{"id":6353,"date":"2015-12-09T22:49:49","date_gmt":"2015-12-10T03:49:49","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/bhp-billiton-remotely-resourcing-the-future\/"},"modified":"2015-12-09T22:52:23","modified_gmt":"2015-12-10T03:52:23","slug":"bhp-billiton-remotely-resourcing-the-future","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/bhp-billiton-remotely-resourcing-the-future\/","title":{"rendered":"BHP Billiton \u2013 Remotely Resourcing the Future"},"content":{"rendered":"<p>Created through the 2001 merger between BHP\u00a0Limited and Billiton, <strong>BHP Billiton (BHP) is the world\u2019s largest mining company<\/strong>.<\/p>\n<p><strong><u>Business model <\/u><\/strong><\/p>\n<p>BHP\u2019s business strategy is aimed at owning and operating large mineral assets that are diversified by commodity type, geography and extraction method. Consistent with pursuing its business strategy, BHP has established a business model that develops core competencies and expertise in evaluating, developing, extracting and selling natural resources.<\/p>\n<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Business-Model1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-6425\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Business-Model1.jpg\" alt=\"Business Model\" width=\"960\" height=\"267\" \/><\/a><\/p>\n<p><strong><u>Winning strategy: continuous productivity improvement<\/u><\/strong><\/p>\n<p>BHP is a very asset intensive business and its success is dependent on reliable, safe and productive operations.<\/p>\n<p>Productivity improvements is the major\u00a0driver\u00a0that helped BHP become the world\u2019s largest leading miner with the following unique\u00a0competitive advantages:<\/p>\n<ul>\n<li>large(st) scale operations which results in relatively lower\u00a0unit production cost<\/li>\n<li>diversified operations which produce\u00a0different types of commodities to hedge against market price movements<\/li>\n<li>operations in many parts of the world to reduce supply chain costs<\/li>\n<\/ul>\n<p>Overtime, BHP has developed a structured approach to continuously improving productivity and measuring performance using simple integrated metrics.\u00a0BHP\u2019s operating model helped to drive sustainable performance improvement and helped to lay the foundation for successful growth through continuous culture enhancements and technology developments, which is\u00a0the core of BHP&#8217;s success.<\/p>\n<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Continuous-productivity-improvement2.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-6582\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Continuous-productivity-improvement2.jpg\" alt=\"Continuous productivity improvement\" width=\"936\" height=\"320\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Continuous-productivity-improvement2.jpg 1094w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Continuous-productivity-improvement2-300x103.jpg 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Continuous-productivity-improvement2-1024x350.jpg 1024w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Continuous-productivity-improvement2-600x205.jpg 600w\" sizes=\"auto, (max-width: 936px) 100vw, 936px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p><strong><u>Operating model<\/u><\/strong><\/p>\n<p>Despite the complexities associated with\u00a0mining resources, BHP\u2019s operating model is predicated on a simple and scalable organizational design. The operating model is structured\u00a0to help BHP achieve superior performance\u00a0in all elements of its business model, from exploration to extraction and to sales. BHP has also been developing expertise in supply chain specifically as an owner and operator of dedicated transportation assets such as rail lines. A sophisticated supply chain network now forms the backbone of BHP\u2019s operating model and helps to streamline its business model. There are five distinct features of BHP\u2019s operating model:<\/p>\n<ul>\n<li><strong>Integrated management system<\/strong> provide single source of data which allows BHP to measure, track and benchmark performance down to single components <em>(Example A: 10% increase in truck fleet utilization from 2013 to 2014 following internal and external equipment benchmarking study)<\/em><\/li>\n<li>Application of <strong>common systems and standard processes<\/strong> across portfolio mines help BHP to accelerate replication of best practices<\/li>\n<li><strong>Collaboration with customers<\/strong> to design quality specifications, optimize supply chain and provide deep technical capability support <em>(Example B: 4% improvement in sales forecast accuracy and 30% reduction in variability achieved from 2013 to 2014)<\/em><\/li>\n<li><strong>Internal competition for capital<\/strong> means project teams are incentivized to achieve higher returns\u00a0with less capital, which helps to reduce cost variability <em>(Example C: average cost over-runs reduced by 23% and overall cost variability reduced by 65% since introducing the concept of internal competition for capital, which has driven a strong sense of capital stewardship)<\/em><\/li>\n<li><strong>Technology developments\u00a0<\/strong>continues to be\u00a0a major\u00a0productivity driver\u00a0as BHP continues to search for remote and autonomous solutions that deliver cost effective and reliable outcomes. BHP is very focused on leading the mining industry in innovations through using and creating technology solutions (e.g. driverless trucks) that aims to improve safety, lower production costs and increase output.<\/li>\n<\/ul>\n<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Operating-model-impacts1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-6583\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Operating-model-impacts1.jpg\" alt=\"Operating model impacts\" width=\"919\" height=\"393\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-decoration: underline\"><strong>Remote, autonomous technology as the key productivity driver<\/strong><\/span><\/p>\n<p>BHP is the world renowned leader in remote monitoring and operating of large scale mines. Leveraging technology has been at the core of BHP\u2019s operating model as it attempts to continuously improve efficiency, safety and reliability, consistent with its business strategy. In 2013, BHP unveiled its state-of-the-art remote control center called IROC (Integrated Remote Operations Center). IROC gave BHP an unparalleled vantage point as it provided real-time monitoring and control of BHP\u2019s entire Western Australian Iron Ore network. IROC gave engineers the ability to view supply chain operations, key performance indicators and other live useful information on large screens 24 hours a day. Engineers are able to make adjustments to the entire network including mine, plant, port, rail and even individual trucks. IROC helped BHP increase the overall system-wide availability, utilization and output rate of its assets. Overall, technology systems such as IROC are fundamental in ensuring BHP remains the world\u2019s largest miner with competitive\u00a0advantages including lowest per unit production cost, largest scale, and highest productivity with continuous improvement and growth.<\/p>\n<p style=\"text-align: center\"><a href=\"https:\/\/www.youtube.com\/watch?v=wXJjM9ppHtA\">https:\/\/www.youtube.com\/watch?v=wXJjM9ppHtA<\/a><\/p>\n<p style=\"text-align: center\"><em>Source:\u00a0https:\/\/www.youtube.com\/watch?v=wXJjM9ppHtA<\/em><\/p>\n<p>&nbsp;<\/p>\n<p>Sources:<\/p>\n<p>ABC News, 2013. <em>BHP opens automated centre in Perth for its Pilbara mines. <\/em>[Online]<br \/>\nAvailable at: <u>http:\/\/www.abc.net.au\/news\/2013-07-02\/bhp-opens-new-automated-centre-for-pilbara-mines\/4794838<\/u><br \/>\n[Accessed 8 December 2015].<\/p>\n<p>BHP Billiton, 2014. <em>Maximising value and shareholder returns. <\/em>[Online]<br \/>\nAvailable at: <u>http:\/\/www.bhpbilliton.com\/~\/media\/bhp\/documents\/investors\/reports\/2014\/141027_maximisingvalueandshareholderreturns.pdf?la=en<\/u><br \/>\n[Accessed 7 December 2015].<\/p>\n<p>BHP Billiton, 2014. <em>Safely growing production while lowering costs. <\/em>[Online]<br \/>\nAvailable at: <u>http:\/\/www.bhpbilliton.com\/~\/media\/bhp\/documents\/investors\/reports\/2014\/141027_safelygrowingproductionwhileloweringcosts.pdf<\/u><br \/>\n[Accessed 8 December 2015].<\/p>\n<p>BHP Billiton, 2015. <em>Integrated Remote Operations Center (IROC), Iron Ore. <\/em>[Online]<br \/>\nAvailable at: <u>https:\/\/www.youtube.com\/watch?v=wXJjM9ppHtA<\/u><br \/>\n[Accessed 8 December 2015].<\/p>\n<p>BHP Billiton, 2015. <em>Strategic Report 2015. <\/em>[Online]<br \/>\nAvailable at: <u>http:\/\/www.bhpbilliton.com\/~\/media\/bhp\/documents\/investors\/annual-reports\/2015\/bhpbillitonstrategicreport2015.pdf<\/u><br \/>\n[Accessed 7 December 2015].<\/p>\n<p>S&amp;P Capital IQ, 2015. <em>S&amp;P Capital IQ. <\/em>[Online]<br \/>\nAvailable at: <u>https:\/\/www.capitaliq.com\/<\/u><br \/>\n[Accessed 7 December 2015].<\/p>\n<p>The Wall Street Journal, 2015. <em>BHP\u2019s Old New Business Model. <\/em>[Online]<br \/>\nAvailable at: <u>http:\/\/www.wsj.com\/articles\/bhps-old-new-business-model-heard-on-the-street-1426608769<\/u><br \/>\n[Accessed 7 December 2015].<\/p>\n<p>&nbsp;<\/p>\n<p><!--more--><\/p>\n<p><!--more--><\/p>\n<p><!--more--><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Technology development as the key driver of continuous productivity improvement for the world\u2019s largest miner<\/p>\n","protected":false},"author":1320,"featured_media":0,"comment_status":"open","ping_status":"closed","template":"","categories":[993,996,5,995,994,336],"class_list":["post-6353","hck-submission","type-hck-submission","status-publish","hentry","category-bhp","category-continuous-improvement","category-mining","category-productivity-improvement","category-remote-technology","category-tom-winners"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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