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Operational Excellence
The Path to Operational Excellence
through Operational Discipline
Brian D. Rains
Global OpEx Practice Leader
May 15, 2015
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What is Operations Excellence?
Operations Excellence is:
“The application of principles, systems and tools to engage and focus everyone’s efforts on meeting customers’ needs and continuously improving process performance.”
Said another way, Operations Excellence requires both:
1. Minimization and management of downside risks (prevention of incidents that negatively impact safety, the environment, assets, supply chains, right to operate, reputation, communities, etc.)
2. Maximization of operations’ performance and value creation
“Prevent Value Destruction. Maximize Value Creation”
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The First Step is to Prevent Value Destruction
Operational Risk Management is an integrated system that identifies, evaluates, and controls a manufacturing process’ operational risks in a way that catastrophic incidents are prevented that could impact:
• People – the public, employees and contractors• The Environment – local community / work sites• Business – lost assets, business opportunities, loss of
customers, loss of shareholders
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1. Management Leadership & Commitment
2. Build a Safety Culture
How DuPont Manages Safety and Risk
3. Implement ORM Program
Operations Risk Management Model
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1. Management Leadership & Commitment
2. Build a Safety Culture
4. Operational Discipline
How DuPont Manages Safety and Risk
3. Implement ORM Program
1. Leadership by Example
2. Functioning Capability/Sufficient
Resources
3. Employee Involvement
4. Active Lines of Communication
5. Strong Teamwork
6. Common Shared Values
7. Up to date Documentation
8. Practice Consistent with
Procedures
9. Absence of Shortcuts
10. Excellent Housekeeping
11. Pride in the Organization
12. Risk Sensitivity
13. Innovative, Agile, and C.I.
14. Just & Fair
Operational Discipline Characteristics
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What is Operational Discipline?
Organizational View
The deeply rooted dedication and commitment by every member of an organization to carry out each task, the right way, each time.
Individual View
I am committed to working safely by doing every task, the right way, every time.+
Everyone
Individual
Operational Discipline
Organizational
ORMExcellence
Does It Right
Every Time
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The Case for Operational Discipline
Do you experience incidents when failure to have or follow good procedures is an important cause/contributor?
OD Involvement in Year 2000 Incidents
Yes53%
No47%
• In 2001, DuPont initiated a Six Sigma project to assess causes for significant Process Safety Incidents in 2000.
• OD was identified as a dominant factor in 53% of the incidents.
• In 2010, this percentage was 32%. In 2012, it was <10%
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Visible Felt Leadership, demonstrated commitmentClear, meaningful policies and principlesHigh standards of performance Challenging goals and plans
Supportive staff Line management accountabilityIntegrated team structuresPerformance measurement
Effective communication processesLearning & DevelopmentRich content, Proven Best Practices Effective assessments and re-evaluation
Strong Leadership
The best system in the world, poorly executed, is worthless
Appropriate Organizational
Structure
Focused Processes and
Actions
People-
Driven
Operational
Excellence
The Second Step is to Maximize Value Creation DuPont’s experience is that People drive Operational Excellence
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Operations Excellence is being achieved by DuPont and by our Clients through an integrated Production System
Focus on what really matters, with the right
People
The right tools and practices to solve root
level problems
People instinctively
doing the right things
People with the right skills and coaching
Mindsets and Behaviors
Role modeling/ coaching dialogue/ difficult
discussions
Capabilities Engine
Technical Model
Managing Process
Delivery example
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Current and
future
requirements
For capability
and
performance
Required Business Outcomes
An integrated system that fully develops People and organizational capability for effectiveness and creativity in utilizing assets and eliminating all waste
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Places to Change System Performance (1)
The Ability to Change Mindsets Visioning, Creativity, Flexibility – Systems Thinking
Understanding the Goal of the System & the Mindset Behind It
Guiding principles and what the system should be Knowing what the system wants to do
The Rules that Set Up the System Power to self-organize, improve the system Incentives and taboos
The System Drivers Information flows Changing the strengths of feedback loops Shortening / lengthening a time delay
Parts (Parameters of the System) Increasing some buffer or cushion Amount of current price, tax, subsidy
Higher Leverage
Lower Leverage(1) Leverage Points concepts by Donella Meadows (Sustainability Institute)
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Influence Model11
"I will change my Mindsets and my Behaviors, if ..."
" … I have the skills and confidence to behave inthe new way"
Skills and competencies
Understanding and commitment
"… I know why I need to change and in what way”
"... the systems reinforcethe desired change "
Aligned formal systems and structures
Role-modeling
" … I see my leaders behaving differently"
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Critical Mindsets Changes Before Starting
Openness to change and focus towards the future
Commitment to visibility and transparency
Willingness to prioritize and make choices
Action orientation – 60/40
People are not the problem
Accountability as personal choice
“Everyone, Everyday”
An expectation and explicit request that everyone must constantly strive to improve their skills and capability and performance
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Is Operational Discipline consistent with what is necessary to achieve Operations Excellence?
Poll Results:
During a recent conference, ~100 Operations and Safety Leaders were asked how well they agreed with the following statement:
‘Operational Discipline is a limitation to an organization’s ability to be agile and innovative’
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Is Operational Discipline consistent with what is necessary to achieve Operations Excellence?
Poll Results:
During a recent conference, ~100 Operations and Safety Leaders were asked how well they agreed with the following statement:
‘Operational Discipline is a limitation to an organization’s ability to be agile and innovative’
12%
12%
14%
59%
OD Limits Agility & Innovation
Strongly Agree - 12%
Somewhat Agree - 12%
Neither Agree nor Disagree - 3%
Somewhat Disagree - 14%
Strongly Disagree - 59%
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Panelist Comments
During this same conference, 4 panelists made the following comments:
• Operational Discipline releases time, energy and resources
• Operational Discipline is an essential ingredient to moving up the curve to Operational Excellence• Operational Discipline equals brilliance at the basics
• A good OD culture is when employees exhibit strong teamwork, a high degree of pride and housekeeping tends to be very good
• Today, the leadership we are looking for is the leadership that lies within our operators, within the people on the front lines
• It’s all about leadership. Leadership sets the tone. Leadership creates the culture. If the culture isn’t what you want, you have to change it
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DuPont Sustainable Solutions Case Study
SIBURSIBUR is the Largest petrochemical company in the Confederation of Independent States, Central and Eastern Europe
2013 sales of over $8 billion USDUSD, 27 production locations in Russia, as well as several joint ventures with major international companies in Russia and abroad
Founded in 1995, it rapidly grew into a holding company with numerous largely independent entities through a number of mergers and acquisitions
Company’s extremely fast growth has brought its own challenges. Senior management recognized that there were significant competitive gaps compared to world-class companies outside of the home market
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Challenges To Becoming World Class
Condition of SIBUR assets and the ability of the organization to improve and sustain performance
Fragmented structure as a result of operating as a very large holding company with 50,000 employees spread across 27 operation sites made operational control challenging
Need for transformation of the organization to a single corporation with a recognizable, unifying culture and highly engaged people
1
3
2
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Client’s needs Key questions & Approach Benefits
Design & implementation of an Integrated Production System for world-class operational performance
Operational performance improvement to be competitive in international markets
Maximizing returns from its existing portfolio of assets
Improving operational competencies
A sustainable roadmap with significant year-on-year payback that enables delivery of the business objectives
Significant increase in the daily production at the sites
Palpable cultural change towards an aligned and productive culture
World-class operational practices and culture in development
Key questions & Approach Benefits
Cultural Alignment
How can the organization accelerate progress towards operational performance goals?
Production System Design
Production System
Deployment
Executive leadership alignment around operational objectives
Leadership Development
Establish long-term operational goals
Establish case for change
Management process
Culture transformation
Capability building
Diagnose & improvement tools:
Operations Energy M&R Lean manufacturing
technology Safety
Sites implementation through structured approach: diagnose, implement, sustain
Focus on value release, optimizing existing process activities
Leadership, teamwork and problem solving empowering employees, driving cultural change
1 2 3
How can operations efficiency and effectiveness be improved in an integrated and sustainable way?
How should operations organize itself to ensure alignment and operational discipline in executing the corporate and business strategies?
Operational Excellence: Production System Deployment
SIBUR’s needs
World-class operational performance
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Results Acheived By The End Of 2013
Value of improvement projects has more than doubled
Reduced lost time injuries by 40 percent
Financial benefits estimated at 20 times the investment in consulting
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Sibur Feedback
Vladimir Razumov, Deputy Management Board Chairman and Executive Director of SIBUR
Vasily Nomokonov, Managing Director, SIBUR
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Source: The Conference Board, CEO Challenge, 2013
Operations Excellence is one of the most important issues for CEOs globally
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Benefits across operational value levers that companies realize*
1. Productivity & Quality improvements
2. Improved Maintenance and Reliability
3. Improved Safety and footprint reduction
4. Supply Chain Efficiencies
- Capacity release- Increase high quality product - Waste reduction
- Reduced downtime- Increased predictability- Reduced breakdown
- Maintain right to operate- Mitigation of injuries & incidents - Reduced energy consumption- Alternative energy sources
- Improved purchasing process- Reduced stock of raw material, MRO & finished
product- Reduced transition loss / waste
* Results extracted from individual cases. Actual results may differ according to their specific circumstances
Operational Excellence Value Proposition: The Benefits & Value
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