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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.
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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
Major Value Drivers • Satisfying the global market • Reduction in re-active workload • Lower safety risks • Higher energy efficiency • Increased share value
Reliability How can Reliability create a successful business ? People Reliability Site Reliability Work Process Reliability Equipment Reliability
Reliability Strategy Sustaining Capacity Efficiency Driven • Effective Turnaround Management • Effective Maintenance Programs • New Technologies Energy On-Stream + Process Optimization Leading/Lagging Indicators, Training, Prioritization and Work Processes to lower operating cost Maximize Production… Optimal Cost
Reliability Strategic Focus Areas 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
CMMS System ASSET & LOCATION MANAGEMENT WORK MANAGEMENT PURCHASING CMMS INVENTORY MANAGEMENT FINANCE
Valve – (12 hour delay) How many times has this valve failed before? 3 times Was there re-work in the last repair? Before the failure, the valve was sent to a contractor during the Outage for servicing What is the status of the replacement valve? Under procurement (4-6 Months) Were the materials to repair the valve available? Spring had to be sourced from external company (No Inventory) Procurement & Inventory – Industry Example 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
Reliability Leading Indicator Index Typical industry scorecard without supply chain metrics
Supply Chain Analytics & Reliability 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
Lessons Learnt • 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 JAN11 - JUN