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LEAN SIX SIGMA IN A PETROLEUM REFINERY - A CASE STUDY

NAVEEN NARAYANANSSA BUSINESS SOLUTIONS (P) LTD.

SEPTEMBER 24TH, 2011

PRESENTED TO:

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INDUSTRY CHALLENGES

‣ State regulated product pricing

‣ Cumulated losses of

₹78000 crores in FY 2010-2011*

‣ Capital intensive & high operating cost

‣ Huge profit leakages due to process inefficiencies

*SOURCE: BUSINESS STANDARD, MAY 2011

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NEED OF THE HOUR

PEOPLE ENROLLMENTEVERYONE COMMITTED & INVOLVED

| PROACTIVE PROBLEM SOLVING

PROCESS EXCELLENCECONTINUAL IMPROVEMENT | FACT

BASED MANAGEMENT

WASTE ELIMINATIONREDUCE PROFIT LEAKAGE |

ENHANCE EFFICIENCY

OPERATIONAL EFFICIENCYREDUCE COST | IMPROVE EFFICIENCY

NEED OF THE HOUR

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CI INITIATIVES

7 QC Tools Quality Circles Suggestion Scheme

5 ‘S ’ Daily Work Management

TPM

Strategic Alignment? Bottom-line focus? Sustainable?| |

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WHY LEAN SIX SIGMA?

✓ Engagement across the organization

✓ Analytical approach

✓ Align-able with strategy planning

✓ Focus on operational efficiency

✓ Capability for breakthrough improvements

✓ Internalization of Six Sigma skills

✓ Cross-functional team based problem solving

✓ Drive continual improvements

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LSS DEPLOYMENT ROADMAPHOW ‘PINNACLE’ REFINERY EMBRACED LSS

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ROLL-OUT MODEL

PILOT PHASE SCALE UP PHASE SUSTAIN PHASE

PILOT WAVE (6 MONTHS)

- PROJECT REPOSITORY

- LEADERSHIP BUY-IN

- CREATE BUZZ

- PEOPLE ENROLLMENT

SCALE-UP (1 YEAR)

- COMPANY-WIDE ROLLOUT

- SUPPORT FUNCTIONS

- FINANCIAL FOCUS

- KRA LINKAGES

- INTEGRATE WITH STRATEGY PLANNING

- ALIGN WITH BSC

- INTERNAL MBBs

INTERNALIZE (3 YEARS)

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DEPLOYMENT ROADMAP

Training

-Executive Overview (Leadership)-Champions training (15)-Green Belt (19)-Black Belt (11)

-Green Belt (31)-Black Belt (17)

-Green Belt (86)-Black Belt (15)

Coaching

-GB Projects (7)-BB Projects (4)

-GB Projects (11)-BB Projects (5)

-GB Projects (23)-BB Projects (7)

Piloting

Wave 2 Scale up

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PROJECT SELECTIONHOW ‘PINNACLE’ IDENTIFIED STRATEGIC PROJECTS

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PROJECT SELECTION

✓ Top-down approach

✓ Leadership Involvement

✓ Balanced focus

✓ Realistic expectations

✓ Aligned with scorecards

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TOP DOWN APPROACH

MISSION: “A Great Place to Work”

VISION:“Role Model for Environmental, Health, & Safety Performance”

“Consistently Most Profitable, and Reliable Refinery”

“Market Responsive”

STRATEGIC THEMES:1)Environment & Safety Performance2)Market Responsive/ Customer Focus3)Resource Optimization4)Great Place to Work

STRATEGIC INITIATIVES:1)Six Sigma Projects2)Other Strategic Projects3)People & Process Alignment

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REFINERY VISION:ROLE MODEL FOR EHS | CONSISTENTLY MOST PROFITABLE AND RELIABLE REFINERY | MARKET RESPONSIVE

REFINERY VISION:ROLE MODEL FOR EHS | CONSISTENTLY MOST PROFITABLE AND RELIABLE REFINERY | MARKET RESPONSIVE

ENVIRONMENT & SAFETY PERFORMANCE

ENVIRONMENT & SAFETY PERFORMANCE

MARKET RESPONSIVE/CUSTOME

R FOCUS

MARKET RESPONSIVE/CUSTOME

R FOCUS

RESOURCE OPTIMIZATION

RESOURCE OPTIMIZATION

GREAT PLACE TO WORK

GREAT PLACE TO WORK

✓Improve Reliability of Fire Extinguishers

✓Bring Down Number of Fires

✓Improve Reliability of Fire Extinguishers

✓Bring Down Number of Fires

✓Bitumen Lorry TAT < 2hr.

✓Product Availability for MMPL

✓Biturox Production (All 3 Grades Availability)

✓Minimize fill weight variation of LPG

✓Minimize losses during ATF production

✓Bitumen Lorry TAT < 2hr.

✓Product Availability for MMPL

✓Biturox Production (All 3 Grades Availability)

✓Minimize fill weight variation of LPG

✓Minimize losses during ATF production

✓Maintain FO line sample viscosity between 150-180

✓Increase Power Reliability

✓Minimize variation in LPG Filling

✓Sustain Yield as per VDU Column

✓Reducing Tankage TAT

✓Minimizing Crude Loss

✓Maintain FO line sample viscosity between 150-180

✓Increase Power Reliability

✓Minimize variation in LPG Filling

✓Sustain Yield as per VDU Column

✓Reducing Tankage TAT

✓Minimizing Crude Loss

✓Reduce Wastage in Canteen

✓Minimize complaints in estate

✓Increase number of suggestions

✓Minimize electricity consumption in estate

✓Optimize overtime in canteen

✓Reduce Wastage in Canteen

✓Minimize complaints in estate

✓Increase number of suggestions

✓Minimize electricity consumption in estate

✓Optimize overtime in canteen

PROJECT DRILL-DOWN

MISSION:“A GREAT PLACE TO WORK”

MISSION:“A GREAT PLACE TO WORK”

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PROJECT SELECTION RATIONALE

‣ Organizational Impact

‣ Clarity of Scope

‣ Feasibility of Solutions Implementation

‣ Feasibility of Completion within 6 Months

‣ Cuts Across Functions/Cross Functional Teams

‣ Domain Expert Available in Team

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SAMPLE PROJECTSProject Goal Metric Baseline Goal

Optimize Product Yield for VD, and VGO from VDU Column

% Wt. on crude

2.5% 3.9%

Reduce H2 Losses to flare

Tons/day 2.4 ton/day 0 ton/day

Reduce TAT of Bitumen Lorries

Time 4.3 hrs. 2 hrs.

Improve Reliability of Rotary Equipments

Failures/yr.

4/year 2/year

Maintain Fuel Oil Viscosity

CST 260 160

Improve Reliability of Fire Extinguishers

% non reliable

15% 5%

Optimization of I/F generation in MMPL Volume 206 Kl 195Kl

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2 1

3

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PROJECT HOPPER

‣ Align LSS with annual strategy planning/Balanced Scorecard

‣ Monthly steering committee meetings to review progress/identify projects

‣ Customer voice as a source of projects

‣ Linkages with KRA

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COMMON PITFALLS AVOIDED

Web

(1) Hype‣Piloting‣Avoided Big-Bang rollout

(2) Trivial Projects

‣Project drill-down from strategic theme‣Charter created by champions

(3) Vague ₹ Gains

‣All projects’ gains ratified by CFO

(4) Limited Champion Support

‣Champions involved at early stages‣Training/certification mandatory‣KRA Linkages

(5) Tool Obsession

‣Application of tools on need base‣Retrofit data analysis instead of DOE wherever possible

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SUCCESS FACTORS

‣ Involvement of Sponsors at all stages

‣ Meticulous project selection process

‣ Abundant data in system

‣ Strict adherence to timelines & toll-gates

‣ Realistic Expectations

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ENHANCED CUSTOMER SATISFACTION: SEVERAL PROJECTS LINKED WITH CUSTOMER EXPERIENCE & LOYALTY

PROCESS IMPROVEMENT: BREAKTHROUGH AND SUSTAINABLE PROCESS IMPROVEMENTS

ACCOLADES: RECOGNIZED AS BEST PROJECTS IN SEVERAL NATIONAL & INTERNATIONAL AWARDS SUCH AS INSSAN, QIMPRO, IDEAS ETC.

PRODUCTIVITY GAINS: DRAMATIC IMPROVEMENT IN OPERATIONAL EFFICIENCY, CONSISTENCY AND RELIABILITY OF PROCESSES

FINANCIAL SAVINGS: DIRECT LINKAGE TO BOTTOM-LINE, CUMULATED SAVINGS (RATIFIED) OF OVER INR 200 CRORE

RESULT

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CASE STUDY 1:VDU COLUMN YIELD

IMPROVEMENT

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PROCESS SCHEMATIC

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PROJECT CHARTER

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PROCESS TREND

LOW VD YIELD - AVG. 2.63% V/S TARGET 4%

23-VE Cpk VALUES INDICATE EXTREMELY POOR

PERFORMANCE

PROCESS CAPABILITY

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PROCESS FMEA

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POTENTIAL CAUSES

X1 X2

X3

X4

X5

Y

VDIR/RCO V/S YIELD HVGOCR V/S YIELD

LVGOCR/RCO V/S YIELD RTC 293 V/S YIELD26

REGRESSION

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DRAMATIC IMPROVEMENT IN VD YILED - AVERAGE YIELD OF 4.5%

BREAKTHROUGH RESULTS

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CASE STUDY 2:REDUCTION IN GATE ENTRY

TIME

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BUSINESS CASE

Project Title: Reduction in process time for Gate Entry Operation for visitors

Problem Definition:-Welcome slip is not ready when visitor arrives.-Average 15 minutes are taken for gate entry process

-Too many counters for Welcome Slip, Mobile Phone hand-over, Vehicle pass, Laptop and other item entry

Goal:-Reduce Gate entry processing time-Provide better experience to the visitors at Gate entry-Improve company image

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AS-IS PROCESS

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Problem Root Cause SolutionToo much waiting for Visitors at early morning, lunch time & end of the shift

No manning before 8am, after 3:30pm, lunch time

2 shift Counter operation (7:30 am to 5.30 pm)

Visitors had to move back & forth at different windows

Vehicle pass, Laptop entry & Mobile deposit area  at different counter

Vehicle no on the same welcome slip, single window approach, allow mobile for admin area, laptop entry by visitor CISF to confirm

Visitor has to wait till welcome slip is ready

Minimum communication between the visitor and staff

SMS to visitor on slip approval to ensure the slip is created prior

All types of visitors through Welcome Slip

No convenient procedure for contractor, delivery persons

Welcome Slip for visitors and daily pass for technocrats/ delivery persons

ROOT CAUSES

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Phase I: Implemented Solutions

One window will be operational all the time

2.System-generated monthly report giving department-wise count and just-in-time slips

3.Training and job rotation for window clerk

Phase II: Implementation in pipeline

Board at entrance to guide people of different locations

2.Infrastructural modifications will be undertaken for front end counters

3.Kiosk with a printer for enabling the visitor for generating the welcome slip on his own without external interference and CISF to check and allow the visitor after photo id confirmation

SOLUTION IMPLEMENTATION

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IMPROVED PROCESS

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Gate Entry Processing time reduced from Avg.15 mins to Avg. 4 mins

BEFORE/AFTER

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ABOUT SSA

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PURPOSE & VISION

Purpose:To enhance Stakeholder’s Value through partnering for growth; our journey will continue as long as there is a passion for perfection.

Vision:To become the No.1 Business excellence solutions provider in India by 2015 with 20% revenue from overseas consulting.

HIGH PERFORMANCE CAPABILITY | HIGH FINANCIAL STRENGTH

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HISTORY

1999

SSA IS BORNSSA IS BORN

- BORN WITH A MISSIONARY ZEAL

- VISION: ‘MAKE MADE IN INDIA SYNONYMOUS TO QUALITY’

MANAGEMENT SYSTEMSMANAGEMENT SYSTEMS

2001

- ISO 9001, QS 9000, ISO 14000, ISO 27001

- HRMS

- BPMS

- SIX SIGMA

PROCESS EXCELLENCEPROCESS EXCELLENCE

2006

- ENTERPRISE-WIDE PROCESS MODELING

- PROCESS REPOSITORY CREATION

- KPI DASHBOARDS

- LEAN DEPLOYMENT

- GLOBAL ALLIANCES

- GLOBAL DEPLOYMENTS

BUSINESS EXCELLENCEBUSINESS EXCELLENCE

2010

- INTEGRATED STRATEGY & PERFORMANCE MANAGEMENT SYSTEM

HIGH PERFORMANCE CAPABILITY | HIGH FINANCIAL STRENGTH

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ACCREDITATIONS

RATED SE-2A BY CRISIL | HIGH PERFORMANCE CAPABILITY HIGH FINANCIAL STRENGTH

ISO 9001 CERTIFIED

ANSI IACET 1-2007 AUTHORIZED PROVIDER

ISO 27001 ISMS CERTIFIED

HIGH PERFORMANCE CAPABILITY | HIGH FINANCIAL STRENGTH

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SELECT CLIENTELE

HIGH PERFORMANCE CAPABILITY | HIGH FINANCIAL STRENGTH

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GLOBAL REACH

HIGH PERFORMANCE CAPABILITY | HIGH FINANCIAL STRENGTH

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BASKET OF OFFERING

Lean Six Sigma

Lean Management

BPMS Solutions

TPM

ISO/ISMS/EMS/OHSAS

Process SimulationDaily Work Management

Project Management

Design for Six Sigma (DFSS)

Performance Management

IT & ITES Support

HIGH PERFORMANCE CAPABILITY | HIGH FINANCIAL STRENGTH

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SSA’S ISM MODEL

“ISM® aligns people and the processes with the corporate objectives and goals”

- NCHIGH PERFORMANCE CAPABILITY | HIGH FINANCIAL STRENGTH

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QUESTIONS?!

HIGH PERFORMANCE CAPABILITY | HIGH FINANCIAL STRENGTH

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Naveen Narayanan

Glendale, AZ, December 8th, 2010