What does BHP look for in a supplier?

BHP shipping operations at Port Hedland. Image: BHP.

For suppliers in the mining industry, partnering with a major company like BHP is the ultimate goal.

And now, BHP’s group procurement officer Sundeep Singh has revealed what it takes to be a supplier for the company in today’s marketplace.

Singh, speaking at the International Mining and Resources Conference (IMARC) in Melbourne on Tuesday, points to diversity and inclusion, responsible sourcing, and climate change as the key factors for BHP when it identifies suitable suppliers.

He believes the biggest opportunity in better decision making is the design and performance of a company’s supply chain.

“The supply chain, as the name suggests, is only as strong as its weakest link,” Singh says.

BHP continues to push the value that diversity and inclusion can deliver for a company.

Three years after setting a goal to have a gender balanced organisation by 2025, BHP has this year increased its female representation to 24.5 per cent.

The company’s data shows that more inclusive and diverse teams outperform other teams on safety, productivity and culture.

Singh says that it is in BHP’s contracts with labour hire providers to have and incentivise greater diversity, which has resulted in a 15 per cent increase in female candidate conversion rate over the past 12 months.

“We partner with organisations like MEGT, an Australian non-profit organisation that supports local employers, apprentices and trainees, which now makes sure women represent 40 per cent of suitable applicants,” Singh says.

“Again, it’s a commitment from both organisations and it’s been written into our contracts.

“We’re working with other suppliers like ESS Compass, Blackwoods and Komatsu to make sure the machines we use, the clothes we wear, the food we eat and the camps we live in are more inclusive.”

BHP has also changed its approach to mining equipment by identifying solutions that both genders can use.

In Chile, for example, BHP has worked with tyre management company, Kal Tire, to introduce a program at the Spence operation where trained women can complete a task historically restricted to larger men.

“The program eliminated the need for physical strength as a pre-requisite for the role, making it not only safer, faster but also more inclusive,” Singh says.

Responsible (or ethical) sourcing, meanwhile, means three things to BHP ­­– policy, governance and collaboration.

BHP has set up Human Rights Centre of Excellence that the company works with to apply a human rights framework and policy statement for every transaction.

It supports the centre with a Global Contract Management System (GCMS), which ensures transparency and visibility of any risk. The system has revealed that 96 per cent of BHP’s direct suppliers are concentrated in 10 countries.

“According to Verisk Maplecroft’s Modern Slavery Index 2019, of these top 10 supplier countries of origin, only 2 per cent are based in high risk countries,” Singh says.

“We then work with a third-party auditor to conduct reviews across a range of labour conditions, including wage and working hours, workplace health and safety issues, environmental conditions and the frameworks in place to manage these risks.

“This level of transparency is making human rights a critical business consideration for anyone that wants to do business with us.”

BHP has collaborated with Dyno Nobel to invest in a blast technology research program that will improve the safety, productivity and sustainability of its Australian operations.

The partnership also represents a joint commitment to eradicate the use of palm oil in the explosive manufacturing process.

“And as you may know a recent and rapid increase in palm oil production, has resulted in an increase in deforestation – destroying habitats, displacing local communities and contributing to climate change,” Singh says.

“As a part of our agreement, Dyno Nobel will only use certified sustainable raw materials and products.”

From a climate change and sustainability perspective, Singh stresses that BHP wants to partner with people beyond the mine gate.

The emissions BHP’s customers produce from using its products are significantly higher than those from its operations, he explains.

BHP works with its suppliers and customers to reduce emissions from the transportation, processing and use of the company’s products.

“Ambitious emissions targets will only be achieved by a supply chain that allows us to collaborate with partners like Adelaide-based Voltra, who last year helped to develop the world’s first electric UTE, ahead of Tesla,” Singh says.

BHP views shipping as an area of its business where emissions can be significantly reduced, but it has not traditionally been a focus of sustainability initiatives.

The company’s maritime team has therefore taken a lead role in driving changes in industry to increase the focus on safety, environmental sustainability, innovation and efficiency.

In 2017, BHP and others collaborated with maritime risk management organisation, RightShip, to introduce a CO2 ratings system that moves charters towards ships with lower emissions.

BHP also released the world’s first bulk carrier tender for LNG-fuelled transport of up to 27 million tonnes of iron ore in July this year.

Singh says the work BHP does with suppliers demonstrates what’s possible when the industry partners, challenges and transforms together.

He believes they are the opportunities presented by a supply chain that connects with a more inclusive, responsible and sustainable version of ourselves.

“More partners not willing to exclude. More partners not willing to ignore. More partners not willing to accept. More partners committed to building a more ethical supply chain,” Singh says.

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