the path to operational excellence through operational

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The Path to Operational

Excellence through Operational

Discipline - An Ongoing Journey

of Improvement

Nikhil Deshpande

Director- Oil & Gas, DuPont Sustainable

Solutions

March 13, 2015


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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”


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Operational Excellence- A Value Road map

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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


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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


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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


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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%


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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


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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


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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)


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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…”


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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


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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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14 14

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


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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


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Source: The Conference Board, CEO Challenge, 2013

Operations Excellence is one of the most

important issues for CEOs globally


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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


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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”


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Thank you

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