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In theory, the continuous improvement model encourages organizations to advance positive changes frequently and smoothly. But what about in practice? How can an industry such as oil and gas, currently struggling with so much disruptive change these days, reach a point where practical CI is even possible?
It all starts with culture, that fertile ground from which continuous improvement compliant principles grow into day-to-day practices and work is carried out to completion time and time again.
The roadmap of Continuous Improvement culture-building
There are several aspects to developing CI culture, some of which require creative, as opposed to formulaic, thinking. Think of CI culture-building like preparing for a long journey. Its steps include, but are not limited to, identifying the following:
- Where you’re going: A definitive vision of how your organization will operate under CI.
- Why you’re going there: Mission statements that emphasize the importance of CI to your specific organization.
- How you’ll get there: The path that will lead you to a state of functional CI.
- Who will help get you there: A list of qualified team members and their roles in this undertaking.
- Who will lead the way: Senior management who will advocate for the cause.
- How will you know when you’ve arrived: Metrics and benchmarks for determining success.
Armed with an overview of what continuous improvement culture-building entails, let’s turn our attention back on Oil & Gas and discuss why rapidly developing an internal environment for supporting these methodologies matters.
1. Oil & Gas has room for improvement
Many influential organizations have called on Oil & Gas to acclimate to a world driven by environmental and cultural sustainability. Earlier this year, the United Nations Development Program, along with the International Finance Corporation and IPIECA, published a report detailing how private-sector Oil & Gas companies can integrate 17 sustainable development goals into standard operations around the world.
Additionally, the latest information from the Bureau of Labor Statistics, women make up only one-fifth of all U.S. oil and gas extraction jobs, even though women occupy about 47 percent of the entire labor force. Creating environmentally sustainable operations and having more female representation in Oil & Gas both represent worthwhile justification for starting the continuous improvement cycle sooner rather than later.
All Oil & Gas workers, regardless of role, deserve CI value boosts.
2. Individual value creation is imperative in low-price environment
At its essence, CI trains organizations to target and remove waste ad infinitum, which increases the value of the work each CI-compliant employee performs. It also incentivizes leaders to invest in training, as doing so will maximize their returns in the form of a highly intelligent workforce.
Automation in Oil & Gas behaves in a similar fashion, reducing work that doesn’t add value or actively depletes value. Both continuous improvement and automation are necessary, and can easily play off of each other, as Oil & Gas companies aim to minimize their operating expenses in the long term and adjust to a financially leaner industry climate. However, in many instances, CI is the figurative fuel that powers the engine of cost-saving innovations like automation. Advanced software and technology-driven processes will not succeed without a culture that clearly defines their significance to the organization utilizing them.
3. Forming the right Continuous Improvement team takes time
Any business undertaking CI methodologies must first build a team of core members who will strive for success. That takes a lot of careful planning, scheduling, and even permanent alterations to roles within a company.
CI team members must possess a deep understanding of their industries, market performance and the challenges of their unique businesses – all signs point to the inclusion of senior-level management, as well as perhaps a few executive stakeholders, along with a cadre of rank-and-file workers with highly developed skills and specialized knowledge.
But instead of piling continuous improvement related duties on top of traditional job specifications, Oil & Gas companies must rewrite all internal roles to account for CI, which will also mean delegating legacy duties once intended for upper management to new parties down the chain of command. Those are not decisions to enter into lightly, so it behooves businesses to start planning now to implement continuous improvement as soon as possible.
Continuous improvement puts the future of Oil & Gas within reach, but companies must first develop a culture conducive to best practices. From there, augmenting operations and incorporating new elements into the greater business schema will become far easier, and Oil & Gas companies can adapt intelligently to whatever tomorrow brings.
For more information on continuous improvement and operations management in oil and gas, contact a USC Consulting Group representative today.
Beverage manufacturers, particularly carbonated soft drink makers, will have a lot of big decisions to make in the coming year in order to prevent buzz around their businesses from affecting production.
Although the global nonalcoholic beverage industry has enjoyed steady rises in sales – today totaling more than $800 billion, according to analysis from Dun & Bradstreet – sugary sodas have come under heavy fire as of late. Parents, schools, and health experts have made it their mission to educate young students about modern balanced diets, and bubbly beverages with high added sugar don’t make the cut. Municipal and city governments are also cracking down on consumption by enacting tougher taxes on sugary beverages which puts manufacturers in danger of being priced out of consumer favor.
As soda producers work to regain positive consumer sentiment, however, they cannot ignore these three key points concerning internal operations.
Are you developing your competitive agility?
Complaints regarding the health of soda affect the entire industry. No one is impervious – except the manufacturers who reposition the fastest.
Concentration in the U.S. nonalcoholic beverage industry has reached critical heights, with 90 percent of revenues sopped up by just 50 companies. Every fraction of future market share, therefore, will be hard-fought when earned and particularly painful when lost. Who won’t feel the sting? Those beverage manufacturers that infuse agility into their current change management practices. Adaption isn’t a question anymore – it’s a certainty. To remain competitive, facilities will need the speed and flexibility to respond to shifting consumer perceptions not only now but forever after.
Is marketing aligned with production?
Last summer, the Department of Agriculture finalized regulations restricting food and beverages sold in schools to standards set forth by the agency’s Smart Snacks in School guidelines, which limit sugar content to 35 percent by weight or less. That spells trouble for major beverage manufacturers with profitable vending machine operations.
But regardless of whether individual soft drink manufacturers bend to the will of regulators and legislators banning their goods from schools or choose to protest against them, there’s no denying that a great deal of work must be done with marketing. The efficacy of subsequent campaigns means a great deal to production teams as they struggle to forecast demand in an evolving consumer environment. Developing channels of communication between these often disparate departments will help businesses stay ahead of shifting trends and proactively evaluate messaging.
What will change about your portfolio of products?
As reported by the Daily Mail, Coca-Cola has decided to drop Coke Zero after just over a decade of production in favor of a no-sugar alternative. The drink will debut in Australia later this summer.
Other manufacturers will likely follow suit as more consumer clamor for beverages wholly without sugar and other unappealing additives. But a decision like this is just as much about production limitations that come with an over-varied catalog of goods. Perhaps the greatest challenge facing food and beverage manufacturers today is the widespread inability to align consumer demands with production line capabilities. In other words, the appetite of the customer rarely matches what manufacturers’ plants can do, at least not efficiently. No customer retention strategy is worth having too many products and too paltry a plan to mitigate changeover losses.
So Coke Zero got the ax. Any other soft drink maker designing a new offerings that address concerns over sugar may have to make similar hard decisions about their underperforming products for the sake of simplicity and cost-efficiency.
For more insight on how trends in the food and beverage industry impact manufacturers today, download our e-book, Trouble at the Table.