What does the industry really think of Operational Excellence?
Article by Scott Lehmann, VP Product Management and Marketing, Petrotechnics
Operational Excellence (OE) is a global concept whose time has come. A recent survey of oil, gas, and petrochemical industry professionals, conducted by Petrotechnics, shows a growing consensus around operational excellence, what it means and the benefits it can bring to organisations in hazardous industries. When it comes to defining OE, participants in the survey were presented with the following description:
“OE is the pursuit of world-class performance. It requires everyone, from the boardroom to the frontline, to consistently make the most effective operational decisions, based on an integrated view of operational reality, based on risk, cost and productivity.”
An overwhelming majority – 98 per cent – agreed with that statement. Inevitably, some caveats were made: some people thought that ‘best possible’ was preferable to ‘world-class’. But a broad consensus was there.
That consensus continued when considering the value of OE. 92 per cent said achieving OE was important to the success of their business and only 13 per cent said that OE is a management trend that the industry doesn’t take seriously.
Understanding the benefits: Contained in the definition above are indicators of why organisations are taking OE very seriously: risk, cost and productivity. In its own OE study, Ernst & Young (EY) suggested that by reducing the growth rate of a company’s compound annual cost expenditure rate, OE could deliver staggering results. EY stated OE could reduce costs by up to 43 per cent and reduce the number of safety incidents by 43 per cent.
Survey respondents have taken these findings on board. Given a range of options, nearly two-thirds (63 per cent) said that the need to achieve greater cost efficiencies was key for achieving OE.
The same number said reducing operational and major accident hazard risk was a driver, while more than half (56 per cent) said optimising maintenance programmes was a key driver.
Making it real: In its earlier incarnations, OE struggled. The necessary tools were unavailable. But that too has changed: 92 per cent of respondents agreed that technology is an enabler for delivering sustainable OE in hazardous industries.
The key word here is enabler. Technology doesn’t replace skilled or experienced people. It supports and enables them to make the best decisions based on available evidence.
This view is reflected by 56 per cent of survey respondents who said a key driver of their OE programme was influencing cultural and behavioural change. And 31 per cent said that OE was driven by everyone in the organisation. This is a ‘boardroom to frontline’ effort not just another programme sponsored by the C-Suite.
Enabling people: This is important, because until now one of the things that prevented organisations from achieving OE is the way information within an organisation remains fractured and provides a limited view on what is happening at any given point on an asset.
If everyone is to make more effective decisions, they need an integrated view of operational reality – in real-time. Technology tools that effectively support OE give everyone from boardroom to frontline that all-important global-view of their operations. Personnel can know what’s happening, where, and when – and equally, what’s driving risk.
Delivering success: There is urgency about the adoption of OE tools, because the amount of data that is available and will need to be parsed, shared and understood is growing rapidly.
Today, 47 per cent of survey respondents are already using data analytics to support OE, and 31 per cent are using predictive or prescriptive analytics. 11 per cent are using Industrial Internet of Things (IIoT) technology now – but twice that number plan to in the future.
Scrapping silos and connecting data gives everyone enterprise-wide the information they need to make better, safer and more informed operational decisions. That is the long-promised, tangible business advantage of OE. It’s time to lower maintenance costs and increase production, reduce risk to people, plant and profit. And the good news is that the industry agrees!
Thursday, April 6th at 08:45 - GE Oil & Gas, Enagas, INPEX Corporation and KOGAS will be discussing “Delivering Greater Efficiency & Cost-Savings through Improved Innovation & Technology” at Gastech 2017. Click here to view the Gastech conference programme.
More on gas and LNG:
- Interview with KBR on gas & LNG projects – Cost, innovation and progress
- How benchmarking improves LNG terminal asset management performance: A case study from Europe