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Energy, Oil & Gas Industry Update SCOR for Energy, Oil & Gas Forum for Benchmarking and Practices Gary Kilponen SCC Director & Treasurer May 21, 2010.

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Presentation on theme: "Energy, Oil & Gas Industry Update SCOR for Energy, Oil & Gas Forum for Benchmarking and Practices Gary Kilponen SCC Director & Treasurer May 21, 2010."— Presentation transcript:

1 Energy, Oil & Gas Industry Update SCOR for Energy, Oil & Gas Forum for Benchmarking and Practices Gary Kilponen SCC Director & Treasurer May 21, 2010

2 Agenda Introductions Purpose SCC Energy, Oil & Gas Industry Group Update Sample Downstream Supply Chain Analysis Research Plan Industry Group Participation Next Steps/Action Plan 2 gk

3 SCC Energy, Oil & Gas Industry Group Purpose Energy, Oil & Gas Resources are critical business and personal topics that are on the top of mind E, O & G Supply Chains are: –Unique (Capital Projects (ETO), Operations (process), EAM) –Have limited benchmark data –Still very focused on Procurement (Source) Create a Oil and Gas Supply Chain Process Model to enable industry chain benchmarking and best practice implementation Why we chose to create Industry Group? What has happened so far? Energy, Oil and Gas Industry Group formed and kicked off December 2007 Teams were formed to address process models and benchmarking, but realized a common high level industry model was required to move forward The team created a high level Oil & Gas Industry Segment Definition Initial Strategies and metrics for top oil & gas supply chains segments have been developed gk


5 Oil & Gas Challenge: Supply Chain Excellence How to facilitate and accelerate Improvements in Oil & Gas Supply Chains –Completeness: enough reference data to address common Oil & Gas metrics and processes –Benchmark: Provide a neutral metrics framework for broad industry benchmarking of supply chains –Practices: What are industry-specific best practices can be added to the SCOR framework –Strategy: Common industry strategies by Oil & Gas supply chain type –Flows: what do material flows look like for Oil & Gas, and how do they relate to metrics 5 gk

6 Industry Group Research Phases Phase I – Supply Chain Identification and Benchmarking Preparation –Understand the Scope and Extent of the EO&G Supply Chains –Identify Major Supply Chain Types within business segments –Identify Major Supply Chain Strategies –Create a base of reference SCORcard (metrics) for benchmarking Phase II – Benchmarking Study and Analysis –Facilitate industry benchmarking process –Analyze and publish results Phase III – On-going Activities –Create a base of reference material flows –Create a base of reference best practices related to the Energy, Oil and Gas supply chains –Identify key supply-chain issues important to Energy, Oil and Gas industry –Educate/Discuss shared learning and findings –Provide forum for Energy, Oil and Gas supply-chain practitioners to network 6 gk

7 Defined: The Scope of Energy Oil & Gas Initial focus on Upstream, Midstream, and Downstream with articulation of some details of the material flow. Identified Infrastructure Equipment & Maintenance as common area to all three. gk

8 Framework for Benchmarking Supply Chain Definition Supply Chain Prioritization Supply Chain Strategy Selecting Metrics Sourcing Data Creating a Balanced SCORcard Performing Benchmark 8 gk

9 Supply Chain Definition Supply Chains are the totality of processes spanning operations from supplier to end-customer, focused on material, work and information flow We use a tool called the Supply Chain Definition Matrix to define the Supply Chains within an enterprise The Supply Chain Definition (i/o Matrix) Matrix helps determine the number and size of supply chains –Columns: Customers (Output) –Rows: Products (Input) The intersection of each column and row – if the goods or services flow to the customer – is a supply chain 9 gk

10 Downstream Supply Chain Definition 10 Using a supply chain identification matrix, created master high-level list of supply chains within Downstream gk

11 Downstream Supply Chain Prioritization 11 Light Prioritization for further assessments gk

12 Supply Chain Strategy We use a tool called the Supply Chain Strategy Matrix to Identify priority strategic features or attributes of Supply Chains. Each supply chain strategy is indicated by a collection of ranked features: ReliabilityOn time? Complete? Undamaged? ResponsivenessFrom Customer Request to final acceptance FlexibilityHow long to scale up? How expensive to scale down? CostCost of Processes? Cost of Goods Sold? AssetsWorking Capital? Return on Investments? gk

13 Comparative Ranking We advocate using a simple ranking system for industry comparison Each rank corresponds to a specific percentile in industry performance We do not use averages or other statistical tests Our key ranks: PerformancePercentileChoicesInterpretation Superior90 th 1Need to be Top 10 performer Advantage75 th 2Need to be Top Half performer Parity50 th 2Half better/Half worse gk

14 Initial Downstream Strategies 14 RELIABILITY - The performance of the supply chain in delivering: the correct product, to the correct place, at the correct time, in the correct condition and packaging, in the correct quantity, with the correct documentation, to the correct customer. RESPONSIVENESS - The speed at which a supply chain provides products to the customer. AGILITY (flexibility, scalability) - The agility of a supply chain in responding to marketplace changes to gain or maintain competitive advantage. COST - The costs associated with operating the supply chain. ASSETS - The effectiveness of an organization in managing assets to support demand satisfaction. This includes the management of all assets: fixed and working capital. Each unique combination of ratings defines Your Supply Chain Strategy for the channel Think of the rating as a desired state, NOT where you want to improve the most gk

15 Initial SCORcard Created (Consumer Gasoline) 15 gk

16 Final Benchmarking Phase Used for choosing target performance Critical to understand Performance in a particular Demographic Can be internal (competing against other supply chains in same company) Aligns Strategy, Performance, and Performance Goals 16 AttributeSAPMetric (level 1)YouParityAdvSuperiorGap Reliability SPerfect Order Fulfillment 97%92%95%98%1% Response AOrder Fulfillment Cycle Time 14 days8 days6 days4 days8 Days Flexibility PUps. Supply Chain Flexibility 62 days80 days60 days40 days0 Cost PSupply Chain Mgmt Cost 12.2%10.8%10.4%10.2%1.4% Assets ACash-to-Cash Cycle Time 35 days45 days33 days20 days2 Days *Sample Data Only gk

17 Industry Group Ongoing Research Plan

18 Organizational Model Members Teams Governance Steering Committee Staff, Chair, Team Leaders Upstream Leader 10-15 Participants Midstream Leader 10-15 Participants Downstream Leader 10-15 Participants Infrastructure Leader 10-15 Participants Review Panel cl

19 Phase Deliverables 19 Phase I – SCORcard Development Energy, Oil and Gas supply chains definition and priority by sector (Supply chains are typically defined by a combination of products, customers and geography) Scorecard neutral metrics framework for benchmarking study of all sectors in the Energy, Oil, and Gas supply chains Phase II – Study and Analysis User group benchmarking (Approximately 25 sample companies) Phase III – Data Publishing and Next Steps Publish industry benchmarking report (Note: all shared data is aggregated and made anonymous) Develop material and process flows for Energy, Oil and Gas industry relating to metrics Define Industry specific best practices can be added to the SCOR framework cl

20 Phase I Program Timeline

21 Opportunities to Participate Industry Segment Volunteer –Practitioners/Consultants that can provide useful insight into target supply chains –Meet bi-weekly via teleconference ( 3-6 hours per month) –Anticipate 4-6 month initial commitment (Phase I) –Responsible for identification of Supply Chain and Supply Chain Metrics Review Panel –Volunteers who desire to participate but cannot commit to a bi-weekly team meeting –Will meet via teleconference at project milestones (no more than once per month) –Serve as a review panel for the data that is being collected/submitted. Team Leader (Segment) –Small group committed to oversee the project –Will insure integration of all team data into benchmarking that will be useful for the industry as a whole. –Serve as part of the Steering Committee 21 cl

22 Oils and Gas Industry Group Next Steps Team Development –Email Administrator: Contact Information Team –Upstream –Downstream –Mid stream –Infrastructure Equipment and Maintenance Desired capacity to serve. –Development Team –Review Team –Team Leader (Segment) Develop project plan for each team Resources Timeline 22 cl

23 Open Discussion

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