Attaining and Sustaining Operational Excellence: A Business Case
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Transcript of Attaining and Sustaining Operational Excellence: A Business Case
Copyright © 2016 The Rapid Response Institute LLC. All Right Reserved.
The Rapid Response Institutewww.theRRInstitute.com
“Meeting the Challenges of a Volatile World”
Attaining and Sustaining Operational Excellence:
A Business Case
Scott M. Shemwell, D.B.A.
The Rapid Response Institute• Scott M. Shemwell, D.B.A.
o Career in Upstream Energy Services and use of IT• Former member of Halliburton Energy
Services Leadership Team• Former Oracle Executive• COO of small public energy services
companyo Early in DOFo Technology Sales to Petroleum Industry
• 30 + Years• More than $1 Billion in Revenue
Generatedo Author and Speaker on the global stage
• Enabling our clients to posture themselves in their market segments so that they can thrive in volatile markets and capitalize on uncertainty, not suffer because of it
• Organizational Agility, Resiliency, Sustainability
www.theRRInstitute.com www.OARS360.com
DisclaimerThe views, opinions, positions or strategies expressed by the author and those referenced organizations and/or individuals are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of the conference organizer and affiliated organizations, sponsors, The Rapid Response Institute LLC, or any employee thereof. The author make no representations as to accuracy, completeness, suitability, or validity of any information contained herein and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its use.Moreover, the author does not endorse any of the organizations or products referenced in this discussion. Links to their web sites are provided only as a courtesy for those interested in additional information/research.
While much of the material has a USA focus, the same issues are being address globally!
Discussion Points• Define Operational Excellence• OE Characteristics• Attaining OE• Risks of Not Attaining OE• OE Value Proposition• Use of Technology• Change Management• Final Thoughts
“Operational Excellence is a methodology helping organizations grow and sustain
operational standards in today's environment of government regulation and consumers',
communities', and NGOs' expectations.”
- Society of Petroleum Engineers
Operational Excellence Criteria
OE Matrix
Value from OE• World-class operational execution can add up to 30 percent of
value to the production asset base.• Up to 80 percent of costs are upstream project time issues,
e.g., optimizing equipment, material and facilities, and delivery times.
• 50 - 75 percent are engineering productivity constraints, such as frequent and last minute project change orders, and “weak-performance cultures and broken leaning curves.”
- McKinsey
Risk Mitigation
Risk of Not Attaining OE
• Safety• Competitive Landscape• Loss of Business Opportunities• Stock Price
Systemic Risk Management• Systemic vs. Occupational Only
o Systemic• Human, Machine, Process, Environment
Interface• Holistic - More than Fault Tree Analysis• Linkages are Weak Points
o Include Supply Chain Linkages• The Best Perspective
o Occupational• Simplistic• Slogans and OSHA “like” reporting• Good not Great (or acceptable today)
• Systemic is ONLY Viable Approacho Real Time Systems (Smart Equipment)o Appropriate Human Trainingo Human Factors & Behavioral Economics
Human Systems Integration
Typical Operator Operations Management System (OMS) Policy
Operations Management System• More than a Website or Policy• More than a Checklist• Seamless across the Supply Chain• Standards & Regulations in the
Work Flow• Cloud-Mobility Enabled• Automatic Audit• Risk Mitigation• ISO/IEC 17021 – Conformity
Assessment
90% of field operations personnel are contractors
Today’s Major Critical Issues• Significant Crude Price Decline
o Severe Financial Crisiso Large Reduction in Force
• Operational Excellence is a Focuso Pressure on Management and Technical Staffo Layoff Results in loss of Key Industry Knowledgeo Merger & Acquisitions
• No Relief from Regulators or Publico Culture of Safety is Mandatoryo All Economic Participants ~4,500 companies
Some Key Trends• API RP-75 Recommended Practice for Development of a Safety and
Environmental Management Program for Offshore Operations and Facilities Updateo Contractor Managemento IT / Cybersecurity
• Operations Management Systems Emergingo Competency, Safety, Cost Reduction
• Technology Development Continueso Water Management
• Mergers & Acquisitions• Disruptive Big Data
o $115 million in 20 VC oil & gas deals in 2015
Oil and gas is one of the last giant industries yet to be fundamentally disrupted," said Reid Calhoon, RunTitle's chief executive officer.
Enabling Technology
Background• OARS360 is a Spin Out of The Rapid Response Institute—focus
on Operationso True Operations Management Systemo SEMS Regulations Enabledo Culture of Safetyo Cloud/Mobility
• Third Generation—developed with Industry
90% of field operations personnel are contractors
Compliance Management
Risk Mitigation
Ensuring Safety
Driving OperationEfficiencies
Study: Actual costs are 4X engineered projections
Violations: 1667 in 2011Reported: 545 oil field deaths (2008-12)
Estimate: $200M negative impact on companies
O&G Field Operations - ChallengesOARS360 – Operational Agility & Resiliency System
Collaboration
DocumentManagement
Maintenance Management
Asset Management
ERP
Complexity Creates Opportunity
Existing solutions limit operations effectiveness
Oil & Gas Field Operations today:
• Extending/leveraging existing tools • Managing Spreadsheet checklists
Resulting in the following problems:• Critical field operations data in silos• Manual consolidation/reporting • Limited actionable information• Operations lacks real time visibility Field Operations
Firewall
Empl
oyee
s
Contractors
Collaboration
DocumentManagement
Maintenance Management
Asset Management
ERP
Value Proposition
Providing a comprehensive 360⁰ view of operations
Field Operations
Firewall
Empl
oyee
s
Contractors
OARS360 is a Operations Management System (OMS) that: • Interfaces with all existing tools • Provides real-time reporting and visibility• Maintains audit history of all field activities
Delivering the following benefits• Real time actionable information• Improved operational efficiency• Compliance management • Enhanced safety of field personnel
OARS360
Demonstration
Change Management
People Resist Change
Or Do They?
Change Management• Defined Process• Three Step
o Initialo Stagedo Sustained
• Specific to ME!• Cross Culture Negotiations• Resistance Management• Online/Game Version Available Soon
Towards a Culture of Safety/OE• Competency Assurance
o More than Just Trainingo More than Record Keepingo Organizational Commitmento Demonstrable
• Change Management is a Proven “Iterative” Processo Awareness & Educationo Pilot Projectso Wide-Spread Integration
• Good Practices Availableo Inside industryo External
The Way We Do Business!
Implementation GuidelinesTransformationSustaining
Self Assessment GuideQuick Assessment anyone can conductTen Minutes or Less
Final Thoughts• Operational Excellence is not an Option• Documented Shareholder Value• No Reason Not To
o Best Practiceso Technology Enablers Available
• OE Financial Model (EVPM) Soon• Work Flows as Knowledge Management
o Drillingo Human Factorso More to Come
References Cited• SPE definition of Operational Excellence• Bain Report• McKinsey OE Paper• McKinsey Offshore Paper
Codicil• Books available on Amazon• PennEnergy Governing Energy Blog• Take the Culture of Safety
Self Assessment• Monographs• See Our Website for Links
www.theRRInstitute.com
Contact• Scott M. Shemwell• [email protected]• www.theRRInstitute.com• www.OARS360.com • +1.281.414.6958