The pursuit of operational excellence (OE) can provide prodigious production and business benefits, as operating companies such as Lanxess and BASF and software suppliers such as KBC and AspenTech can attest. However, processors striving to achieve OE face many challenges, according to a survey last year by KBC and technical event organizer IQPC.
The survey asked leaders of more than 100 companies in the refining and petrochemical sectors about their understanding of OE and response to it.
“The research uncovered three main industry trends that reflect a changing approach to OE, shaped by emerging technologies and an increasingly volatile and competitive landscape,” notes Shane Fitzsimmons, global practice executive, strategy and business excellence, KBC, Houston.
The first is that most respondents have high hopes for OE. Indeed, 79% felt “very confident” that an OE mindset will result in safer, more reliable and more profitable operations. “However, it is clear that there are barriers preventing businesses from achieving this. It is especially concerning that only 25% of those we surveyed felt that their company has a clear vision for OE. Factors identified as barriers to operational excellence include ‘initiative overload,’ comfort with the status quo and internal organizational barriers,” he adds.
Second is the need for a new approach to OE. Respondents expressed concern not only about internal factors but also about increased volatility, competition and regulation in the market. In addition, trends such as changing workforce demographics, cyber security and technological disruption are coming to the forefront.
Across the board, leaders reported that their companies were in the “planning but not yet prepared” stage of readiness for these factors, says Fitzsimmons.
Third is the role that big data, the cloud, the industrial internet of things (IIOT) and artificial intelligence (AI) are playing. Fitzsimmons admits being surprised that some scepticism remains regarding the extent to which technology will influence the industry in the next five years. On one hand, many respondents reported high levels of maturity in adopting technologies such as advanced process control and maintenance/asset integrity systems. On the other hand, 65% said their companies weren’t ready yet to adopt AI while 41% said the same for the IIOT.
He stresses that the chemical industry must pay attention to three fundamental points: management of health, safety and environmental risk; fostering deep technical understanding as well as treating process data as a shared corporate asset; and creating an operations-centered mindset (Figure 1).
As an example of this in action, Fitzsimmons cites an OE program that KBC developed and rolled out for an East Asian refiner that was experiencing issues with loss prevention, operating efficiency and aligning operating practices with the wider corporate plan.
The strategy focused on four major themes over three years, he notes. “Firstly, we worked to conceptualize and design the OE model, in consultation with senior leadership. The second pillar focused on margin capture. By implementing operational improvement, the refiner ensured increased short-term profitability, turnaround optimization and curtailment of potential production losses. Thirdly, KBC recommended a major realignment and focus on developing basic capability in the organization. Finally, we took steps to address fundamental safety behaviors and risk management.”
Fitzsimmons points to impressive results from implementing these steps: The refiner executed a turnaround requiring 20 million manhours without a lost time incident. Financially, it achieved $160 million in cumulative benefits, with a further $250 million in potential benefits identified.
“The number of truly excellent organizations is small, with increasing divergence between typical and world-class operators. By applying emerging digital technology and applications, guided by robust business processes, businesses in the chemical and refining industries can achieve superior, sustained results,” he emphasizes.
Lanxess, Leverkusen, Germany, is using its manufacturing excellence (MEx) initiative to hone OE. “One goal of MEx is to operate plants at optimal costs. The main target here is to optimize production processes in order to have a high availability and a high yield of the plant and so achieve maximum productivity. In addition, our team draws a special focus in the value stream analysis on product losses via gas, liquid and solid waste streams. And the positive effect is twofold: less material consumption for the production process on the one hand and reduced waste treatment cost on the other,” explains Ralf Krueger, head of MEx.
He cites as a typical example a batch product line in which the company instituted a variety of measures to free up significantly more of the available production capacity: “This enabled the insourcing of production that had been done by a toller before. The effects were cost savings and also a more flexible production schedule, which led to higher customer satisfaction.”