Deploying the Business Excellence Framework. at BHP Billiton. Better Business Conference, 21 st June Business Excellence.

Transcription

1 Deploying the Business Excellence Framework at BHP Billiton Better Business Conference, 21 st June 2007 Bryan Maher Global Manager, Business Excellence

2 Manganese Iron Ore 25 countries 100 sites 38,000 Permanent Employees World s Largest Diversified Minerals Resources Company Overview of BHP Billiton Petroleum Energy Coal Metallurgical Coal Page 2 Aluminium Base Metals Diamonds & Spec Prod Stainless Steel Materials

3 Page 3 Source: Bloomberg (data as at 28 March 2007) 1. Market Capitalisation on 28 March Market Capitalisation on 28 June 2001 Market Cap. on 28 March 2007 (US$Bn) Alcoa Norilsk Xstrata Shenhua Anglo Platinum Barrick Gold Freeport-McMoRan SPCC Newmont Alcan Impala Goldcorp Teck Cominco Cameco AngloGold Gold Fields CVRD Anglo American Rio Tinto BHP Billiton Market Cap 2007 (1) 2001 (2) US$ bn $134.8 $29.5 BHP Billiton Market value of minerals industry US$892bn Value of Top Four US$367bn Value of BHP Billiton US$134.8bn The largest company in a consolidating sector

4 Excellence at BHP Billiton We have a personal commitment to, and run our business in accordance with the BHP Billiton Charter and our Zero Harm aspiration. Leaders at all levels inspire and set expectations of Business Excellence through both Operating Excellence and Organisational Excellence We embrace the imperative for improvement and empower all employees, partners, customers, contractors, suppliers and service providers to work together to drive improvement and eliminate waste. All of our key business and governance processes are transparent, understood, in-control and relentlessly improved. Together we develop and own our strategies and plans, and set targets informed by benchmarking and understanding of our untapped capabilities. We execute with discipline, continually check progress and close performance gaps. Option generation, risk management and good governance are pursued as sources of competitive advantage. Page 4

5 Business Excellence Frameworks Chosen by BHP Billiton USA Brazilian All models are fundamentally the same Page 5 Australian European

6 Page 6 The PNQ Model

7 PNQ provides: An operating discipline Doing what we say we are going to do An improvement process Continually improving what and how we are doing Page 7 Customers People Conduct Leadership Strategies and Plans Results PNQ Evaluation Processes Society Capture benefits Transfer knowledge The Journey to Excellence Operating Discipline Identify Leading Practices and opportunities Improvement Appraisal Implement improvement Six Sigma Replication Prioritise in 5yr Plan Directional Planning CEO Msg Strategy / RDP Life of Asset

8 PNQ is the whole-of-business framework that integrates our critical business processes LEADERSHIP Risk Management Leadership Model STRATEGY & PLANS BHP Billiton way of planning (CAP) Appraisals CUSTOMERS Customer - Centric Marketing INFORMATION & KNOWLEDGE Information Management Policy GSAP Networks SOCIETY HSEC Standards PEOPLE HR Standards PROCESS Exploration Projects Maintenance Six Sigma BCS PNQ Evaluations RESULTS Appraisals Benchmarking Processes listed are representative and not fully comprehensive Page 8

9 Page 9 The PNQ Program is an integrated cycle of evaluation, prioritisation, improvement and transfer of knowledge The Journey to Excellence Customers Leading Practices Captured in Library People Conduct Leadership Strategies and Plans Results PNQ Evaluation Processes Society Operating Discipline Identify leading Practices and opportunities Improvement Appraisal Capture benefits Transfer knowledge Implement improvement Six Sigma Replication Prioritise in 5yr Plan Directional Planning CEO Msg Strategy / RDP Life of Asset

10 PNQ evaluation process Evaluations are done at all businesses throughout the Group. The criteria being that it must be an EBIT and planning entity At BHP Billiton Group level At Customer Sector Group level At Asset Level 57 entities for evaluation within (and including) BHP Billiton Evaluations conducted on 3-yearly cycle Page 10

11 Page 11 PNQ evaluations during Fiscal Year 2007 Worsley Alumina: 27 th August 2006 Manganese CSG: 18 th September 2006 New Mexico: 25 th September 2006 BMA: 2 nd October 2006 Nickel West: 23 th October 2006 Cerro Matoso: 23 rd October 2006 Illawarra Coal: 6 th November 2006 Hillside: 27 th November 2006 Aluminium Brazil: 5 th February 2007 Iron Ore: 13 th February 2007 Mozal: 12 th March 2007 Middelburg: 26 th March evaluations Bayside: 16 th April 2007 during FY07 Escondida: 23 rd April 2007 Cannington: 7 th May 2007 Ekati: 14 th May 2007 Suriname: 21 st May 2007 Marketing: 4 th June 2007 Khutala: 12 th June 2007 Yabulu: 25 th June 2007

12 PNQ evaluation process 4 stages: 1. Business engagement and briefing 2. Site self-evaluation and report preparation 3. Evaluators assessment of the response document 4. Site visit by the evaluators 2 months 2 hours 2 weeks 6 days Form team Site briefing (visit or telecon) Site prepares a report by answering the Business Excellence (PNQ) evaluation questions available in the eroom Evaluators read and analyse the response doc Site visit, interviews, analysis, feedback Page 12

13 The evaluation team 6 people on each team: Lead evaluator from Business Excellence External consultant 1 evaluator from the business 3 evaluators external to the business (but from within BHP Billiton) Team membership is a critical element of the evaluation process Senior personnel enable more effective sharing of good practice Excellent learning experience Page 13

14 What does the evaluation review? Is the businesses management practice Adequate? Proactive? Has the management practice Been effectively deployed to all appropriate stakeholders? Integrated with other activities? Is the management practice Providing relevant results with positive trends? Has the management practice: Been reviewed for improvement opportunities? Used data in the decision-making process? Page 14 A D R I

15 Evaluation output The output from the evaluation is an input into the Asset business planning process Report Scoring Capture leading practice and make available to all of BHP Billiton through a leading practice library Page 15

16 Feedback Report: 3 Levels Evaluation team develops a detailed report with 3 to 6 strengths and opportunities per item Evaluation team consolidates into summary report with 3-6 strengths and opportunities per category Management team selects what it feels is relevant to feed into planning process Page 16 Approx 100 strengths and 100 opportunities Approx 30 strengths and 30 opportunities Potentially 5 opportunities

17 PNQ integration with the 5 Year Plan The CAP 5-year plan process integrates PNQ feedback and allows improvement prioritisation CEO Msg Strategy / Resource Dev Life of Asset Strategy Appraisal Letter of Intent* 5 Year Plan Delivery Appraisal 2 Year Budget KPIs 5 Year Plan - Content Executive Summary PNQ Improvement Ops Strategy Performance Review Actual Performance Gap Analysis Revised Targets Prioritised improvement projects Actions Outcomes Page 17 Contingency Plans

18 BMA example: Evaluation output mapped to plan Top six opportunities for improvement 3 1. Focus resources on delivering the business plan. 2. Analyse/identify key drivers for availability and utilisation. 3. Clarify responsibilities for delivery of improvement targets. 4. Improve business planning process. 5. Develop owners communications protocol. 6. Modify the talent management system. Page 18

19 Page 19 Leadership Strategies and Plans Customers Society Information and Knowledge Category Score Category Results Compared to Best Practice Category comparisons People Processes Results Results for this evaluation Best Practice Level (>65) BHP Billiton Maximum

20 Scoring dashboard for each evaluation: Shared throughout BHP Billiton Leadership Strategy Customers Society Information People Process Results Leadership System Culture of Excellence Org. Performance Review Strategy Development Strategy Implementati on Image and market knowledge Customer Relationship Social and Environ. responsibility Ethics and social development Org. information management Comparative information management Intangible asset management Works systems Training and development Quality of life Core business and Support process mgt Supplier relationship mgt Economic and Financial mgt Economic and Financial results Customer and market results Society results Excellent % Good 60-70% Promising 40-50% Immature 0-30% People results Core business & Support results Supplier results Page 20

21 Sharing leading practice Evaluation Identifies Potential Leading Practice Potential leading practice documented in standard format Page 21

22 Sharing leading practice Subject matter expert verifies leading practice Page 22 Logged into database

23 Sharing leading practice Subject matter expert verifies leading practice Simple process to enable the findings of one evaluation to be leveraged across multiple sites Take-up of leading practices pulled from Assets Page 23

24 Actioning the improvement opportunities Two recommended methods to close the gap: Replication: Use leading practice database or Knowledge Networks Six Sigma: Standard DMAIC /Lean / Just do It The Journey to Excellence Customers People Conduct Leadership Strategies and Plans Results PNQ Evaluation Processes Society Operating Discipline Identify leading Practices and opportunities Improvement Capture benefits Transfer knowledge Implement improvement Six Sigma Replication Prioritise in 5yr Plan CEO Msg Page 24 Appraisal Directional Planning Strategy / RDP Life of Asset

25 Knowledge Networks The business model naturally develops silos around business groups Networks sponsor: Communities of Practice Face-to-face conferences and workshops Functional evaluations Metrics benchmarking Libraries of leading practices Mentoring programs Page 25 Networks act as bridges between silos along functional lines Value is added by: Solving everyday problems Defining excellence for the function Comparing performance (KPIs) Identifying and sharing leading practice Developing people

26 Networks Case Study New Mexico asks Conveyor CoP Sunday 8pm How to predict roller failures on conveyor belts 3 independent replies from Iron Ore 10am 11am 2 replies from Olympic Dam (recognised experts in condition monitoring) 9am and 10am Page 26 Ingwe 4pm QNI Yabulu 11am BMA Central Office 8am Illawarra Coal 10am BEHelpDesk offers all past roller maintenance documents 11am

27 Page 27 BCS database provides a rich source of ideas for replication FY01 FY02 FY03 FY04 FY05 FY Key contributors are Six Sigma and Group Supply improvement projects Financial benefits audited and captured in common database BCS US$ m illion pa Improvement process delivers both financial and non-financial benefits Annualised benefits (BCS) Financial benefits from all business improvements are recorded in the Benefits Capture System (BCS) Capturing 6 Sigma Benefits

28 Summary The PNQ Business Excellence system provides BHP Billiton with a framework that integrates key business processes PNQ provides a diagnostic tool which provides a whole-of-business perspective on the organisation s strengths and major opportunities for improvement Senior management s participation in the evaluations assists the knowledge transfer process The PNQ evaluation process is an integrated component of the 5 year planning process It provides a process to identify leading practice and make this available to others as required Six Sigma, replication and knowledge Networks are key enablers to close improvement gaps Page 28