Proposal for Developing Value Chain Model for Rio Tinto Group

1.0 Introduction

Cordon et al. (2012) argued that majority of business organisation in business sector tries to gain the competitive edge within their own competition. Therefore, value chain model in supply chain management process is an important and effective aspect that allows the organisation in developing competitive advantage. Apart from that, Drake (2012) cited development of value chain model not only helps in gaining the competitive advantage but also provide the greatest value to consumers. However, value chain model involves within the entire operation process and improve the manufacturing as well as production of the company. It is also one of the important aspects of improving business process with low costs and ensures the consumers get each product according to their demand.

This particular study propose the value chain model for Rio Tinto group in terms of increasing their production and delivers better service to the consumers. Through the entire study, researcher describes the way of developing value chain model within the organisational process of Rio Tinto Group.

1.1 Background of the company (Rio Tinto Group)

In the world, Rio Tinto is one of the famous mining groups that focus in mining, processing as well as finding the mineral resources. The vision of the company is to develop the large customer base and deliver service throughout the world. The CEO of the Rio Tinto Group Sam Walsh said that the goal of the company is to deliver sustainable and string shareholders from the globalization aspects through the compelling pipeline of projects. The company focus on long term development and designing the discipline approach throughout their lifecycle (Riotinto.com, 2015). Apart from that, company also focuses in delivering the vale that make the operation capable as well as in low costs service. Drake (2012) stated that mining industry is cyclical. Therefore, in order to sustain within the mining industry, Rio Tinto Group firmly focus on delivering low prices service. Moreover, the company also focus of strong supply to consumers of their products. In terms of sustainable shareholders returns towards the business of Rio Tinto Group, the management underpinned the consistent strategy through six value drivers that creates the platform for ongoing success –

Value Drivers	Description
World Class Portfolio	World class assets is the heart of the portfolio. The main assets if the company are hydropower aluminium smelters, diamonds, mineral assets , etc
Quality Growth	The company has compelling pipeline of longer and near term dated for the project
Commercial and Operating excellence	Te company focus on safety of their core people.
Balance Sheet Strength	In order to maintain the robust sheet, the company gearing the ratio of 20 to 30 percent of their aims.
Capital Allocation Discipline	The company make primary contract with their shareholders in terms of dividing the progression
Free Cash Flow Generation	Recently the company make improvement within their business process such as increase the productivity 12% rather than their last productivity, delivers incremental volume through developing high quality project, increment the expansion of volume, etc

Figure 1: Official Logo of Rio Tinto Group

(Source: Riotinto.com, 2015)

1.2 Aims and Objectives

The main aim of this project is to develop the concise ad clear conceptual value chain model for the Rio Tinto Group that increase the performance of the company. Therefore the objectives of this project are –

• To identify the effective value chain model for business
• To establish a clear value chain model for Rio Tinto Group that support their vision

1.3 Questions

Following will be the questions in terms of developing the concise and clear value chain model for Rio Tinto Group –

• What are the effective supply chain management models for improving business performance in business organisation?
• What will be the effective value chain model for improving performance and productivity for Rio Tinto Group?

1.4 Rationale

In order to increase the productivity and growth of the business, organisation has to improve their supply chain management process. It is not only helps in providing effective customer service, but also helps in increasing the competitiveness within the business scenario. Therefore, for the business process of Rio Tinto Group, the process of developing value chain model has been selected in terms of supporting their current business strategy of providing strong as well as high quality service in mining industry.  

2.0 Literature Review

Lean Manufacturing

Halldórsson and Svanberg (2013) argued that in order to develop the value chain model within the business, lean manufacturing is the most important and effective aspects. Implementation of lean manufacturing helps in considering the effective probability of delivering the products within time. Lean manufacturing supply chain management process helps in developing the automatic process that deliver service to appropriate customers. Kayakutlu and Büyüközkan (2010) cited that lean manufacturing increasing the products or service reliability as well as quality. According to LUSCH (2011) lean manufacturing also concern the profitability for company. Implementing the lean manufacturing process within the business, organisation can able to improve the quality performance, breakdown process, inventory management process, higher profits, customer satisfaction through greater way, employee morale involvement and improvement, etc within their business.

Total Quality Management

Narasimhan and Narayanan (2013) presumed that Total Quality Management is an effective approach that helps in originating the attitude, cultural aspects, organisational current operational process for providing better service to the customers and meeting their requirements. Olson (2010) opined that in order to improve the business process and increase the performance of the company, waste reduction and time management along with attitude, allows the organisation in developing the effective as well as efficient service providing to the customers. However, the philosophy of total quality management integrate the all functions of the organisation including finance, marketing, designing, production, customers service, service delivery, engineering, researcher & development, etc. On the other hand, ROSSETTI and DOOLEY (2010) opined that Total Quality Management is one of the most effective and efficient way of meeting consumers needs and their demands. It mainly focuses on the organisational objectives. Following table demonstrates the principle of total quality management that helps in engaging better delivery of products as well as services –

Options	Description
Employee empowerment	Total quality management allows the organisation in providing training to the staffs and through the suggestion scheme. Apart from that, recognizing the staff in a way and measuring their performance, Total Quality management allows in developing an excellence team.
Management Commitment	Total Quality Management supports to the initiatives of management within operational process of the firm and suggest the participants to build effective work schedule. Total Quality management allows the staffs in management board in communicating with the staffs of the workplace and recognize them in a effective way
Customers Focus	Total Quality Management process helps in focusing on the supplier’s partnership and never compromise with the quality. Moreover, Total Quality Management creates the ability of customer driven standards. It also allows in making effective service relationship between the customers in both internal and external.
Continuous improvements	In terms of continuous improvement, total quality management provides a systematic approach through focusing on the CONQ. It is also helps in building the excellence team. Moreover, it attain, maintain and improve the standards for organisation.
Decision making based on current facts	Total quality management analyzed the current situation of the respected company and make the decision that helps in improving customers. For example, the customers of Apple demands for new products. The developed value chain model helps in making the decision for providing new model of phone to customers.

3.0 Documentation of best practice of discovering supply chain management process

Total Quality Management

Rio Tinto Group is one of the most popular organisations in mining industry. The organisation is already established their through providing higher quality service to the customers. Therefore, in terms of developing the value chain model for maintenance of quality services and goals of the company need to involve the total quality management in their supply chain management process. Total Quality Management allows the Rio Tinto Group in developing dysfunctional structure that accelerates their business. It helps in rectifying the issues or mistakes within operation that changes the system of service delivery in Australia especially in mining industry (Svensson, 2010). In mining industry, TQM break the system in different vulnerability and minimized problems.

Apart from that, TQM increase the flow of product development in Australia through controlling the complexes. On the contrary, Song (2012) acknowledged that Total Quality Management is the key aspects of collection process of an organisation. There are several activity of total quality management such as minimizing the development life cycle time, fulfil the demand of consumers, line management ownership, celebration and reorganization, team improvements, improving facility through system, proper incorporation for strategic planning, etc.

4.0 Summary

This proposal summarized the different aspects of developing clear and concise value chain model for Rio Tito Group. However, describing the different models of supply chain management, explained the appropriate model named Total Quality Management that would be effective and efficient for Rio Tinto Group. TQM is the better process of delivering products and service throughout the nation as well as global. TQM is also help in amends the marketing strategies and engage modern management practices for Rio Tinto Group.