Insights and News /

28 September 2017

Transformation agenda no.1 in oil and gas: “Be lean”

Birte Fehse

Birte Fehse
Senior Manager | Energy, utilities and resources | London

We previously talked about the pressure oil and gas companies are under in the face of lower oil prices, increased competition and negative public perceptions and encouraged focusing on three agendas: “Be lean”, “Be nimble”, “Be great”. Here we will examine the “Be lean” agenda.

“Be lean” is about using the most cost-effective way of achieving organisational objectives. Over the years, the industry has spent millions on Operational Excellence (OE) programmes, but problems still exist around inconsistent ways of working, low performance visibility and unrealised benefits.

Opportunities abound, but the road to success is strewn with past failures. The industry is lagging behind in adopting technologies, partly because few processes lend themselves to the same level of automation, partly because the main product is highly flammable hydrocarbon. The latter argument is sometimes used as a defensive shield and showing that a rigorous safety management process exists is critical in overcoming resistance to new technology and innovation.

We believe that OE can be supercharged by coupling it with new technologies and a mind-set that challenges the status quo. Digital platforms have given us the ability to collect, connect and manipulate data more easily. Analytics provide us with ever-greater insights, and Artificial Intelligence (AI) and machine learning are transforming the way we work. Robotic Process Automation (RPA) is driving rapid cost reduction by automating high-volume, repetitive processes. Leveraging these on lean, user-focused processes can produce transformative results.

New technology is like a shiny new toy: everyone wants to get stuck in as quickly as possible – especially when it is relatively cheap and easy to configure.  But the hard work lies upfront. We encourage clients to invest generously in understanding business requirements, defining optimal processes and analysing the change impact before getting started.

The two areas to really concentrate on are set out below:

1) Relentless focus on lean, user-focused processes
Being the person who implemented a robot is undoubtedly more exciting than being the person who reduced process variation by 20%. Unfortunately the latter is vital if the former is to succeed. Automation of poor processes brings risk, inefficiency and hidden costs in the future.

End-to-end design thinking techniques which focus obsessively on end user needs are increasingly applied to business-to-business processes, with a positive effect on safety: user-friendly processes and interfaces result in higher compliance and lower failure rates. A relentless focus on a proposed solution will highlight how the processes that sit behind it should be readjusted to make it brilliant.

2) Mine and refine data to constantly improve performance
We have more data than ever at our disposal, from geo-tracking vessels to real-time drilling information. Refining and coupling this data with a mind-set that seeks to challenge and classic OE tools can lead to a step-change in process performance and an organisational evolution towards more intelligent solutions across a wider spectrum.

In summary, being “be lean” is not just about running six-sigma programmes. Oil and gas companies now sit on vast proprietary data pools. By becoming good data refiners and being increasingly customer-focused, they will achieve remarkable improvements in processes across the value chain.

All of this needs to be done using a rigorous management of change process and significant process or technology change should include considerations on safety and risk management, governance, organisation and communication to ensure a safe transition.

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