Deploying the Business
Excellence Framework
at BHP Billiton
Better Business Conference, 21st June 2007
Bryan Maher
Global Manager,
Business Excellence
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
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
CVRD
Anglo American
Shenhua
Norilsk
Impala
Goldcorp
Freeport-McMoRan
SPCC
Newmont
Alcan
Cameco
Gold Fields
2001(2)
$29.5
US$892bn
US$367bn
US$134.8bn
Teck Cominco
2007 (1)
$134.8
AngloGold
Market value of minerals industry
Value of Top Four
Value of BHP Billiton
Barrick Gold
BHP Billiton Market Cap
US$ bn
Alcoa
Source: Bloomberg (data as at 28 March 2007)
1. Market Capitalisation on 28 March 2007
2. Market Capitalisation on 28 June 2001
Anglo Platinum
BHP Billiton
Rio Tinto
Xstrata
The largest company in a consolidating sector
Page 3
Market Cap. on 28 March 2007 (US$Bn)
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.
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Australian
Chosen by BHP Billiton
Brazilian
European
All models are fundamentally the same
USA
Business Excellence Frameworks
Page 5
The PNQ Model
Page 6
PNQ provides:
• An operating discipline
– Doing what we say we are going to do
– Continually improving what and how we
are doing
• An improvement process
Page 7
Customers
People
Society
Processes
Strategies
and Plans
Results
Conduct
PNQ Evaluation
Leadership
Capture benefits
Transfer knowledge
Prioritise in
5yr Plan
Identify Leading
Practices and
opportunities
The Journey to Excellence
Operating Discipline
Discipline
Improvement
Improvement
Implement improvement
Six Sigma
Replication
Appraisal
Strategy
/ RDP
Life of Asset
Directional Planning
CEO
Msg
STRATEGY
& PLANS
• BHP Billiton
way of
planning
(CAP)
• Appraisals
CUSTOMERS
• Customer Centric
Marketing
SOCIETY
• HSEC
Standards
PEOPLE
• HR
Standards
PROCESS
• Exploration
• Projects
•Maintenance
• Six Sigma
• BCS
• PNQ
Evaluations
Processes listed are representative and not fully comprehensive
INFORMATION
& KNOWLEDGE
• Information
Management
Policy
• GSAP
• Networks
RESULTS
• Appraisals
• Benchmarking
PNQ is the whole-of-business framework that integrates our
critical business processes
LEADERSHIP
• Risk
Management
• Leadership
Model
Page 8
Page 9
Results
Prioritise in
5yr Plan
Identify leading
Practices and
opportunities
The Journey to Excellence
Operating
Operating Discipline
Improvement
Implement improvement
Six Sigma
Replication
Appraisal
Leading Practices
Captured in Library
The PNQ Program is an integrated cycle of evaluation, prioritisation,
improvement and transfer of knowledge
Customers
People
Strategies
and Plans
Conduct
PNQ Evaluation
Leadership
Processes
Society
Capture benefits
Transfer knowledge
Strategy
/ RDP
Life of Asset
Directional Planning
CEO
Msg
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
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Worsley Alumina:
Manganese CSG:
New Mexico:
BMA:
Nickel West:
Cerro Matoso:
Illawarra Coal:
Hillside:
Aluminium Brazil:
Iron Ore:
Mozal:
Middelburg:
Bayside:
Escondida:
Cannington:
Ekati:
Suriname:
Marketing:
Khutala:
Yabulu:
27th August 2006
18th September 2006
25th September 2006
2nd October 2006
23th October 2006
23rd October 2006
6th November 2006
27th November 2006
5th February 2007
13th February 2007
12th March 2007
26th March 2007
20 evaluations
16th April 2007
during FY07
23rd April 2007
7th May 2007
14th May 2007
21st May 2007
4th June 2007
12th June 2007
25th June 2007
PNQ evaluations during Fiscal Year 2007
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1.
2.
3.
4.
2 hours
Site
briefing
(visit or
telecon)
1
2 months
Site prepares a report by answering the Business
Excellence (PNQ) evaluation questions available in the
eRoom
2
2 weeks
6 days
4
Site visit,
interviews,
analysis,
feedback
3
Evaluators
read and
analyse the
response doc
Business engagement and briefing
Site self-evaluation and report preparation
Evaluators assessment of the response document
Site visit by the evaluators
4 stages:
PNQ evaluation process
Form
team
Page 12
The evaluation team
Lead evaluator from Business Excellence
External consultant
1 evaluator from the business
3 evaluators external to the business (but from within BHP Billiton)
• 6 people on each team:
–
–
–
–
• Team membership is a critical element of the evaluation process
• Senior personnel enable more effective sharing of good practice
• Excellent learning experience
Page 13
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?
– Been reviewed for improvement opportunities?
– Used data in the decision-making process?
• Has the management practice:
Page 14
A
D
R
I
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
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
PNQ integration with the 5 Year Plan
Strategy /
Resource
Dev
Strategy
Appraisal
Life of Asset
•
•
Revised Targets
Gap Analysis
Actual Performance
Contingency Plans
Outcomes
Actions
•
Performance Review
Strategy
Executive Summary
5 Year Plan - Content
Letter
of
Intent*
5 Year Plan
Delivery
Appraisal
KPIs
Prioritised
improvement
projects
2 Year
Budget
The CAP 5-year plan process integrates PNQ feedback and allows improvement
prioritisation
CEO
Msg
PNQ Improvement Ops
Page 17
1
2
3
4
6
BMA example: Evaluation output mapped to plan
Top six opportunities
for improvement
4. Improve business planning process.
1. Focus resources on delivering the business plan.
2. Analyse/identify key drivers for availability and utilisation. 5. Develop ‘owners communications’ protocol.
3. Clarify responsibilities for delivery of improvement targets. 6. Modify the talent management system.
Page 18
100
90
80
70
60
50
40
30
20
10
0
Le
ad
te
ip
sh
er
ra
St
gi
es
d
an
a
Pl
ns
st
Cu
om
er
s
rm
d
ow
Kn
le
dg
e
Category
n
ty
io
ie
at
c
So
fo
In
an
Category
Category Results
Compared to Best Practice
Category comparisons
Page 19
Score
Results for this evaluation
pl
e
es
oc
Pr
se
s
s
Re
ts
ul
Best Practice Level (>65)
BHPBilliton
BillitonMaximum
Maximum
o
Pe
Strategy
Customers
Information
People
Process
Economic
and Financial
results
Results
Immature
0-30%
Promising
40-50%
Good
60-70%
80-100%
Excellent
Scoring dashboard for each evaluation: Shared throughout BHP Billiton
Strategy
Works
systems
Core
business and
Support
process mgt
Society
Leadership
Development
Org.
information
management
Social and
Environ.
responsibility
Customer
and market
results
Supplier
results
Core
business &
Support
results
People
results
Society
results
Supplier
relationship
mgt
Comparative
information
management
Quality of life
Economic
and Financial
mgt
Training and
development
Ethics and
social
development
Intangible
asset
management
Customer
Relationship
Leadership
System
Strategy
Implementati
on
Image and
market
knowledge
Culture of
Excellence
Org.
Performance
Review
Page 20
Evaluation Identifies Potential Leading Practice
Sharing leading practice
Potential leading
practice
documented in
standard format
Page 21
Subject matter
expert verifies
leading practice
Sharing leading practice
Page 22
Logged into database
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
Actioning the improvement opportunities
Customers
People
Results
Capture benefits
Transfer knowledge
Society
Processes
Strategies
and Plans
Conduct
PNQ Evaluation
Leadership
Implement improvement
Six Sigma
Replication
Improvement
Improvement
Operating
Operating Discipline
Discipline
Prioritise in
5yr Plan
CEO
Msg
Appraisal
Strategy
/ RDP
Life of Asset
Directional Planning
Identify leading
Practices and
opportunities
The Journey to Excellence
– Replication: Use leading practice database or
Knowledge Networks
– Six Sigma: Standard DMAIC /Lean / “Just do It”
• Two recommended methods to close the gap:
Page 24
Knowledge Networks
The business model
naturally develops
“silos” around
business groups
Networks sponsor:
9 Communities of Practice
9 Face-to-face conferences and
workshops
9 Functional evaluations
9 Metrics benchmarking
9 Libraries of leading practices
9 Mentoring programs
Page 25
Networks act as
bridges between
silos along
functional lines
Value is added by:
9 Solving everyday problems
9 Defining excellence for the
function
9 Comparing performance
(KPIs)
9 Identifying and sharing
leading practice
9 Developing people
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
Capturing 6 Sigma Benefits
500
450
400
350
300
250
200
150
100
50
0
FY01
FY03
FY04
Annualised benefits (BCS)
FY02
FY05
Financial benefits from all business improvements are recorded in the
Benefits Capture System (BCS)
• Improvement process delivers
both financial and non-financial
benefits
• Financial benefits audited and
captured in common database –
BCS
• Key contributors are Six Sigma
and Group Supply improvement
projects
• BCS database provides a rich
source of ideas for replication
Page 27
U S $ m illion pa
FY06
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