pims global lubricants & greases supply chain benchmarking · over the last 23 years pims® has...

System-cybernetic

Malik ManagementSystems®

for mastering complexity

© Malik 2016© Malik

PIMS Global Lubricants & Greases Supply Chain Benchmarking

An Introduction

Marcus Bonse – Project Director

Omer Chowdhury – System Expert


Introduction to the project and its motivation

Lubricants manufacturers worldwide face many challenges. Economic uncertainty, high material costs,

ecological concerns and increasing competitive pressure are forcing them to re-examine all areas of

operations. Minimum cost and maximum flexibility are needed to address new market realities.

Historically, there was pressure to increase market share, capacity and complexity:

• in regions where demand for many lubricants is falling, due to lengthened vehicle service intervals

and higher oil prices, companies are now having to make tough decisions on plant and product

rationalisation.

• in regions where demand for lubricants is rising due to increasing economic development,

companies are having to achieve the operational edge necessary to build competitive advantage for

market share growth and optimal capacity and complexity management.

Over the last 23 years PIMS® has established its data-driven worldwide benchmarking process and

assembled the world’s only current database of lubricants and greases supply chains. Leading companies

use PIMS as the foundation for evidence based performance improvement.

2


Why PIMS Lubricant and Grease Plant Performance Benchmarking?

Because for almost 25 years we have provided lubes and greases manufacturers with fast,

effective and objective benchmarking, becoming trusted advisors, known for thorough data

collection and validation, good analysis and useful answers.

Because you can use PIMS deliverables to answer questions like:

• what should you do to get your operations to be world class? (process optimization)

• what levels of quality and HSE are achievable?

• what are your advantages / disadvantages versus local competitors?

• where and how should you invest? Or divest? (portfolio optimization)

• toll-blending, outsourcing, maintenance: yes or not, too much or too little?

• how do you master performance and complexity drivers?

• are your targets feasible? Is your current strategy supported by objective evidence?

Because only PIMS has valid comparative data on over 250 plants in 60 countries, from

over 40 of the world’s top oil companies, and a research-based analysis framework to

clearly show results to managers at all levels.

Because we assure data confidentiality: feedback never shows (or allows calculation of)

data on individual competitors.


PIMS Typically Identifies Savings in Excess of $500,000 (~5% OPEX) Improvement per Plant

We analyse cost, productivity, complexity, throughput and configuration to find plants that are your best

performing strategic peers as well as local competitors. This, in conjunction with our 20+ years benchmarking

experience provides you with:

• Complete understanding of the key drivers of performance;

• Objective evidence of your true competitive position;

• Quantified and prioritised areas of improvement: how much of an improvement is needed and what is the

prize?

• A stimulus for change based on clear evidence versus real competitors (under strict confidentiality);

• A basis for analysing alternative future scenarios using real experiences of others who have been there.

Firm facts to base decisions on, rather than wishful thinking


How will we work with you?

1. PIMS consultants work with you through a multi-stage process, and they will have a face-to-face meeting

with you at least 3 times (kick-off, data review, final results, see previous slide).

2. PIMS consultants will interact with key plant personnel, and validate the data with your planners and

financial accountants to develop a comprehensive profile of your plant operations, comprising over 100

key metrics.

3. PIMS then models your plant against regional and local competitors and against matching plants globally.

We identify which areas of the plant are performing strongly, and which need improvement.

4. We spell out relative pay rates, productivity levels, complexity, maintenance load, cycle times and quality

performance in each area, versus appropriate peers.

5. PIMS correct for key differences outside your control, such as scale, complexity, location, inbound

logistics, and product mix. Comparisons are "apples to apples". We give you key insights into improving

your production operations. Together, we pinpoint priority areas and help you to develop action plans for

performance improvement.

5


PIMS Benchmarks Against 235 Lubricant and 60 Grease Plants from 47 Companies Globally

Americas

68 lube plants

20 grease plants

Europe

79 lube plants

20 grease plants

Africa

19 lube plants

4 grease plants

Asia & Oceania

70 lube plants

16 grease plants

Note: Choropleth map based on the combined volume of lubricants and greases by country (Q3 2016)

0 kT 5,000 kT


PIMS Lubricant Plant Volume Distribution

0

10

20

30

40

50

60

0-20 20-40 40-60 60-80 80-100 100-120 120-140 140-200 200+

No

. of

Pla

nts

Volume (Tons '000)

• 235 lube plants.

• Over 20 are under 20kT.

• Over 20 are greater than 200kT.


PIMS Grease Plant Volume Distribution

0

2

4

6

8

10

12

14

16

18

0-2 2-4 4-6 6-8 8-10 10+

Nu

mb

er o

f p

lan

ts

Volume (Tons '000)

• 60 grease plants

• Over 20 are greater than 6kT

© Malik 2016

Methodologies Overview

Costs

Performance Metrics

Volume

Stock days Service Levels

Assets Downtime

Quality Losses

HSE Maintenance

Improvement Potential by Area of Activity

Inbound freight Input cost

Packed material receipt Bulk material receipt

Blending Laboratory

Bulk filling Packing/filling

Bulk distribution Warehousing

Grease production Pack distribution

Plant administration Allocated administration

2. Local Low Cost 3. Look-Alikes 4. Par Performance

ProductivityEnergy

efficiency

1. Regional Comparison

PIMS Delivers Comprehensive Benchmarks by Performance and Area of Activity using 4

Methodologies

© Malik 2016

PIMS also provides In-Depth Analysis of Non-Cost Metrics (1/2)

PIMS Quality Metrics

% Rejected blends

Pro

ce

ss s

tag

e

Total number of tests

Right First Time Rate No. types of equipment

Stock count

Flushings

Recovered Downgrades

Slops

LossesTestingBlend accuracy

1. Material receipt

2. In-process control

3. Product release

4. Post production

When do you test?

© Malik 2016

PIMS also provides In-Depth Analysis of Non-Cost Metrics (2/2)

PIMS Service Metrics

Number of spills

Volume of spills

Days lead time from order

to dispatch

(from stock)

% OTIF by order

% OTIF by line item

Days lead time from order

to dispatch (produced to

order)

Minimum possible days

(produced to order)

% OTIF by order

% OTIF by line item

Number of injuries

Number of lost time accidents

Number of other

environmental incidents

PIMS HSE Metrics

HSE Lead Time On Time In Full (OTIF)

© Malik 2016

PIMS Plant Complexity – How Difficult is the Job you have to do?

Volume

No. of grades/80% production

SKUs/kton

Grades/kton

% bulk

+ other attributes to a lesser degree

31.55 kTon

128/18

4.06

17.5

9%

+

+

+

+

+

Factor Contributing to ComplexityPlant X Plant Y

33.4 kTon

50/6

1.50

16

24%

+

+

+

+

+

54% 72%

Despite a similar throughput level, Plant Y is clearly more complex (it has a more difficult job to do), which is

mainly driven by the substantially higher number of grades (different formulations) in comparison to Plant X,

the marginally higher number of SKUs and the lower percentage of lubricants dispatched in bulk


Core Methodology 1: Regional Comparison (including time series)

We compare you with the your geographical/market

peers with regard to the range of products manufactured,

the types of packaging, as well as the cost in each

activity area (raw material receipt, blending, packing,

laboratory, filling and dispatch, warehousing, other

production costs and assets, G&A, etc.). What are your

peers doing differently and what are they doing better?

How is the market changing over time with regard to

both cost and product portfolio.

Plant X

Plant X

Plant Y

Regional

Avg.

Plant Y

Q1

Q2

Q3

Plant X


Core Methodology 2: Local Low Cost Peers

We compare you with the best half of your closest geographical/market peers in each activity area (raw

material receipt, blending, packing, laboratory, filling and despatch, warehousing, other production costs and

assets, G&A, etc.). What are the peers doing differently and what are they doing better?

Key messages on complexity, payroll costs, structure etc.

PIMS can amend the default definitions and boundaries of “local” areas to meet clients needs, so long as the

number of “local” observations in the database can guarantee 100% confidentiality.

Traffic-light code:

1.25 Unfavourable position

0.8 Favourable position

No immediate message

Cost metric

Non-cost metric

You Local low cost


Core Methodology 3: Look-Alikes

We compare you against the performance of the best plants that resemble your plant’s profile. Look-alikes are

the closest structural peers: based on your current profile (scale, product mix, complexity, labour cost

environment and major "givens" for configuration, e.g. % of base oil in via pipe etc.). We match you with your

peers in each activity area, and compare you with the best half (e.g. best four out of eight). Details of the

matching criteria are shown on the summary page for each activity area.

Key messages on productivity and operating performance.

C

PIMS global database

Finding plants worldwide

that match your profile

Benchmarking your activity

based performance against

best practice

Traffic-light code:

1.25 Unfavourable position

0.8 Favourable position

No immediate message

Cost metric

Non-cost metric

You Look-Alike


Beyond Conventional Benchmarking: PIMS Unique “Look-Alike” Methodology

PIMS finds plant areas from the database that are structurally similar to you (look-alikes). Matching criteria and

the quality of the match are clearly shown. Transparency is attained whilst maintaining confidentiality.

Matching criteria

Lubricant Blending Complexity

Plant X Look-alikes

Plant X

Local low

cost

© Malik 2016

Global

Ranking=𝐴𝑐𝑡𝑢𝑎𝑙

"𝑃𝑎𝑟"

“PAR” =

expected

performance

given a plants…

Complexity

Labour Cost

Environment

Fixed

Assets

AutomationAverage

Temperature

Size

Core Methodology 4: Par Performance

Par is the expected level of unit cost given your scale, complexity, labour cost environment, fixed assets,

automation and annual average temperature based on a multiple regression model.

Plant X

© Malik 2016

PIMS Benchmarking Outcomes

Priority areas for

improvement (incl. $ value)

Regional cost and

complexity quartiles

Detailed cost and activity analysis by

plant area

Based on the 4 methodologies of analysis, PIMS recommends the top areas for change and the financial gain by

their implementation.


PIMS Deliverables

Results comprise three different level of benchmarking reports:

• The plant data appendix (PDA) is tailored for plant and country managers. It is the place where one

plant’s performance is assessed and compared in great detail against its best performing look-alikes and

local low cost peers.

• The regional report is aimed at regional managers. It shows all plants in a region (e.g. Europe)

benchmarked against each other and regional quartiles. It also tracks the plants and the regional

quartiles over time. It is the first report presented to the client as it is used in the data review stage to

spot possible mistakes in inputs.

• The Executive Summary is the final report, where all the key issues arising from the more detailed

reports are highlighted and reviewed from a different perspective. This reports also provides PIMS

suggestions and priorities (ranked by financial “prize”).

Regional

Report

(Quartiles &

Time Series)

Plant Data

Appendix

LowGranularityHigh

Executive

Summary


Project Timeline (for those who join in the main cycle)

Kick-off Data assemblyData review /

first resultsFinal data set

Results

workshop

January / February March April / May May / June July

Kick-off • Introduction & definition of local issues

• Outline timetable, data forms & glossaries

Data assembly • Assemble initial data with support from PIMS’ helpline

Data review / first

results

• Review data gathered & items for checking identified

• First comparisons on overall performance metrics

Final data set • Final data, checked and amended

Results workshop • Present and discuss the findings

• Draw inferences and set up action plans


Project Timeline (for a single plant participating out of cycle)

Kick-off Data assemblyData review /

first resultsFinal data set

Results

workshop

Monday Tuesday / Wednesday Thursday Friday morning Friday afternoon

Advantages versus participation during main cycle:

1. PIMS consultants onsite and working directly with you to assemble the data

2. Data related queries addressed in real time, therefore quick turnaround achieved

with sound data quality.

3. All your relevant plant staff interact directly with PIMS, thus developing a good

working relationship and mutual trust

4. Project completed in 5 working days, inclusive of analysis and results presentation

Malik London

PIMS Associates Limited

5 Cheapside

London EC2V 6AA

T +44 20 3161 4000

F +44 20 3161 4020

[email protected]

www.malik-management.comSystem-cybernetic

Malik ManagementSystems®

for mastering complexity


Marcus Bonse, Associate Partner

[email protected]

+41 79 8275123

pims global lubricants & greases supply chain benchmarking · over the last 23 years pims® has...

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