lily kong presentation to downstream asia 2010 - 20101027 (with appendices) v3

7/24/2019 Lily Kong Presentation to Downstream Asia 2010 - 20101027 (With Appendices) v3

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1

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



2

Agenda

• Journey to achieve Operational

Excellence

• Development of Operational

Excellence Framework

• Approach to institutionalise

operational standards

• Targets

•

Conclusion



3

What is Operational Discipline?

• Back to Basics

• Consistently & diligently

deploying all the basic

practices

• Perseverance in perfecting

and internalising the simple

practices



4

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



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



6

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



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



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



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



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



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





delivery of i POCS


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


measure and

benchmark

per formance

OE Reports

Benchmarking


iPOCS Assessment

Change ManagementEng age leadership, create awareness

and promo te ownership at al l levels to ef fect cons istent imp lementat ion


ImproveAdop t best

pract ices and

develop

competencies

through

structured peer-

assist

mechanism

Gap Closure



AssessSituational

Assessment

Ad-hoc Reviews

Situational




solut ions


too ls and

processes

Standards

ManagementSystem

Guidelines

Tools


measure and

benchmark

per formance

OE Reports

Benchmarking


iPOCS Assessment




ImproveAdop t best

pract ices and

develop

competencies

through

structured peer-

assist

mechanism

Gap Closure

13



delivery of i POCS




AssessSituational

Assessment

Ad-hoc Reviews

Situational




solut ions


too ls and

processes

Standards

ManagementSystem

Guidelines

Tools


measure and

benchmark

per formance

OE Reports

Benchmarking


iPOCS Assessment




ImproveAdop t best

pract ices and

develop

competencies

through

structured peer-

assist

mechanism

Gap Closure

14



delivery of i POCS




AssessSituational

Assessment

Ad-hoc Reviews

Situational




solut ions


too ls and

processes

Standards

ManagementSystem

Guidelines

Tools


measure and

benchmark

per formance

OE Reports

Benchmarking


iPOCS Assessment




ImproveAdop t best

pract ices and

develop

competencies

through

structured peer-

assist

mechanism

Gap Closure

17



delivery of i POCS




18

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



Embrace i POCS in PETRONAS’s journey to achieve

Operational Excellence

19

• 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.



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

20



21

hank you



22

Any Questions?

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