Situation

A major pipeline company had just reorganized and ended as a stand-alone entity. The president felt this was an opportune time to review current operating practices and develop and Implement Best Operating Practices along with reducing costs for Operations. Additionally, he wanted to identify the most marketable products and develop the most economical line-ups for distribution and increased capacity.

The relationship between Marketing and Operations made this project particularly complex. Traditionally, Marketing would order and line up product without regard to total need and cost. We would need to work with Marketing to determine which products would be best-selling and then coordinate with Operations as to which line-up of valves, pipelines, etc., would be the most effective, efficient and increase line capacity. This would be a new and innovative paradigm.

Actions

The first step in the Implementation Process was to form two teams:
  • Sales/Marketing, whose purpose was to review historical and forecast data to identify and plan the sales progression for the next year and determine what could actually be sold and in what quantities
  • Operations, whose purpose was to begin the process for developing best practices by reviewing all current operating procedures, practices and processes to identify the current operating situation and build the As-Is flows to determine areas of opportunity and challenge
Based on the results of the Sales/Marketing team and the assessment of the Operations team, a cross-functional implementation team was formed to:
  • Identify the most marketable moves
  • Develop the procedures and processes to support and execute those moves
  • Develop implementation plans, including the introduction of cost-reducing initiatives
  • Develop the training necessary to introduce the new operating processes and train operating personnel
  • Implement the changes system-wide

Results

In addition to the successful implementation of the process changes, which resulted in over $30 million in savings, we were permitted to continue other assignments which resulted in these additional benefits:
  • Reengineered and restructured the Measurement Department. Restructured management and reporting layers at operating facilities. Recommended increased supervisory span of control and consolidation of workload. Developed staffing options for adapting to changes in markets.
  • Development and implementation of a Delayed Movement System to track and report, by reason code, delays to customer’s product movements. This allowed Operations to address the real barriers.
  • Developed and implemented strategic alliances with Engineering and Construction, and Integrated Suppliers of MRO materials. This facilitated the reorganization of the Engineering structure, resulting in staff reductions.
  • Elimination of material overruns with the installation of a fully DOT compliant inventory control system