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Process Improvement If a company changes its approach and instead sets a


destination for exactly where it is going, it will simply get there faster, since every employee will know where the company is heading. Te key is to describe the destination in a practical, hands-on way that each employee can see, understand and apply to their own specific work environment, rather than in terms of financial performance or results. A good destination that satisfies this requirement is


To meet these and a host of other challenges, oil and gas


equipment manufacturers are migrating their thinking from a project build (like one might find in a construction company) to production build (repeatable manufacturing for highly en- gineered products). Initially, to help with this transition, many oil and gas equipment manufacturers attempted to apply lean and continuous-improvement techniques from the automo- tive industry to their operations. But the crossover is far from straightforward. For example, in the automotive industry, demand is fixed over many months and production schedules are leveled. Cars are sold at dealerships with incentives when the leveled schedule does not match customer demand. Oil and gas equipment manufacturers, however, cannot build the same equipment unit by unit with a consistently leveled sched- ule, or send products to dealerships to be sold by incentives. It’s a different business model, and the approach and applica- tion of lean principles has to be different, too. Recently, a few oil and gas equipment manufacturers have


begun adopting a new approach to lean for their industry that enables them to strive not only for efficiency, but also top-line business growth—and in months, not years. (See chart above.) To start, these companies changed the way they thought and learned about lean. Instead of using lean to eliminate waste and get a little better each day, they set a des- tination for all their lean activities and built a road map to get there, which provided a laser-like focus for their continuous- improvement activities.


The Destination If a company embarks on an endless journey of waste elimina- tion, it will forever make incremental improvements in its operations. In fact, the best it can hope is for each improve- ment to build on the last one, forming a “staircase” of im- provements. However, even if the company succeeds at doing this, it will take many years.


64 Energy Manufacturing 2014


operational excellence as defined by one of the key precepts of the Institute for Operational Excellence, which is when “each and every employee can see the flow of value to the customer, and fix that flow before it breaks down.” When companies use operational excellence as their destination, they no longer endlessly seek to eliminate waste but rather design their value streams to flow product to customers at the rate of demand. Specifically, these companies design self-healing flow, or a type of flow where the employees building the product can understand if delivery is on time to the customer and take corrective action if flow breaks down to ensure the customer gets its product on time, all without management intervention. Te key word here is design. Achieving operational


excellence in the oil and gas equipment industry happens by following a specific set of principles and guidelines, not by ap- plying tools or brainstorming.


Designing for Self-Healing Flow Te goal of operational excellence is to achieve a lean flow


of product from raw material to the customer that is autono- mous, meaning it runs on its own without management. Tis result can be achieved by creating a production environment in which the employees are able to fix flow breakdowns before they become catastrophic and negatively impact the customer. Critical to this transformation is educating everyone in the


organization and changing mindsets on some key concepts, such as understanding why a company strives to create flow. Traditionally, companies created flow because it is the best way to eliminate waste, improve efficiency, reduce lead time, and achieve many other results. But more progressive compa- nies understand that the real reason to create flow is simply to see when flow stops. Once every employee (including those in the office) can see when flow stops, the company can begin to put together what should happen when it does, without management intervention. To create this self-healing flow and achieve operational


excellence, companies follow a process that designs flow in the operation, similar to how a blueprint provides a schematic to follow when creating a bridge or building. Operational excellence is achieved by following eight principles that are completed in sequence and can be adapted to many different production and work environments, including those found in the oil and gas equipment industry. Completing these prin-


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