Analyzing BHP Industries S.A.’s Opportunity for Multifaceted Growth Through Vertical Integration
Restricted (Penn State Only)
- Author:
- Excellent, Patrick
- Area of Honors:
- Supply Chain and Information Systems
- Degree:
- Bachelor of Science
- Document Type:
- Thesis
- Thesis Supervisors:
- Robert Alexander Novack, Thesis Supervisor
John C Spychalski, Thesis Honors Advisor - Keywords:
- vertical integration
manufacturing
flexographic prnting
label printing
international expansion
expansion - Abstract:
- BHP Industries S.A. is a personal care and consumer goods manufacturer based out of Port-au-Prince, Haiti. The company was started in 2006 and grew out of a closed family business which produced pasta and butter. Though the company still produces these items on a very small and seasonal basis, it has grown far from the company it sprang out of. Today, BHP Industries S.A. produces over 100 stock-keeping units (SKUs) with products including body lotion, shampoo and conditioner, laundry detergent, dish soap, vinegar, mayo, and much more. As the company grows, BHP wants to explore a few new business strategies. Firstly, the company would like to expand and diversify outside of just Haiti, as operating there results in many unpredictable risk factors. As the company looks to expand to the United States, this will also provide BHP with a basis to take the next step to expanding and selling in the U.S., the Caribbean, and Central America. The company is also looking towards vertical integration regarding its product labels. Currently, BHP orders labels from multiple suppliers from several countries. However, the company is looking to gain costs savings though supply chain and cost control for their labels. Uniting these two goals, BHP is looking to establish a label printing plant in Florida, with BHP as its first customer, and proceed to acquire many more customers and grow independent of BHP. Utilizing BHP’s label order quantities per label and their total label use, machine options for labels were evaluated. Through conversations with multiple suppliers, the best printing press for the situation was selected. Through evaluations of multiple Florida Industrial areas, Tampa proved the most beneficial location matching good costs with a good location. Additionally raw material suppliers were identified and costs evaluated, as well as flexographic print press operator job listings in the areas that were evaluated, providing a picture for how the printing plant project might turn out. Based solely on BHP’s consumption, the projected company is close to breaking even, while barely using its capacity and its allocated rent and labor costs. With increased sales, the company could very well move towards profitability within its first year.