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Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
The Path to Operational
Excellence through Operational
Discipline - An Ongoing Journey
of Improvement
Nikhil Deshpande
Director- Oil & Gas, DuPont Sustainable
Solutions
March 13, 2015
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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What is Operations Excellence?
Operations Excellence is:
“The application of principles, systems and tools to engage and focus
everyone’s efforts on meeting customers’ needs and continuously
improving process performance.
Operational Excellence allows Oil & Gas leaders to run their assets
safely, reliably, sustainably & cost effectively ”
Said another way, Operations Excellence requires both:
1. Minimization and management of downside risks (prevention of
incidents that negatively impact safety, the environment, assets,
supply chains, right to operate, reputation, communities, etc.)
2. Maximization of operations’ performance and value creation
“Prevent Value Destruction. Maximize Value Creation”
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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Operational Excellence- A Value Road map
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Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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The First Step is to Prevent Value Destruction
Operational Risk Management is an integrated system that identifies,
evaluates, and controls a manufacturing process’ operational risks in a way
that catastrophic incidents are prevented that could impact:
• People – the public, employees and contractors
• The Environment – local community / work sites
• Business – lost assets, business opportunities, loss of customers, loss of
shareholders
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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1. Management Leadership & Commitment
2. Build a Safety Culture
4. Operational
Discipline
How DuPont Manages Safety and Risk
3. Implement
ORM Program
1. Leadership by Example
2. Functioning Capability/Sufficient
Resources
3. Employee Involvement
4. Active Lines of Communication
5. Strong Teamwork
6. Common Shared Values
7. Up to date Documentation
8. Practice Consistent with
Procedures
9. Absence of Shortcuts
10. Excellent Housekeeping
11. Pride in the Organization
12. Risk Sensitivity
13. Innovative, Agile, and C.I.
14. Just & Fair
Operational Discipline Characteristics
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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What is Operational Discipline?
Organizational View
The deeply rooted
dedication and
commitment by every
member of an
organization to carry out
each task, the right way,
each time.
Individual View
I am committed to
working safely &
efficiently by doing every
task, the right way, every
time.
+
Everyone
Individual
Operational Discipline
Organizational
Operational
Excellence Does It Right
Every Time
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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The Case for Operational Discipline
Do you experience incidents when failure to have or follow good procedures is an important cause/contributor?
OD Involvement in Year 2000 Incidents
Yes
53%
No
47%
In 2001, DuPont initiated a Six Sigma project to
assess causes for significant Process Safety
Incidents in 2000.
OD was identified as a dominant factor in 53%
of the incidents.
In 2010, this percentage was 32%. In 2012, it
was <10%
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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Visible Felt Leadership, demonstrated
commitment
Clear, meaningful policies and principles
High standards of performance
Challenging goals and plans
Supportive staff
Line management accountability
Integrated team structures
Performance measurement
Effective communication processes
Learning & Development
Rich content, Proven Best Practices
Effective assessments and re-evaluation
Strong
Leadership
The best system in the world, poorly executed, is worthless
Appropriate
Organizational
Structure
Focused
Processes and
Actions
People-
Driven
Operational
Excellence
The Second Step is to Maximize Value Extraction &
Value Creation
DuPont’s experience is that People drive Operational Excellence
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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Operational Excellence is being achieved by DuPont and by our
Clients through an integrated Business Excellence System
Focus on what
really matters,
with the right
People
The right tools
and practices
to solve root
level problems
People
instinctively
doing the right
things
People with
the right skills
and coaching
Mindsets and
Behaviors
Role modeling/
coaching
dialogue/
difficult
discussions
Capabilities
Engine
Technical
Model
Managing
Process
Delivery example
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Current and
future
requirements
For capability
and
performance
Required
Business
Outcomes
An integrated system that fully develops People and organizational capability
for effectiveness and creativity in utilizing assets and eliminating all waste
Everyone, everyday working together so businesses can win
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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Places to Change System Performance (1)
The Ability to Change Mindsets
Visioning, Creativity, Flexibility – Systems Thinking
Understanding the Goal of the System & the Mindset Behind It
Guiding principles and what the system should be
Knowing what the system wants to do
The Rules that Set Up the System
Power to self-organize, improve the system
Incentives and taboos
The System Drivers
Information flows
Changing the strengths of feedback loops
Shortening / lengthening a time delay
Parts (Parameters of the System)
Increasing some buffer or cushion
Amount of current price, tax, subsidy
(1) Leverage Points concepts by Donella Meadows (Sustainability Institute)
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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True Operations Improvement & Transformation only
happens when employees…
“I see others behaving
differently”
“I know what I
need to change
and want to do it…”
“Our systems reinforce the change…”
“I have the
ability and
confidence to
behave in the new
way…”
Adapted from - Beyond Performance –
How Great Companies Build Ultimate
Competitive Advantage, Keller and
Price, John Wiley & Sons, 2011
“I will change my
mindset and behavior
if…”
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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Present to Future- Critical Mindset Changes
Openness to change and focus towards the future
Commitment to visibility and transparency
Willingness to prioritize and make choices
Action orientation – 60/40
People are not the problem
Accountability as personal choice
“Everyone, Everyday”
An expectation and explicit request that everyone must
constantly strive to improve their skills and capability and
performance
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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In order for us to Continuously Improve, we
must Role Model our Commitment to Change
There are two parts to this process:
1 2
Communicate a
compelling vision for the
future, based on our
commitment to change
Live the vision by role
modeling the behavior we
want to see all employees
exhibit
Tools Personal Change Story
The Top 3
Leader Standard
Work
Line Walks
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Leader Standard Work is the process of driving the correct
behaviour by shifting the focus of leaders to teaching,
coaching, and problem-solving.
This is accomplished by:
• defining the key objectives of the organisation, and in this
case around operational excellence
• identifying the key visual indicators that provide
performance data for those objectives
• defining standardised tasks that enable the correct
behaviour
• integrating all tiers of leadership in the organisation
through standard work
Leader Standard Work (LSW) in Operations
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Leader
Standard
Work
Infrastructure
and
Routines
Mindsets and
Behaviors
• Actively seek out feedback from team
• Look to be a coach for the team and to develop talent within
the team
• Be a role model for other leaders
• Engage with colleagues on personal coaching and support
for self and others
• Craft time in their calendar to coach and develop specific
individuals
• Calendar time to review the visual management boards in an
area
• Use personal visual management to track progress of time
spent
• Complete weekly standard work checklist to assess that their
own time and interactions are adding value
Leaders must…
Leader Standard Work requires changes to both
Systems and Mindsets
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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Mindsets & Behaviors
Capability Build
Technical Diagnostic
Primary Focus Areas
Understanding the site’s culture. Defining and
implementing needed changes to improve
employee engagement
leadership behaviors
leadership rituals
Answering “Where’s the $$?”
cataloging all existing improvement work
defining additional improvement options
establishing stretch targets
Prioritized improvement plan
Assess where the site is vs. World Class
Focus on Frontline capability building
teamwork
problem solving skills
visual performance management
expanded knowledge and skills
Ultimate Goal: Fully integrated improvement plans, developed & owned by site
employees, with visible progress on the journey to world class
Deployment Has Three Major Work streams
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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Source: The Conference Board, CEO Challenge, 2013
Operations Excellence is one of the most
important issues for CEOs globally
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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Benefits across operational value levers that companies realize*
1. Productivity & Quality
improvements
2. Improved Maintenance
and Reliability
3. Improved Safety
and footprint reduction
4. Supply Chain Efficiencies
- Capacity release
- Increase high quality product
- Waste reduction
- Reduced downtime
- Increased predictability
- Reduced breakdown
- Maintain right to operate
- Mitigation of injuries & incidents
- Reduced energy consumption
- Alternative energy sources
- Improved purchasing process
- Reduced stock of raw material, MRO & finished
product
- Reduced transition loss / waste
* Results extracted from individual cases. Actual results may differ according to their specific circumstances
Operational Excellence Value Proposition:
The Benefits & Value
Copyright ©2014 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
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Leadership Comments at a recent Operational Excellence
conference
• “Operational Discipline releases time, energy and resources”
• “ Operational Discipline is an essential ingredient to moving up the curve to Operational Excellence”
• “Operational Discipline equals brilliance at the basics”
• “A good OD culture is when employees exhibit strong teamwork, a high degree of pride and housekeeping tends to be very good”
• “Today, the leadership we are looking for is the leadership that lies within our operators, within the people on the front lines”
• “It’s all about leadership. Leadership sets the tone. Leadership creates the culture. If the culture isn’t what you want, you have to change it”