Lessons Learned for Process Excellence - RLG International

Process

Excellenceis a Superior Way

to Cost Excellence

Rick Heyland, Executive Vice President

Now that we have cut our budgets ….

Now what?

Of the companies that had undergone substantial layoffs

in a restructuring …

30% experienced an increase in costs

22% later realized that they had eliminated the wrong people

80% reported a collapse in employee morale

67% reported no immediate increase in productivity

and more than 50% show no short-term improvement in profits

Australian Newspaper, The AGE

In a review of 50 companies engaged in

cost cutting through layoffs: 43% suffered a

significant downturn in earnings after 3 years

These companies were Fortune 500

such as Kodak, Hershey, Unisys and others

Business Week, July 17, 2000

Genuine “cost-cutting” comes

through process excellence,

not simply cutting budgets.

Ron Moore, Making Common Sense Common Practice,

Fourth Edition: Models for Operational Excellence

Most companies

have good process

but not good process execution

RLG International

Visibility

Accountability

Granularity

Engagement

Challenge

Awareness

Principles for Process Excellence

Accountability and Visibility

Granularity – Sub KPIs

Granularity – AccountabilityTA 6-Aug

Total Work Instructions Due 1000

Planned Work Instructions Due 290

TOTAL # Work Instructions Received

Design Engineering Department 18

Electrical 0

Instrumentation and Electrical Design 0

Rotating Equipment Reliability 0

Instrumentation Reliability 0

Inspection 0

Operations 0

Maintenance 21

Total # Work Instructions Received 39

Total % Work Instructions Received 13.4%

Visibility – Boardwalk

Engineering Performance Improvement

The Problem

Canadian Heavy Oil:

At the TAR 3 Review in December 2014,

the 2015 TA was tracking:

• 38% over budget on cost

• 25% over budget on duration

Challenge and Engagement

• Over 500 attendees

at the 7 TMPs™ and

21 schedule quality

reviews

• Overall Line items

went from 7,000 to

12,000 in the

primavera schedule

• Identified over 550

discrete actions to

improve/strengthen

schedules

Challenge and Engagement –The Result

Turnaround CostCost Relative to Budget

40%

30%

20%

10%

0%

-10% Execution

May 2015

TAR 3

Dec 2014

TAR 3

Dec 2014

Turnaround DurationDuration Relative to Plan

25%

20%

15%

10%

5%

0%

Execution

May 2015

AwarenessRate Your Cost Excellence Culture

1

Senior

Management

2

Middle

Management

3

Front Line

Workers

4

Site

Contractors

1. Know your costs

2. Know your cost targets

3. Regular (monthly) updates on relevant cost actuals

4. Have clear strategies or actions to improve costs

5. Involved in a regular process to identify

cost improvements issues and solutions

(Lean Six Sigma)


1

Senior

Management

2

Middle

Management

3

Front Line

Workers

4

Site

Contractors

1. Know your costs






(Lean Six Sigma)

YES NO

“This gives me the information I need to

confidently schedule contractors without fear

of work being cancelled or budgets being

busted,” says the contractors supervisor.

“There needed to be a better way,” recalls the

Maintenance Superintendent, “we were always

looking in the rear-view mirror and surprised

when the numbers turned out so poorly.”

A Maintenance Cost Success Story“Bringing It All Together”

• Cost control was reactive, with review at period end

• A long history of cost overruns on increasing annual budgets

• A new approval Operating Rhythm™ was developed

• Timely data analysis

• Single point accountability

• Weekly cost forecasting

• Proactive approval process

(2)

-

2

4

6

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Year 1 Year 2 Year 3 Year 4

Mill

ion

s

YTD Maintenance Budget Variance

Start of RLG Project


1

Senior

Management

2

Middle

Management

3

Front Line

Workers

4

Site

Contractors

1. Know your costs






(Lean Six Sigma)

YES NO

Reactive Controlled Ownership Proactive

Urgency When a

Problem Arises Top Down Mandated Bottom Up Involvement

Top Down /

Bottom Up Sustainability

• Right sizing

• Chasing the independents

cost structure

• Using safety as an excuse

for extra costs

• Gold plating changes to

protect yourself

• Top down decisions to cut

costs

• Clear rules on cost controls

• Decisions on cost control

flow up

• Rule-based culture

• Management tells them the

cost score

• Front line knows the cost

score on a regular basis

• Cost targets by team are

clear, visible and discussed

• Front line ideas for

improvement are

encouraged

• Front line cross functional

cost teams are developed

and effective

• Safety, productivity and cost

control are guiding principles

that guide everybody at work

• Contractors are involved and

engaged on cost reduction

ideas

• Full engagement from senior

management and front line

on cost improvement

strategies and actions

Culture Progression Curve

Cost Excellence Journey

Visibility

Accountability

Granularity

Engagement

Challenge

Awareness

Principles for Process Excellence