bhp.com 2019. BHP | A Leading Global Resources Company". Available at:
https://www.bhp.com/ Accessed on 1st Aug 2019
Choi, T.M., Wallace, S.W. and Wang, Y., 2018. Big data analytics in operations
management. Production and Operations Management, 27(10), pp.1868-1883.
Haksever, C. and Render, B., 2017. Service and Operations Management. World Scientific
Publishing Company.
Hitt, M.A., Xu, K. and Carnes, C.M., 2016. Resource based theory in operations management
research. Journal of Operations Management, 41, pp.77-94.
Mahadevan, B., 2015. Operations management: Theory and practice. Pearson Education
India..