Operational Excellence in Oil and Gas
•Download as PPTX, PDF•
1 like•891 views
Learn what Operational Excellence is and how to implement. Companion slides to the breakfast presentation by Mark LaCour with http://modalpoint.com on August 26 in Houston, TX to
Recommended
Recommended
More Related Content
What's hot
What's hot (20)
Viewers also liked
Viewers also liked (7)
Similar to Operational Excellence in Oil and Gas
Similar to Operational Excellence in Oil and Gas (20)
Recently uploaded
Recently uploaded (20)
Operational Excellence in Oil and Gas
- 1. Operational Excellence in Oil and Gas
- 4. Operational Excellence is Not New
- 5. Michael Treacy and Fred Weirsema
- 9. Operational Excellence Over 11 million packages a day delivered to over 220 countries with an on time delivery rate of 99.45%.
- 10. 5 Reasons
- 11. Upstream
- 12. Midstream
- 13. Downstream
- 14. Service
- 15. Talent
- 16. Operational Excellence is not Process Excellence
- 17. Definition of Operational Excellence Wikipedia describes operational excellence as “a philosophy of leadership, teamwork, and problem solving resulting in a continuous improvement throughout the organization by focusing on the needs of the customers, empowering employees, and optimizing existing activities in the process”.
- 20. Parts to Deploying Operational Excellence • 1. Where do you want to take your business? • 2. Building and implementing the road map to actually get there.
- 21. Most Don’t Get
- 22. Hardest Part in Oil & Gas (changing the business culture)
Editor's Notes
- Over 11 million packages a day delivered to over 220 countries and they do it without a hitch, achieving on time delivery of 99.45%.
- Over 11 million packages a day delivered to over 220 countries and they do it without a hitch, achieving on time delivery of 99.45%.
- And unfortunately because the oil and gas industry has a ton of engineers, when I say operational excellence most people think process excellence. Two totally different things. You need process excellence to successfully implement an operational excellence program, but you don’t need operational excellence to implement a process excellence program. Process excellence is a way to wring out inefficiencies in a process. Think Six Sigma, Lean, Agile, Kaizen and Business Process Management. They all address improving the process in some fashion, but they do not look at the entire organization from top to bottom. Nor do they address culture, change management, leadership or continuous improvement.
- Operational excellence is exponentially more impactful to an organization.
- If you’re a Chevron fan or if you work at Chevron, you have heard of The Chevron Way. The Chevron Way is “we’ll complete every task, the right way, every time”. That folks is operational excellence. And big old ship ExxonMobil is out there implementing operational excellence, which is allowing them a return on their operations three or four points higher than their competitors. This means Exxon can go places and either make more money than anybody else, or in places where other companies can’t make money, they can. All because of operational excellence. And DOW has their Operating Discipline Management System (ODMS) Services —
- And companies like McKinsey, Accenture and Bain & Company all have consulting practices around operational excellence in Oil and Gas.
- When you think of deploying operational excellence in Oil and Gas, it’s really a simple thing to figure out. It’s really just two main parts: 1. Where do you want to take your business? 2. Building and implementing the road map to actually get there The first thing I rattled off is where do you want to take your business? That sounds simple, but the answer is actually more strategic than you would think. You need to look at your entire organization, at all the opportunities in the market, your competitors, your company’s strengths and weaknesses, your existing talent pool, leadership and constraints, and then figure out with this identified sets of assets – where do you want to go? What makes the most logical sense as a destination when looking into the future? As Stephen Covey said, begin with the end in mind. The next part is that once you know where you want to go, how do you build and implement a roadmap to get there? Now this is where it gets much more complex, and coincidently where most companies fail. The first question you have to answer is, can you picture your mission critical operating processes, like accounts receivable? Can you literally visualize the moment that you send one of your clients a bill, what actually happens on their side? What paper trails, what systems does it have to be key punched in, what processes does that bill go through until you actually get your money? And then once you receive it, what keypunching and paper trails have to take place on your side for you to actually recognize that revenue? What is that process? And that’s one process in a company. Imagine if you take a large enterprise organization in oil and gas, somebody has multiple business units. You can see the complexity of just that one process multiplied by 1,000. But until you can map out and picture your critical operating processes, it will be impossible to look at efficiencies and improvement synergistically. Once you have that done, then you have to figure out functionally how do you operate? What parts of your business are key and most important which ones are less important so you have an order of progression. Once you can picture your mission critical operating process and you have an order of progression, the next question you need to answer is, what tasks or workflows need to be tweaked or changed to improve those operating processes? And then once you have that done, you need to implement a system to track and measure the progress (or lack thereof).
- And then (and this is part of the process excellence that a lot of people miss out on), you have to drive continuous improvement. So Operational Excellence Continuous Improvementthis whole thing that we’re building doesn’t have an end game. It’s continuously being improved and it has to be improved by the people that have their feet on the street, the people that run your day to day business. Which means your leadership team has to build and then support your employees adopting this culture of continuous improvement. This is not an easy thing to pull off. You’ll hear it a lot in HS&E in oil and gas where people say, well, anybody in the line can pull the trigger. Stop whatever is going on because of a safety risk. The reality is that’s not 100% accurate. What happens is if you’re that guy in the line and you pull that stop lever, you better have a damn good reason why you did or you get your chops busted. That’s not the right way to think about continuous improvement. You need to have the key people in organization being able to stop and reassess the process to see if it can be improved. Now I’m not saying that everybody in the organization can pull the stop lever for any reason. You don’t want a first year engineer right out of school to pull the trigger and stop $85 billion deep-water project. But he may have found something that your senior engineers didn’t see. So what you need is a change matrix in place, so that if something needs to be changed, the right people can verify it’s valid and then you can go ahead and improve the process. Once again, that needs to be an evolution of continuous improvement in the entire organization.
- So, once you build and you’re able to deploy that roadmap, now you come to the hard part especially in oil and gas. How do you change the business culture to ensure success with operational excellence in Oil and Gas? That’s a tough one, but it starts with leadership. Senior leadership has to buy into this lock, stock, and barrel. If they don’t, this will never be successful. And trust me, it will not happen if it’s an “order from the ivory tower”. It has to be authentic with 100% buy in by the executive team, and eventually every single person in the organization. Once senior leadership has total buy in, corporate communications strategies can be developed to speed up the process for the rest of the organization. FedEx pulled it off, so I see no reason that the Oil & Gas companies cannot do the same.
- Finally change management. You’ve got to figure out a change management process that works for your business, your culture, and your company. And then you can start thinking about things like high performance work teams, how do you get your people to do more and be happy to do so? Do more accurate work with less mistakes. That’s performance management and it’s a vital piece that comes in towards the end of your operational excellence journey.
- Cornerstone our gracious breakfast sponsor, has a successful track record of effecting both changing the business culture and change management. They have successfully helped other companies with defining business culture, aligning employees to organizational strategy, improving engagement and encouraging personal development. Plus make the most of internal knowledge to drive continuous improvement. Stand up Christine.
- In the very beginning I gave 5 reasons operational excellence in Oil and Gas is going to be a major business driver for the industry. But it’s also the perfect time in history for this to happen. The oil and gas industry is starting to embrace new technologies faster than I’ve ever seen it before. Our industry is facing global competition like its never have, because of the NOCs, the nationalized oil companies, big companies like Shell and Exxon and Chevron are running out of places to drill. Geopolitics are also playing a major part in this. One of the things I’m most proud of our industry, if you look at the efficiencies as being driven in the frac fields because of low crude prices, they figured it out. The good guys have figured out that they can actually make money at $50 a barrel. Two years ago they were barely making any profits unless oil was above $90 a barrel. Think about how far they had to come in 24 months in terms of operational excellence. We need operational excellence in Oil and Gas to be spread throughout the entire industry. And I think now is the time it’s going to happen.