Lean Manufacturing Applications in Oil and Gas Businesses
Lean Manufacturing techniques provide one of the most significant methods to improve overall business performance in the upstream oil and gas business. These techniques are applicable to Drilling / Completion Operations, Production / Maintenance Operations and Facilities Construction as well as all the supplier (drilling contractors, service companies, construction companies) businesses that support these operations.
In the early 1990’s a few key individuals, including John de Wardt, recognized the value of applying Lean Manufacturing to oil and gas businesses. Early adopters created a huge value differentiation through delivering best in class performance in industry benchmark surveys around the world and manufacturing high technology equipment in the USA at lower product cost than offshore manufacturing in low cost environments.
de Wardt and Company have been a leader in integrating Lean Manufacturing techniques into upstream oil and gas operations following a landmark paper published in 1993 through the unique combination of in-depth knowledge of both Lean Manufacturing and Oilfield Operations. Clients have benefitted financially and competitively through step changes in business performance including doubling throughput, thirty percent reduction in costs, halving of cycle times and setting the benchmark performance across the industry.
Oil Companies
Incorporating Lean Manufacturing techniques into the well delivery process drives improved performance and well quality - higher wellbore integrity and less formation impairment.
Drilling Contractors
Rig operations have improved dramatically with the application of Lean Manufacturing techniques leading to significant improvement in customer satisfaction.
Service Companies
Lower cost and higher throughput have been consistently achieved in the delivery of services through regional and branch operations leading to increased profitability by applying Lean Manufacturing techniques.
History of Lean Manufacturing Origins
In the 1950’s, Taiichi Ohno, the production manager of Toyota, faced a difficult challenge. Unlike others in the automobile manufacturing industry at the time, he was forced to build a large variety of vehicles with very little inventory.
Ohno succeeded by developing new techniques to restructure workflow and involve suppliers in the process of design and manufacture. Ohno continued to improve through the development and application of other techniques.
In the late 1980’ the Massachusetts Institute of Technology undertook a major study of automobile manufacturing around the world. Through this study, they discovered that the companies which had followed Ohno’s techniques achieved double the productivity with twenty five percent less defects than their nearest competitors.
The term “lean” was coined to describe this new breed of world-class companies - simply put, they achieve more with less.
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Testimonials
John’s emphasis on rigorous planning has resulted in tangible and measurable results in the area of drilling and completing wells. A true step-change.
His recent corporate strategy development work resulted in a set of strategic initiatives that are already beginning to deliver value only a few months into their implementation.
...substantial improvement in product delivery and resultant reductions of inventory. The catalyst for these new processes was the Strategic Planning workshop lead by John de Wardt.
John de Wardt provided us with a straight forward, hard driving, no nonsense approach to strategic planning that is still helping us define and achieve new business goals.
His insight into the oil and gas industry is invaluable, and his knowledge of best practice in manufacturing has added measurable value to several of our investments.
We have seen significant improvements in results and have adopted the principles in our planning and operations efforts.
Case Studies
Significant growth through strategy development.
THE INDUSTRIAL COMPANY (one of the top Industrial Construction Contractors in the US - see links under "Clients") hired DE WARDT AND COMPANY to apply their scenario based strategy development program to their construction business. TIC's initial 20 years of growth had reached a plateau and they were keen to find ways to achieve their next phase of growth. The strategy development program identified six key initiatives which were pursued according to the implementation plans developed by TIC's teams and guided by John de Wardt. Each of these initiatives have achieved significant changes to their respective areas in the organization. TIC revenues doubled during the 2 years after the strategy session (from circa $500 million to over $ 1 billion) and continue an upward trend in spite of the competitive climate for both projects and resources. These initiatives crossed the breadth of the company including training, human resources, information technology, marketing, organization and international operations. TIC has placed in the top 10 contractors, in nine categories, as ranked by Engineering News Record.
Increased competitiveness in low price environment
Western Summit, a major player in the construction of water and waste-water treatment plants, relied on our scenario based strategic planning program to build a foundation from which to grow. After a period of updating their organization, systems and management techniques, their revenues started to rise and continue to do so. This company is better ready to face the significant challenges in this highly competitive industry as municipalities continue to pursue the low cost bidders while adding full services to the scope of work. These full services include operation and maintenance of the plants after construction, often on an incentive payment scheme basis.