The LR Experience

BY DR MARK VINE, LR CONSULTANTS, DUBAI, UAE

Preference

Dr Mark Vine has over thirty years of experience as an HSE Manager and Management Consultant with extensive experience in oil and gas, chemicals, government, transport, insurance, NGO’s and development banks. His experience covers the full lifecycle from mega and major projects through to operations.

Mark is a recognised subject matter expert in HSE MS and Operations Management Systems (OMS) development, implementation and assurance with a focus on sustainability, Environmental and Social Governance (ESG), process safety, behavioural based safety, asset integrity management and Operational Excellence (OE).

LR Consultants is a unique boutique consultancy that provides high-value management consulting services to the global energy, chemical process, mining, banking and financial service industries.

LR Consultants is headquartered in Dubai, United Arab Emirates and is supported by an extensive global network of highly experienced independent consultants with executive and senior management industry experience in capital projects delivery and operational excellence.

1 OVERVIEW

As a business leader or senior manager, it is natural that you should be continually asking questions that challenge to improve the performance of your business management system.

LR Consultants experience suggests that the following questions reflect the foremost concerns of business leaders:

• Are you increasingly frustrated that your project or business strategy is failing to deliver expected and timely results to your key performance indicators?
• Is your project or business management system overly complex, costly to operate and/or experiencing low recognition and involvement amongst your workforce?
• In a rapidly changing business world, is your project or business management system not proving to be resilient and is it unable able to respond effectively to market changes and emerging risks?
• Is your project or business management system unsuitable to deliver compliance to the Environmental Social and Governance (ESG) expectations of donor financing institutes who follow IFC Equator Principles and World Bank requirements?

If the answer to any of these questions is affirmative then the solution should be to invest in Operational Excellence.

This LR Article provides the basics to Operational Excellence (OE) and how to achieve the benefits through the transformation to an enterprise-wide Operating Management System (OMS).

2 WHAT IS OPERATIONAL EXCELLENCE?

There is no unique internationally accepted definition of OE. Some of the more well-known definitions are provided in Table 1.

Table 1 Definitions for Operational Excellence

“Operational Excellence achieves and sustains outstanding levels of performance that meet or exceed the expectations of all their stakeholders”

OE is not the same as Continuous Improvement (CI) which has been promulgated by the ISO suite of management system standards. A comparison of the LR Consultants OE cycle against the ISO CI cycle is provided in Figure 1.

Figure 1 LR Operational Excellence and ISO Continuous Improvement Cycles Compared

A CI business is one that follows a process of improving, sustain, measure and monitor. The business then repeats the cycle over and over again to create a culture of CI. A significant downside is that CI often has no goal or destination to meet and it can be a slow and unreliable journey to deliver results.

OE delivers integrated performance across revenue, cost, and risk. Conversely to CI, it focuses on meeting operating and stakeholder-driven results through the CI of the operational processes and culture of the organisation.

The goal of OE is to develop one single, integrated enterprise-wide management system with strategic results and stakeholder-based direction, driving visualised risk optimised business processes and workflows. The second component of OE, a culture of Operating Discipline, is commonly described as “doing the right thing, the right way, every time”. According to BTOES, this Operating Culture is built upon the guiding principles of leadership, integrity, questioning attitude, always problem solving, daily CI mindset, level of knowledge, teamwork and influencing workforce behaviours.

An OE organisation is more agile and able to identify and manage emerging threats and to rapidly transform itself than its CI counterpart. OE organisations are inherently more resilient and adaptable to changes to stakeholder concerns and market conditions.

These relationships can be visualised using the LR Model for OE shown in Figure 2. The LR Model (under development) is designed for high risk or safety-critical industries (oil and gas, power, chemicals, pharmaceuticals, transport, mining and nuclear) and to meet the requirements of sustainability. It is fully compliant with IFC Equator Principles and ESG requirements.

The LR OE Model delivers ISO compliance as a minimum requirement and as Plan-Do-Check-Act (PDCA) as an integral part of its DNA. It delivers sustainable business results and can be applied across the cradle to grave to rebirth business lifecycle.

Figure 2 LR Risk Optimised Model for Operational Excellence

Figure 2 depicts “Risks” as a separate element associated with business process controls. In reality, “Risks” are distributed and embedded in all elements of the LR model. Risk management is critical to ensuring that business strategy and processes are optimised and prioritised towards meeting key performance indicators. Emerging risks require time management and worker adaptation of existing business or operating processes in order to ensure that the business remains resilient to changing market conditions and aligned with any adjustment to business strategy.

OE has been formally defined by the European Foundation for Quality Management (EFQM) through its EFQM Model for OE shown in Figure 3.

Figure 3 EFQM Model for Operational Excellence (EFQM, 2018)

The EFQM Model is a globally recognised management framework which allows organisations to achieve success by measuring where they are on the path towards transformation, helping them understand the gaps and possible solutions available, and empowering them to progress and significantly improve their organisation’s performance.

Both the LR Consultants and EFQM Models for OE can both be used in enterprise-wide management system design, implementation, benchmarking and transformation for immature and mature businesses alike.

A key difference between the LR and EFQM approaches is that the LR OE Model has been designed for safety-critical industries and is able to distribute risk criticality through all elements and processes of the model. Risk optimised business processes are shaped and prioritised by the critical findings of the enabling risk assessment. This is a key reason why ISO management systems create risk silos and traditionally fail to manage systemic process safety and asset integrity risks.

3 FUNDAMENTAL CONCEPTS AND THEMES FOR OPERATIONAL EXCELLENCE

The fundamental concepts of OE (shown in Figure 2) outline the essential foundation for achieving sustainable excellence for any organisation. The concepts can be used as the basis to describe the attributes of an excellent organisational culture. They can also serve as a common language for senior management.

Figure 4 Fundamental Concepts of OE (EFQM, 2012)

OE covers a number of risk themes (with a focus on risk reduction results) that should be assessed and managed for all projects, facilities, activities, products and services for which your business is partially or wholly responsible or accountable. An illustration of the OE risk themes typically used in capital intensive safety-critical industries is provided in Figure 5.

Figure 5 Operational Excellence Risk Themes

4  OPERATIONAL EXCELLENCE AND OPERATING MANAGEMENT SYSTEMS (OMS)

OE Models can be used to design, develop, benchmark and transform the enterprise-wide management system.

Many organisations are commercially driven to satisfy the disparate needs of the many ISO management system standards often creating overly complex, inefficient and costly to operate management systems. ISO driven management systems, particularly in the case of safety-critical industries fall far short in managing process safety and asset integrity risks.

The solution to efficient and effective OE delivery is to develop an Operating Management System (OMS), also referred to as an Integrated Management System (IMS). The term OMS is preferred in this Article.

An OMS is a complete framework that combines all aspects of an organisation’s systems, processes, and any standards that the business follows.

An OMS is used for controlling risk, delivering high performance and achieving Operational Excellence.

“Operating” applies to every type of company activity, including concept design, engineering, construction, commissioning, operations, inspection, maintenance and decommissioning, throughout the entire value chain and lifecycle of the business and its products.

The development of an OMS that incorporates Equator Principles and ESG requirements fully satisfies the project financing requirements of donor Banks and External Credit Agencies.

An illustration of an OMS framework created from the integration of individual ISO and non-ISO management systems is provided in Figure 6. An important part of integration is to upgrade the minimum requirements of ISO-based management systems to incorporate industry best practice.

Figure 6 Integration of Individual Management Systems into an OMS

5        WHAT ARE THE BENEFITS OF OMS AND OE?

The benefits of OMS and OE investment to your business are summarised in Table 2.

Table 2 Summary of OMS and Operational Excellence Benefits

6  WHAT CAN LR CONSULTANTS DO FOR YOU?

LR Consultants utilises the “Power of Experience” of the global OE and OMS experts in our professional network. Our industry-leading experts cover all aspects of the life cycle and value chain of your business.

LR Consultants are able to provide the full suite of OE and OMS services:

• Strategy
• Benchmarking
• Framing and Integration
• Design and Development
• Optimisation
• Transformation
• Management of Change
• Roll Out and Implementation
• Organisational Culture
• Training
• Audit
• ISO Certification Support

Contact us directly at LR Consultants web site for further information on our OE services. We look forward to hearing from you.