3. Company Overviews
PRIDE INTERNATIONAL
Headquartered in Houston, Texas, Pride International,
Inc. is one of the world's largest offshore drilling
contractors. Pride provides contract drilling and
related services to oil and gas companies
worldwide.
With approximately 4,000 employees, Pride offers a
multinational workforce with offices in the United
States, Angola, Brazil, and Saudi Arabia. We have
positioned our fleet in some of the world's largest
and most active exploration and production
basins. In 2010, Pride had $1.5 billion in
revenues.
Our fleet and operations currently consists of the
following:
5 Deepwater drillships
2 Deepwater drillships under construction
6 Deepwater Semisubmersible
6 Midwater Semisubmersible
7 Jackups
2 Managed deepwater units
UHY ADVISORS
Headquartered in Houston, Texas, Pride International,
Inc. is one of the world's largest offshore drilling
contractors. Pride provides contract drilling and
related services to oil and gas companies
worldwide.
With approximately 4,000 employees, Pride offers a
multinational workforce with offices in the United
States, Angola, Brazil, and Saudi Arabia. We have
positioned our fleet in some of the world's largest
and most active exploration and production
basins. In 2010, Pride had $1.5 billion in
revenues.
Our fleet and operations currently consists of the
following:
5 Deepwater drillships
2 Deepwater drillships under construction
6 Deepwater Semisubmersible
6 Midwater Semisubmersible
7 Jackups
2 Managed deepwater units
4. The Background (timeline)
Brought on as a Consultant for Pride International – to “Fix”
their Received Not Voucher backlog.
Hired on Full Time as the Process Improvement Lead
Myriad of Opportunities in the Procure to Pay Process
Enlisted Aid from UHY Advisors
Requested Full Blown Project to be initiated
5. The Challenge
Oil & Gas Company
Non Manufacturing
Vague or No Documentation of Processes / Procedures
Siloed Work
No Process Improvement Culture or Experience
7. Plan, Do, Check, Act
Identify Problem Statement / Challenges
Benchmark against Industry & Best Practice
Acquire Support from Leadership
Validate and Continue Data Gathering
Define Current State & Metrics
Create Key Performance Indicators
Evangelize and Socialize at all levels
Create Future State
Document the Future State – Process Maps
Pilot and Validate
Implement the Future State
8. Activity
Requirements Gathering
Planning & Analysis
Design
Workshop
Develop Future State
Pilot
Implement & Monitor
2010
APRJAN FEB MAR
2011
JUL AUG SEP OCT NOV DEC
Note: Business Gathering was over a span of 1 year prior to Project
Timeline
10. Problem Statement - Cost
Pride International: $30/ Invoice
In 2009, Pride had an opportunity to save over $8MM in prompt pay discounts.
Actual Prompt Pay Discount Taken: $0.00
The 30% rework cost Pride additional $50 per invoice
In 2009, Pride’s First Pass Yield for Purchase Order to Pay transactions was 70%.
Category
Annualized 2010 Invoices
to be Processed
PSC 16,432
Brazil 67,627
Angola 9,830
All Others 41,455
TOTAL 144,070
11. 15% of Purchase Orders are Cancelled
20% go through Change Order process
32% of PO Receipt fell into OS&D
20% of All Invoices Lost
Clearly Defined Process Map or Procedures did not exist
Lack of SOP’s or Desktop Procedures Transaction Oriented (Firefighting)
Problem Statement - Waste
Lacking Knowledge or Culture for Process Improvement / LEAN / Six Sigma
20% Re-Work Rate
Additional Costs
12. PO Mgmt
PO
Approval
Publish
PO
Receive
Material
Invoice
Receive
Voucher
PO
Pay
PO
Requisition
Queue
Understand Agree Document
Overall Cycle Time - Inefficiency
2 Days
Days a
Req sits.
Metrics are in “average” days.
7 Days
Conversion of
Req to PO
15 Days
Time to Approve & Publish 90 Days
Time Supplier
receives
approval to
Pride
receives
material at
K&N
24 Days
Supplier’s
Date of
Invoice vs.
Invoice
Received
Date logged
in E1
15 Days
Invoice
Received
Date vs. Date
Vouchered
7 Days
Lead Time for
Batching
Process &
Physical
Payment
Total Average Cycle Time = 160 Days
First Pass Yield = 70%
13. | Our World is Getting Deeper
Scope of Project
PO
Mgmt
PO
Approval
Publish
PO
Receive
Material
Invoice
Receive
Voucher
PO
Pay
PO
Level 1 Process Steps are denoted “LX.0”
L1.0 L2.0 L3.0 L4.0 L5.0 L6.0 L7.0
POMgmt
•Manual
•Auto
•Portal
•Change
•Cancel
•Blanket?
•Emergency?
POApproval
•Initial
•Changes
•AFE
•Non-Capital
AE
•Budget
Mgmt
PublishPO
•Manual
•Portal
•EDI
• Supplier
Acknowledge
ment
ReceiveMaterial
•K&N Process
•Pride
Process
•Recon
•PO
Status/Ship
InvoiceReceived
•Indexing
•Accruals
VoucherPO
•Voucher Log
•Normal
•3 Way Match
•No Match
•No Invoice
•No PO
PayPO
•Batching
•Approving
•Releasing
•Confirmation
14. • Direct Objectives:
Cycle Times – Reduce Cycle Times in the P2P process
First Pass Yield – Reduce rework or recycle of work (70%)
Streamline – Remove unnecessary steps or steps that can be
consolidated
• Indirect Objectives:
Reduced Costs (Rework of $300K)
Import Export Compliance
Increased Efficiencies (Lowest Credit Rating DnBi among
Competitors)
Meet Commercial Obligations (55% On Time Pay)
Improve Savings (2% Prompt Pay Discount $8MM)
Aligned with Internal Controls & Policies
| Our World is Getting Deeper
Project Objectives
15. | Our World is Getting Deeper
•Example Map
•Session Work
•Consolidation
Day 1-
Current
State
•Example VSM
•Session Work
•Consolidation
Days
2,3-
Value
Stream
• Session Work
• Internal Controls
• Consolidation
Days
4,5-
Future
State
Objectives
Understand Agree Document
SpiritTimeline
Off-Site Workshop
16.
17. | Our World is Getting Deeper
Service Team Maturity Model
Characteristics of the business process at each maturation
level include:
1. Initial
Initial learning phase for the team is determined.
Formal documented processes may not exist.
2. Repeatable
Informal, ad-hoc paths of communication are established.
A certain level of repeatability is attained.
3. Defined
Processes are well defined, documented, and standardized.
Repeatability and consistency is more commonplace.
4. Predictable
Integrated service management is present (e.g. quality controls,
audit controls, preventive measures).
Focus is on measuring and communicating processes at the
business level.
5. OPTIMIZING (targeted goal for a service department)
Departmental efficiencies are gained through refined
processes.
Errors are almost non-existent.
Initial
Repeatable
Defined
Predictable
Optimizing
18. | Our World is Getting Deeper
Identify Value/Waste
Using the
Current State
Map. Identify
activities within
the process that
can be
“improved”.
Level 1
Level 2
Level 3
19.
20. | Our World is Getting Deeper
Current State Result Mapping
Current State Mapping & Analysis
21. Value Stream Analysis Results
Minimize
Non-Value Add
RequiredActivity
Eliminate
Improve
Monitor
Value Add
Non-Required
Activity
AUTOMATE
Required as checks due to number of exceptions
Required due to immature processes
Required due to lack of closed processes
Required due to lack of communication
Required due to lack of policy enforcement
Total Activities Identified - 120
Required/Value Add 42%
Non Required/Value Add 0%
Required/Non Value Add 53%
Non Required/Non Value Add 6%
22. Total of 173 Improvements were identified to support our Process Maps and
Future State.
Shared Ownership with split responsibilities for Voucher Log and Received
Not Vouchered.
Training! Training! Training! Lack of knowledge/ enforcement on Policies
and Procedures has caused delays in the process or rework.
Poke Yoke – Error Proofing on front end rather than mid-stream checks and
reviews.
Close the Loop – Understand and own the process.
23. Ongoing Project Discovery
Policy Requirements – Integration into new SOP
Desktop Manual – Complete End to End
Process Maps – 23 New Process Maps
Sarbanes-Oxley 404 – New Controls & Integration
Training Requirements – Process / Technology
25. The Test Pilot
Three Buyers / 2 Expeditors / 2 Accounts Payables
Random population of Purchase Orders
Track them against old metrics
Period of One Month
26. KPI Improvements
Comparison to YTD 2010 vs. 2011 YTD Running JAN FEB
P2P Metric % Improvement % Improvement
REQ to PO Time (Days) 30% 15%
Approval Time (Days) 67% 57%
Supplier Shipment Time (Days) 51% 47%
Invoice Date vs. Received Invoice Date (Days) 79% 79%
Received Invoice Date to Voucher (Days) 80% 80%
Total Cycle Time % Improvement % Improvement
First Pass Yield [No Change PO, No Voucher Log] 37% 36%
Received Not Vouchered (in Millions) 60% 56%
Voucher Log (in Millions) 50% 67%
KPI Description % Improvement % Improvement
Line Items on Purchase Order that has uses a GIM number 2% 1%
Items in GIM that has classification data required for Export 39% 42%
Total Average Days Passed % Improvement % Improvement
NO Touch PO [Auto PO] 100% 100%
PO's with 3 Bids - exclud. Auto PO 60% 43%
27. | Our World is Getting Deeper
Instill the Culture
Current State
Future State
Q1 - Work Plan
&
Implementation
Q2 - Work Plan
&
Implementation
Q3 - Work Plan
&
Implementation
