Purchasing Management of BHP Billiton Samples †MyAssignmenthelp.com

Question: Discuss about the Purchasing Management of BHP Billiton. Answer: Introduction The objective of the essay is to analyzing of effectiveness of aspects in relation to the purchasing management. These aspect are supplier selection criteria and issues, ICT for the purchasing operations, ICT for the purchasing operation and the purchase cost analysis (Ate?, van Wynstra, 2017). In this research it has focused on the BHP Billiton which is an Anglo-mining multinational mining, metals as well as the petroleum dual-listed public company that has headquarters in Melbourne, in Australia. Products The organization deals is involved in the production of the various products such as iron, steel, copper, silver, oil, aluminium as well as the gas (Billiton, 2014). Supplier markets When it comes to the supplier market the organization has been able to develop on the world class supplier program which is able to create cluster of more than one hundred world class supplies (Barrick, Thurgood, Smith Courtright, 2015). The company has a diverse supply chain which has helped it to market on their products. Additionally, they have been able to enter into an agreement with Codelco in order to make changes in regards to the internal processes such as the procurement to be able to develop the organizations in their supply chain (Billiton, 2014). There is a ready market for their products as the company has involved other major companies in other sectors to be able to improve on their suppliers innovation processes which help open new networks for their products. Competitors The major competitors of BHP Billiton organization are Rio Tinto Ltd, Potash, Wesfarmers, and SABmiller. Organizational goals and strategies The organizational goal is to own, operate large, long life, low cost as well as have an upstream assets that are diversified by the commodity and be the leaders both geographical and in all market (Chao, 2014). The company also has a goal of utilising technology which improve on the safety, and has a low coast and unlocks on the resources. To be able to achieve on this goals they have developed an operating model which enable them to leverage on their expertise across their business, using multifunctional teams who are connected across the organization (Chao, 2014). These individuals are able to share on their best practices and solve problems. Supplier selection criteria and issues The supplier have always been an integral aspects for the organization management policy. However, the relationship between the organization and the supplier has traditionally been distant one (Chao, 2014). When the supplier decision needs to be made in the made in BHP Billiton organization, the buyer should need to establish the set of the evaluation criteria which could be used in comparing of the potential sources (van, Voordijk, Matos Vos, 2015). The supplier selection is the strategic decision which fulfils on the goals of the organization for long time at low risk (Price, 2015). In accomplishing on this objective BHP Billiton organization has moved from the reactive buying to the proactive buying which is much more priority to the co-creation of the wealth with its suppliers. Purchasing goals for BHP Billiton organization BHP Billiton organization has a purchasing department in which is responsible for any purchases in the business. Additionally, the organization is governed by various purchasing goals which they observe in order to effectively deliver on the products (Price, 2015). One of the goal is to develop the strategies which to be able to discount from the vendors. The purchasing strategy usually varies form one industry to another (Kumar, Jain Kumar, 2014). The purchasing strategy of the organization has been linked to the organizational objectives and these strategies usually support on the supply chain aims. The people in the company are typical conscious of these types of strategies so they could result to a successful enterprise. An additional purchasing goal would be to enhance on the quality to manage to get the customer loyalty in addition to good reputation in the market (Price, 2015). The good quality program that BHP Billiton offers help them to contend it more competitively on the market. The quality they enhance by means of hiring of the most effective professionals that have good negotiable skills, the legal knowledge as well as better understanding of the company. Another purchasing goal is the reduction of the inventory maintenance cost. Whenever the business gets hold of the huge amount of the inventory for lengthy period of time then they will need to bear with the spoilage of the cost (Monczka, Handfield, Giunipero Patterson, 2015). The inventory in the organization could depreciate if they are stored for very long time which would require some maintenance. BHP Billiton to reduce on this cost they avoid the inventory maintenance cost through use of the just in time inventory system, this therefore means that the inventory is delivered once they get contract for the supply (van, Voordijk, Matos Vos, 2015). This aspect of managing of the inventory is very vital to be able to keep the client satisfied (Price, 2015). BHP Billiton organization makes sur e that they delivery their product on time and they have vendor who can deliver on time. Additionally, they makes sure they have the best vendors who are available in the market as well as keep in view of the local and national suppliers. Appropriate criteria for selecting the suppliers The selection criteria for the supplier is defined by the cross functional teams for the representatives from various sectors of BHP Billiton organization. The organization is a manufacturing company therefore, members representative are from purchasing, quality, engineering and the production (Kumar, Jain Kumar, 2014). The members usually include the personnel with the technical knowledge of the products which are to be purchased. The common supplier criteria is has follows; The first thing for selecting the appropriate supplier is to identify the supplier. Before selecting the supplier it is important to gather on the opinions of the stakeholders. The second thing would be measuring of the supplier performance. This is achieved through development of the audit as well as the assessment program (Monczka, Handfield, Giunipero Patterson, 2015). The next thing would be to gain the feedback of the supplier. This could be done through a self-assessment questionnaire. This could be used to identify on the performance gaps and be able to discover on the way the supplier understand their own operation. The next thing would be achieving of the certification. As the relationship becomes stronger, and both of the parties feel they are received positive performances the suppliers could be able to achieve the status of certification (Rodrguez-Escobar Gonzlez-Benito, 2015). The next step would be to develop partnerships. The relationship of the BHP Billiton and that of the suppliers is best when there is a formation of the partnership hence allowing the full knowledge of the sources of the materials as well as ensuring on high quality. ICT for purchasing operations ICT application to improve purchasing operations BHP Billiton today uses the ICT tools which are efficient as well as effective so that there is access of the relevant data with ease and on time to maintain a competitive edge when it comes to the purchasing operations (Monczka, Handfield, Giunipero Patterson, 2015). The use of the ICT enables interaction between the various organization along with the supply chain hence facilitating on the data sharing as well as exchange of the information at a much high speed and accuracy (Yoo, Naciri, Badulescu Glardon, 2017). This enables the organization in meeting on the demands of the clients on time hence setting the customer service standards. The needs of staying ahead of the competition entails that the organization embraces on the ICT advancement in their daily operations (Monczka, Handfield, Giunipero Patterson, 2015). The aspect of efficient as well as effective handling of the materials management from the purchase can only be achieved with the cooperation of the efficient as well as effective department within the supply chain in the organization. The selection of the suppliers as well as the negotiation of all the aspects of the contracts that relates to the inventory activities is a purchasing goals in which the purchasing professionals are expected to play as their leading role in the organization. BTP Billiton organization has been able to achieve this need in their purchasing goal (Monczka, Handfield, Giunipero Patterson, 2015). When the tools of the ICT are implemented in the organization it would bring benefit from these and thus as a result the company will be in a position to save on the costs associated to the inventory which is one of their purchasing goal and hence make profits. They will be able to reduce on the wastes as well as reduce on the inventory holding hence release the capital. Some of the ICT tools that have improved on the purchasing operations are as follows; distribution requirements planning, as well as the material resource pla nning. On the MRP it is a detailed planning of the purchasing operation and its characteristics are geared towards specifically to assemble on the operations (van, Voordijk, Matos Vos, 2015). It is a computer based information system. The aim of this ICT tool is to make available the purchases or the organization manufacturing assemblies. The order can be tracked throughout the process of manufacturing process as well as assist in the purchasing department in moving to the right supplies. The DRP is the scheduling approach which controls the inventory and it applies the principles of MRP (Wiengarten, Ambrose Ambrose, 2017). It is a method which is used in handling of the replenishment of the stock in the company. This method has been useful in the BHP Billiton organization since they utilizes in various distributions points for example the regions as well as the local distributors. Purchasing cost analysis The purchasing goal of the organization has been, to improve on the quality to get customer loyalty, reduction of the inventory costs and to achieve on this aspect there is need to recommend on appropriate tools to consider in regards to analyse on the purchasing costs (Chen Wu, 2013). Purchasing is a significant part of the business therefore the business needs to have regular purchasing analysis to ensure that it is making the best use of the earned revenues. The purchasing analysis is the analysis which goes on in the department of purchases (Chen Wu, 2013). In this department the purchasing strategy as well as inventories are kept to the optimum levels. This is in respect to the suppliers who are chosen and they provide the best prices. The tools are as follows; one is the cost analysis. The first thing in which BHP Billiton looks at is the actual cost of purchasing on the good (Wengang Suicheng, 2015). There are various cost involved such as the delivery costs, the handling and the storage. There may be suppliers who require the advancement payments. This purchasing tool would be important in identifying of the total cost for purchasing of a given supplier. The next tool is the inventory analysis. This method is used in analysing of the costs for storing the items along with the cost of not having the items which are available for the manufacture (Scott, Ho, Dey Talluri, 2015). When there is a correct purchasing analysis to the current inventory it would be able to predict on the optimal future inventory (Johnson, 2014). Moreover, with the use of the method it is possible to tell the optimum inventory levels which could negatively influence on the sales (Johnson, 2014). The next tool is the maverick spending. In a situation when the organization use purchase requisitions, the products could have been ordered which are not appropriate or perhaps have a higher price or lower in quality than they are purchased (Johnson, 2014). This tool is used to analyse the purchase requisitions as well as the ad hoc purchases so that the company will know what cost them more than they require. Conclusion In the essay, it has analyzed the effectiveness of aspects in relation to the purchasing management. These element that are discussed are supplier selection criteria and issues, ICT for the purchasing operations, ICT for the purchasing operation and the purchase cost analysis. The essay has further highlighted on the purchasing goal of the BHP Billiton organization which has been the focus of the research. In the research it has also highlighted on the criteria which is involved in the selecting the suppliers such as identification of the supplier, measuring the performance of the supplier, achieving of the certification as well as formulation of the partnership. These aspect have been discussed in details and how they relates to the purchasing goal of the organization highlighted. In the essay, it has also discussed on the ICT for improving on the operations of purchases as well as the tools that are considered when analyzing on the purchasing costs. References Ate?, M. A., van Raaij, E. M., Wynstra, F. (2017). The impact of purchasing strategy-structure(mis) fit on purchasing cost and innovation performance. Journal of Purchasing and Supply Management. Barrick, M. R., Thurgood, G. R., Smith, T. A., Courtright, S. H. (2015). Collective organizational engagement: Linking motivational antecedents, strategic implementation, and firm performance. 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