By Peter Shields, chief executive of Aberdeen process improvement company BusinessPort
The response of E&P and service companies alike, in the wake of the oil price drop, has been to start the process of lowering the operational cost model by reducing headcount, renegotiating supply chain rates and postponing projects rendered unprofitable. While these actions are understandable, there is a need for a more sustainable approach to improving organisational and operational efficiency; one that has been largely neglected during past downturns.
Facing the choice of radical cost-cutting or implementing a continuous improvement programme in the pursuit of incremental gains, organisations have tended to adopt the former. It only delivers a short-term gain, whereas the time has arrived for some smart thinking which provides a future-proofed sustainable business model.
In support of the initial gains achieved through reduced manpower and spend, a Process Improvement Programme needs to be developed to create long-term efficiency improvements. This can focus on people, plant, process and systems and, provided risk is not increased beyond acceptable limits and compliance remains ring-fenced, the business model is open to change.
Start with the people
Understanding the ‘as is’ structure of the organisational model and supporting end-to-end process overviews will provide clarity on the value-chain and relevant priorities within the market environment. Processes are the heartbeat of the organisation and should be re-evaluated and streamlined where possible.
Identifying wasteful, redundant or duplicated work processes is essential to organisational improvement – it is one of the pillars of ‘lean’ management – and by involving existing users, should increase both ownership and commitment to the new processes. Importantly, identify the ‘as is’, before the new ‘to be’ model is rolled out to the workforce.
Process harmonisation
Having one process to describe the similar ways of working across all regions or business units will reduce costs significantly. Harmonising process simplifies instructions, makes improvement faster to adopt, and assists staff mobility from one region to the next. The silo approach to management systems is bankrupt, the future is integration, quick access to information, and simple instructions; 20-page procedures have had their day.
Roles and responsibilities
Alignment of roles and responsibilities with their relevant processes is essential. With less people doing more, a competency management system needs to be firing on all cylinders to maximise existing competency within the workforce and pinpoint where further advancement can further cut costs. With 20% of processes being automated within ERP systems, the remaining 80% are human-centric and require competent people to make the right decisions at the right time.
So many documents
The excessive numbers of documents stored within multiple repositories create complexity and confusion. A recent project revealed that out of a total 10,000 documents, more than two thirds were no longer relevant due to being out of date or having no owner. These documents were still open to audit by clients and regulatory authorities. Companies which maintain volumes of the traditional text-based procedures would be advised to validate each document with regards to the current owner, accuracy of content, relevant attachments and links; a time-consuming exercise, but essential.
Management structure
Reallocation of roles and responsibilities can cause, at one end of the spectrum, misunderstanding and inefficiency in performing daily operations; at the other, the risk of unsafe execution of safety-critical process. To avoid both extremes everyone needs to know “who does what, where and when”. There is an opportunity to flatten the management levels with more autonomous responsibilities through more streamlined reporting structures which SharePoint workflow can automate to simplify, monitor and control.
The effects of change
Now for the obvious. Change can have an adverse impact on the morale of staff, which in turn affects performance. It is essential that management establishes a communications programme to allay fears among the workforce; it should focus on the benefits of change to both the organisation and the individual.
Management systems
Regardless of the level of change – be it related to people, plant, process or systems – the management system is the carrier of the information and therefore must be held sacrosanct by all employees of the organisation. Enterprising companies who have been integrating operational risk and compliance requirements into their processes will have a greater understanding of change.
While an ISO 9001 certificate might proudly hang on the reception wall, another level of improvement and effectiveness will be required to get anywhere near what will be necessary to stay safe, profitable and compliant in the industry in 2015.