Impact of Business Analytics on Supply Performance: A Caribbean Perspective Inter-American Supply Chain Forum March 15-16, 2012 Presenter : Mushtaq Mohammed Manufacturing Director Methanex Trinidad Limited

Supply Chain in the Hydrocarbon Industry - Upsteam & Downstream The industry is characterized by the following:  High capital investment  Access to hydrocarbon resources base  Access to technical services  Highly trained staff  Access to supply chain for materials

Typical Strategy for Businesses in the Primary Manufacturing Petrochemical Industry The business is mainly a commodity business and the strategies are driven by the following:  Personnel & Process Safety  Operational Excellence  Low Cost

 Satisfying the global market  Reduction in re-active workload  Lower safety risks  Higher energy efficiency  Increased share value

How can Reliability create a successful business ? People Reliability Work Process Reliability Equipment Reliability Site Reliability

Maximize Production… Optimal Cost + Sustaining Capacity Effective Turnaround Management Effective Maintenance Programs New Technologies Effective Turnaround Management Effective Maintenance Programs New Technologies Leading/Lagging Indicators, Training, Prioritization and Work Processes to lower operating cost On-Stream Energy Efficiency Driven Process Optimization

The Reliability Strategic focus areas were summarized into three major areas for development:  People: — Resourcing — Leadership: Performance Management & Alignment — Competence of Workforce  Processes: — Work Safety Controls — CMMS (Computerized Maintenance Management System) — Quality Document Management — Business/Work Planning — Root Cause Analysis — Prioritization — Performance Metrics  Plant: — Relationship with Suppliers — PM Optimization — Plant Monitoring — Asset Integrity — Equipment History & Analysis

The Role of Supply Chain in Reliability Many companies have centralized maintenance management systems, these systems do the following:  Act as a backbone by connecting and integrating Work Planning, Inventory, Finance, Purchasing and the Asset  Procurement activity is driven by outputs from this system  The configuration of these systems to give real time information and provide data for forecasting material and spares needs link directly to reliability and business strategy

ASSET & LOCATION MANAGEMENT WORK MANAGEMENT PURCHASING INVENTORY MANAGEMENT FINANCE CMMS

Valve – (12 hour delay) 1. How many times has this valve failed before? 3 times 2. Was there re-work in the last repair? Before the failure, the valve was sent to a contractor during the Outage for servicing 3. What is the status of the replacement valve? Under procurement (4-6 Months) 4. Were the materials to repair the valve available? Spring had to be sourced from external company (No Inventory) IMPACT  I8 hours of the downtime that could have been prevented with the correct focus on inventory & procurement reliability  0.6 % of 97.5 % reliability eroded  1,800 T production loss  Profit of US $180,000

Typical industry scorecard without supply chain metrics

Reactive Inventory Management  Procurement & Inventory cost triple  Incur Production Losses (Reducing Income)  Geographic Location (long lead time)  Unable to meet customers expectation (Contracts) Proactive Inventory Management  Reduce production down time  Increase plant reliability  Decrease high inventory costing  Ensure availability of critical spares

JAN 11 - JUN  Include supply chain performance metrics into reliability score cards  Create a culture where technical persons view supply performance as important in achieving their objectives  Design the information feed from the backbone system to facilitate proper forecasting  Demonstrate the impact of supply chain performance on the company’s commercial delivery