Improve your Business Margins - An immediate approach
With oil barrel prices fluctuating and profits down, oil, gas and
chemical companies need their assets to be as efficient and
productive as they can be. But it’s not always the big business
changes that make the most immediate difference. In fact, more and
more companies are finding that the best opportunities to rapidly
improve their business margins lie within identifying and ‘cashing
in’ the low hanging opportunities found within operational and
business processes at the work place.
Getting operational costs
down: The aim
If you think about the aspects of your business - things like
asset management and equipment maintenance - it’s easy to find a
huge number of places where inefficient processes could have
developed. And if you leave one inefficient system in place, the
knock-on effect can lead to slower production, more labour hours
for staff, and huge amounts of money being wasted on unnecessary
activities. Although these areas might seem too far down the system
to make much of a difference, they can be crucial in helping you
optimise your operational expenditure, the combination of lower
quantum, higher efficiency and a reduction in rates. When assets
are large and complicated, this balance can be difficult to
achieve. Get it right, and you could cut your OPEX costs
by up to 30%.
A good start; do you know where you stand?
A short diagnostic review using a qualitative and quantitative
'3 cost pillar' study is where most companies begin. It tells you
where you could make easy, practical improvements to your site
processes and how much money you’re likely to save. In order to
visualise the areas of potential improvement, the next step would
be to use a gap analysis to acknowledge where you are in terms of
your asset, business and peer group and identifying opportunities
for improvement. Of course, to make the most of these
opportunities, you need to put long-term changes in place. But by
highlighting and implementing these ‘quick-fix’ solutions companies
have made immediate substantial savings - some of over $50 million
on OPEX costs. Mostly, savings can be achieved by improving site
maintenance approaches - from planning and scheduling all the way
through to execution.
‘Time on Tool’ - the smart method
There are a number of techniques which can be implemented. A
simple way to identify inefficiency is a ‘waste walk’ - literally
walking a site, noting anything that doesn’t seem as efficient as
it could be. A more advanced technique is a system and methodology
developed to assess productivity called the `Time on Tool` method.
It measures achieved work against planned work, to see where
efficiency is falling short. By using this technique, companies can
identify where work processes aren’t running smoothly -
particularly between the planning and implementation stages.
Putting the theory into practice
Once you’ve seen where systems and processes are inefficient,
the next stage is to re-engineer them to increase productivity. It
can also be a good chance to see where a lack of communication
between departments is causing inefficiency - and to put new
systems in place to encourage your planners to talk to the people
on the ground. Some companies take the Time on Tool method one step
further, setting productivity targets for individual areas, like
mechanical pipe work, scaffolding, insulation, electrical,
instrumentation, static and rotating equipment. Using Time on Tool
shows what should be possible. It’s then up to managers to set
incentives for suppliers and contractors to make sure they reach
those levels of efficiency.
Help’s at hand
Most businesses that turn to us for help in these areas are
running cost efficiency rates of 30 - 40%. And they’re not unusual.
We can help your business identify where it’s losing money, then
find real, practical solutions to improve your margins. Depending
on the size of the asset a 1% increase in the productivity level
could represent a saving of over $1 million per year. In the past,
we’ve helped with assets of all sizes, and in all areas - from oil
and gas to manufacturing, utilities to the aviation sectors and we’ve set
‘best in class’ productivity levels for Europe, the Far East, USA
and Middle East.
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