Rising in prominence, operational excellence is seen as key goal by every company in the region
Rising in prominence, operational excellence is seen as key goal by every company in the region. Oil&Gas Middle East found out what it means to key industry players.
Oil and gas companies are operating in very demanding times. A lot of pressure is exercised on experts to maintain optimal production levels, while increasing recoverable reserves and minimising unplanned downtime.
Meanwhile, the industry has also been faced with the challenge of improving the use of technology within the different sectors, while creating better health and safety working conditions for the ultimate purpose of successful execution of projects.
A global imperative for oil and gas companies, operational excellence (OE) has recently become particularly topical in the Middle East.
It was timely, therefore, that representatives from national and international companies convened to discuss the benefits of achieving OE, as well as the challenges that come with it at the second edition of the Operational Excellence (OpEx) conference in Abu Dhabi last month.
Naturally, different companies would have different gaps within their organisations and different targets to meet so the definition of what OE exactly means would vary widely.
Overall, it is used by the industry as an umbrella term to describe a must-have, all-encompassing management system for ensuring that all of the organisation’s different objectives are met and operations run smoothly with the highest, most optimal performance.
At the two-day gathering, people management and the issue of compliance and commitment within the work place emerged as the main hurdles to achieving excellence in operations. A lack of discipline among staff, experts admitted, was a widely observed, underscoring problem that companies face in their quest to improving performance.
“We don’t use the words ‘operational discipline’. We simply say always do the right thing the right way. The right thing is doing the maintenance job according to the work order. The right way is to do the job properly following procedures,” said Mark Hodgkinson, head of Operational Excellence, BAPCO.
Despite having a set OE definition in place, not everything appeared to have been done the right way as inconsistencies and gaps in different sectors would surface on a regular basis. That was the time to look into the shortcomings and explore the options available to remedy them.
“We had a staff compliance issue,” Hodgkinson explained. “We had the systems, but we were not achieving our objectives. The links between the processes were not too strong. We had a maintenance system but people were not filling in all the fields properly so at the end of the job not every work order had the failure codes. Not every incident investigation was filled out completely and had all the tenets, and processes.”
However, a lack of compliance among staff was just one side of the problem. BAPCO also had to address the fact that the company was using an unwieldy, non-automated system which in turn would deter management and efficient communication.
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“Even though our leaders could go in the field, they could not go with meaningful information. It would take quite a long time in the maintenance world to ask the planner to run a report to get all this data,” said Hodgkinson.
A research paper by Bain & Company suggests that inefficiency in operations can lead companies to lose 10% of their production capacity.
The most common reasons for having inefficient operations is often due to a lack of transparency between different systems and inadequate IT infrastructure for alerting managers to equipment which needs repair or replacement. This in turn further stymies the company’s ability to optimise production.
Experiencing the same setbacks themselves, BAPCO decided to adopt a new automated management system seeing it as a joint solution to both staff compliance and out-of-date data records. Hodgkinson said the company’s benefited immensely from this system which increased its OE by engaging key personnel, improving interaction and supplying fast and accessible data to managers and leaders.
“We saw our leaders being the vectors to achieving operational excellence. Giving our leaders the tools accelerated the process. We could have done it without it but it would have taken longer,” he added.
In times of more and more companies adopting automated OE management systems as means to achieve OE, BAPCO’s success story comes as no surprise. However, for companies which have embraced the technological revolution, the biggest challenge now is how to handle successfully mounds of data and equipment with its own reliability issues, which in turn overwhelms the personnel and causes substantial risks to operations running smoothly.
Geoff Fennah, OE manager at S-CHEM, alongside many experts in the industry, is not quite convinced that the implementation of these systems alone can guarantee excellence in performance. That is why he and his company have taken a more people-centric approach in their efforts to improving operations.
“We have tried to reinforce leadership from top management in operational discipline and especially visibility in the field. We call it ‘management by walking around’. We encourage our managers to go into the field, talk to people and engage them,” he said.
To Fennah, building a team culture within the company is central to achieving excellence in operations. S-CHEM has also recently commissioned a leadership and development crew to look at training programs, understanding and what needs to be improved. At the moment, the company is using a somewhat ‘better-be-safe-than-sorry’ technique.
“Operational excellence training is conducted by our senior vice president for manufacturing. At the end of that training, he gives authorisation to everybody that they have the right to stop work or a job if they feel something is wrong, or that they don’t understand what they are being told He would rather they stop what was happening, regroup, rethink and then proceed,” said Fennah from S-CHEM.
“The challenge will be managing going forward, managing change of personnel, systems, training and tactics especially in the Gulf where, there is always high turnover, where we have a multinational work force and people who move a lot more frequently.”
There is a plethora of different OE technology and approaches used in today’s oil and gas market. However, adopting advanced software to optimise operations is only one piece of the puzzle, as Heitham Al-Yahya, cost engineer at Saudi Aramco, explains: “What is needed is to bridge the gap between current practice and minimum requirement of the selected baseline operational excellence’s processes.
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“Technology can be utilised to automate the OE tools and techniques but as a subject it is not significant to implementing operational excellence and cannot impact the core of operation excellence,” he adds.
Saudi Aramco, which has an elaborate top to bottom OE strategy, places more importance on people management than use of technology. “What is required is a change in the working environment and the behaviour and understanding of the employees to adapt to achieving operational excellence. It is much more about educational, managerial and quality management functions than utilising software,” said Al-Yahya.
Speaking at the OpEx conference Gideon Rutherford, who is a senior associate at Strategy& said that understanding your work culture plays a crucial role in adopting not just any, but the right OE system for your company.
“We define operational excellence framework which starts with leaders and vision on what they want to see from the OE model that they will implement. That then needs to be supported by principles and expectations universally reflected across all operational excellence activities, which is translated into management systems and processes,” he commented.
“A final critical element is how this is enacted on a ground level, how it’s implemented by the frontline of the organisation - that is what we define as culture and behaviours. It’s the way people work in their day to day activities and how critically the processes and systems which have been defined work in ordinary activities.”
According to Rutherford, people management and understanding the work culture in place are absolutely vital to running a working OE model.
“In operational excellence it pays to work with your culture, not against it. So designing processes without understanding the underlining operational culture can often doom the process from the outset. Secondly, it pays to focus on a few critical behaviours that purvey operational excellence across the board. Thirdly, generating commitment, rather than compliance, although compliance is clearly important, can lead to real benefits,” he said.
In order to truly achieve operational excellence oil and gas executives should focus on both adopting the right management systems and instilling commitment within their companies’ work culture.
It is also of pivotal importance for companies to adopt the human-asset perspective, through which the retention and successful management of employees are seen as equally important as following the company’s business drivers and strategy for growth.
The strife for operational excellence in the oil and gas industry is not new. However, it is a continuous process, which regardless of how close companies are to achieving their set targets, does never quite come to an end.
As the industry progresses and more projects get off the ground, stakes are getting higher and so is the benchmark for success.