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Operational Discipline – Key to
Business Excellence & Sustainability
Downstream Asia 201027th
– 29th OCTOBER 2010
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
All rights reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by
any means (electronic, mechanical, photocopying, recording or otherwise) without the permission of the copyright owner.
When the brightest and sharpest come
together nothing is impossible
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Agenda
• Journey to achieve Operational
Excellence
• Development of Operational
Excellence Framework
• Approach to institutionalise
operational standards
• Targets
•
Conclusion
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What is Operational Discipline?
• Back to Basics
• Consistently & diligently
deploying all the basic
practices
• Perseverance in perfecting
and internalising the simple
practices
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Plant Operations is one amongst selected institutional
capabilities to be enhanced to achieve High Performing
Capability-Driven Organisation
2002/03
STARTING POINT
Implementation of
CapabilityDevelopment Plan with
Plant Operations as
one of 9 institutional
capabilities
2010/15
High Performing
Capability-Driven
Organisation
• High proficiencies in all 9Institutional capabilities to
distinctive and competitive
levels
• Capabilities are embedded in
the organisation to be reliable,
repeatable and replicable
• Superior performing assets and
operations capability
• PETRONAS has not yet succeeded inextracting full operational stand-alone
and synergy values
• Gap between PETRONAS and the
benchmark companies
• Inadequate distinctive capabilities
necessary to compete and enhance
portfolio value internationally
• Gap in talent pool and leaders bench
DESIRED STATE
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Previously, PETRONAS did not have a common plant
operations framework / standards
5
• All OPUs have their own plant
operating standards – partly
due to different technology /
joint venture partners
• Sharing of knowledge and best
practices but not consistently
captured or documented
• OPUs have to spend valuable
time and resources to redevelop
similar operating processes
• As a result, target setting are
inconsistent and may not yield
the desired outcome
PETRONAS Gas Berhad
Ethylene /
Polyethylene Malaysia
Sdn. Bhd.
PETRONAS Penapisan
Melaka Sdn. Bhd.
ASEAN Bintulu
Fertilisers Sdn. Bhd
Malaysia Liquefied
Natural Gas
Upstream
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PETRONAS has taken steps to embark on its own journey to
achieve plant Operational Excellence
Source: i POCS Team
•Recognised the needfor Group-wide KPIs,
tools, and standards
for Plant Operations
Capability
•Focused only on
addressing
performance gaps•Need to emphasise
on institutionalising
systems and
capability standards
•Plant OperationsCapability Standards
(POCS) was developed to
institutionalise systems
and capabilities to sustain
superior plant
performance
•
POCS cover six capabilityelements that are
important for plants to
deliver superior
performance
•All PETRONAS operating
units were assessed and
common group-wide gaps
were identified
•Enhanced the POCSframework into a
comprehensive system of
codified best practices,
systems, process and tools
– Integrated Plant
Operations Capability
System (iPOCS )
• iPOCS covers 6 capabilities
(4 Technical Governance
capabilities and 2
Optimization capabilities)
essential to facilitate
sustainable Operational
Excellence
Operating Performance Improvement (OPI)
•The PETRONASOperational Excellence(OE) framework
• i POCS (integrated PlantOperations CapabilitySystem) as thegovernance system for allPETRONAS Plants
•The target for all plantsto achieve aCOMPETITIVE rating inPlant OperationsCapability by endFY2011/12
•The i POCS deploymentapproach and wayforward
Plant Operation Capability
Standards (POCS)Integrated Plant
Operation Capability
System (i POCS)
PETRONAS
ENDORSED
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Key focus areas to be a high performing capability –driven
Organisation through Operational Excellence
7
Key Focus Areas
Define a framework for Operational Excellence to create and extract full
operational stand – alone and synergy values among PETRONAS Plants
Create a common framework to realise Operational Excellence by providing
clear expectations, direction, aspirations and targets to be achieved to
improve PETRONAS portfolio value
Ensure efforts are deployed effectively to result in best-in-class performing
assets
Clear linkages between practices / work efforts and performance results
which enables opportunities and gaps to be easily identified and closed
Creating a sense of urgency and performance drive culture to accelerate
capability building and stay among the 1st quartile in the industry
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Operational Excellence in PETRONAS encompasses
measurement of performance in 5 key premises
Operational
Excellence
ProductionProduction
Production focused and reliable
Technical Capability
Our people demonstrate high levels of proficiency in their various
disciplines and are competent and capable of delivering results
Asset Reliability & Integrity
Our assets are safeguarded and integrity is assured such that
the risk of failure has been reduced to as low as reasonably
practicable
HSE
There is a pervasive HSE culture, where our people feel
safe to work in any facilities
Cost
We produce at optimal cost without comprising on quality
Production
Our operations are continuously improved and optimised based
on best practices
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Achievement of Operational Excellence is supported
collectively by the integrated Plant Operating System
(i POCS )
9
iPOCS defines the standards for management in the areas of
Technical Governance and Plant Optimisation as follows:
• Technical Governance
HSE
Physical Assets
Production & Hydrocarbon
Technical Capability
• Plant Optimisation
Business Process
Cost & Yield
Note: There are a total of 29 standards supporting the capability areas
above
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The PETRONAS WAY – A group wide common language and
approach for operating plants
OperationalExcellence
i POCS is the governance system for PETRONAS,
providing a holistic and sustainable approach to
plant operations
A standardised methodology to assess compliance and
effectiveness of implementation
Systematic way to identify, collect and codify best practicesprocesses and tools to build Reliable, Repeatable and Replicable
(3R) practices
Technical Governance : Defines the minimum standards that shallbe complied with to assure sustainability in operating performance
Optimisation : Defines the systems which when implemented will
facilitate optimised operations of the plants
Operational
Excellence
ProductionProduction
Production focused and reliable
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AssessSituational
Assessment
Ad-hoc Reviews
Situational
assessm ents/reviews to
ident i fy gaps, conf i rm
root cause and ident i fy
so lu t ions
11
A structured and comprehensive approach has been
developed to ensure the institutionalisation and smooth
delivery of i POCS
The integrated Operational Excellence delivery model connects and aligns the activitieswithin GTS and OPUs in a structured manner to systematically deploy iPOCS
MeasureUsing key metr ics to
measure and
benchmark
per formance
OE Reports
Benchmarking
Management ControlCompliance assessment for governance and gap closure recommendation
iPOCS Assessment
Change ManagementEngage leadership , create awareness
and promo te ownership at al l levels to ef fect consistent implementat ion
Communication Enablement Ownership
ImproveAdop t best
pract ices and
develop
competencies
through
structured p eer-
assist
mechanism
Gap Closure
DefineDevelop systems,
tools and
processes
Standards
ManagementSystem
Guidelines
Tools
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A structured and comprehensive approach has been
developed to ensure the institutionalisation and smooth
delivery of i POCS
The integrated Operational Excellence delivery model connects and aligns the activitieswithin GTS and OPUs in a structured manner to systematically deploy iPOCS
AssessSituational
Assessment
Ad-hoc Reviews
Situational
assessments/reviews to
ident ify gaps, c onf i rm
root c ause and ident i fy
solut ions
DefineDevelop sy stems,
too ls and
processes
Standards
ManagementSystem
Guidelines
Tools
MeasureUsing key metr ics to
measure and
benchmark
per formance
OE Reports
Benchmarking
Management ControlCompliance assessment for governance and gap closure recommendation
iPOCS Assessment
Change ManagementEng age leadership, create awareness
and promo te ownership at al l levels to ef fect cons istent imp lementat ion
Communication Enablement Ownership
ImproveAdop t best
pract ices and
develop
competencies
through
structured peer-
assist
mechanism
Gap Closure
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AssessSituational
Assessment
Ad-hoc Reviews
Situational
assessments/reviews to
ident ify gaps, c onf i rm
root c ause and ident i fy
solut ions
DefineDevelop sy stems,
too ls and
processes
Standards
ManagementSystem
Guidelines
Tools
MeasureUsing key metr ics to
measure and
benchmark
per formance
OE Reports
Benchmarking
Management ControlCompliance assessment for governance and gap closure recommendation
iPOCS Assessment
Change ManagementEng age leadership, create awareness
and promo te ownership at al l levels to ef fect cons istent imp lementat ion
Communication Enablement Ownership
ImproveAdop t best
pract ices and
develop
competencies
through
structured peer-
assist
mechanism
Gap Closure
13
A structured and comprehensive approach has been
developed to ensure the institutionalisation and smooth
delivery of i POCS
The integrated Operational Excellence delivery model connects and aligns the activitieswithin GTS and OPUs in a structured manner to systematically deploy iPOCS
7/24/2019 Lily Kong Presentation to Downstream Asia 2010 - 20101027 (With Appendices) v3
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AssessSituational
Assessment
Ad-hoc Reviews
Situational
assessments/reviews to
ident ify gaps, c onf i rm
root c ause and ident i fy
solut ions
DefineDevelop sy stems,
too ls and
processes
Standards
ManagementSystem
Guidelines
Tools
MeasureUsing key metr ics to
measure and
benchmark
per formance
OE Reports
Benchmarking
Management ControlCompliance assessment for governance and gap closure recommendation
iPOCS Assessment
Change ManagementEng age leadership, create awareness
and promo te ownership at al l levels to ef fect cons istent imp lementat ion
Communication Enablement Ownership
ImproveAdop t best
pract ices and
develop
competencies
through
structured peer-
assist
mechanism
Gap Closure
14
A structured and comprehensive approach has been
developed to ensure the institutionalisation and smooth
delivery of i POCS
The integrated Operational Excellence delivery model connects and aligns the activitieswithin GTS and OPUs in a structured manner to systematically deploy iPOCS
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AssessSituational
Assessment
Ad-hoc Reviews
Situational
assessments/reviews to
ident ify gaps, c onf i rm
root c ause and ident i fy
solut ions
DefineDevelop sy stems,
too ls and
processes
Standards
ManagementSystem
Guidelines
Tools
MeasureUsing key metr ics to
measure and
benchmark
per formance
OE Reports
Benchmarking
Management ControlCompliance assessment for governance and gap closure recommendation
iPOCS Assessment
Change ManagementEng age leadership, create awareness
and promo te ownership at al l levels to ef fect cons istent imp lementat ion
Communication Enablement Ownership
ImproveAdop t best
pract ices and
develop
competencies
through
structured peer-
assist
mechanism
Gap Closure
17
A structured and comprehensive approach has been
developed to ensure the institutionalisation and smooth
delivery of i POCS
The integrated Operational Excellence delivery model connects and aligns the activitieswithin GTS and OPUs in a structured manner to systematically deploy iPOCS
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Elements of the Physical Asset Management pillar has been
deployed following the integrated delivery model
MeasureUsing key metrics to measureand benchmark performance
Maintenance Management
Performance Scorecard
DefineDevelop systems, tools and
processes
The Suite of Physical Asset
Management Framework
AssessSituational assessments/reviews
to identify gaps, confirm root
cause and identify solutions
Maintenance Effectiveness
Review
• Guidelines and best practices as reference
(RIMS, Maintenance Mgt, TA Mgt & Materials
& Inventory Mgt)
• Minimum requirements to ensure
sustainability of plant performance
• The Maintenance Management Performance
Scorecard provides standardised
performance metrics for maintenance across
OPUs
• Single reporting platform for benchmarking
through the PETRONAS MaintenanceManagement System (PMMS)
• Specific capability gaps identified through the
Maintenance Effectiveness Reviews (MER)
for continuous improvement towards
excellence
Selected Instruments for
Physical Asset Management to deliver value to the OPUs
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Embrace i POCS in PETRONAS’s journey to achieve
Operational Excellence
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• All plants must achieve COMPETITIVE level rating in
Plant Operations Capability by the end of FY 2011/12, a
revised target from FY 08/09.
• For new plants, they must achieve FAIR rating in Plant
Operations Capability within three (3) years and
COMPETITIVE level within five (5) years.
• i POCS assessments shall be conducted once everythree (3) years for all plants.
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Conclusion
• Strong corporate level
endorsement and commitment to
instill operational discipline is
vital to effect operational control
on all Business Units
• A structured and disciplined
implementation of an Operational
Excellence framework is required
to achieve and sustain business
excellence
• A number of PETRONAS plants
have already achieved world
class levels in plant performance
through rigorous implementation
of operating standards
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hank you
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Any Questions?