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Operational Excellence: Driving CI in the Oil & Gas Industry

” True potential lies in embracing operational excellence as a common or a shared language across the functions and business (…), and by fostering a culture of collaboration and continuous improvement, organizations can really unlock new opportunities for sustainable growth and success”– Sanchay Roy, GM Manufacturing, Quality & Engineering at Shell on the PDCA cycle.

The Oil and Gas industry, while facing challenges such as labor shortages, low productivity, and rising material costs, remains crucial to the global economy. Despite these obstacles, it continues to supply the essential resources needed for both daily activities and industrial growth.

In a recent episode of the LEADERS in CI Community podcast, Sanchay Roy, General Manager of Manufacturing, Quality, and Engineering at Shell, and Stewart Dunbar, Business Opportunity Lead at Shell, discussed the challenges faced by the Oil and Gas industry. As the authors of ‘Improving Supply Chains in the Oil and Gas Industry,’ they shared valuable insights in this book into how Kaizen principles can be effectively applied to enhance supply chains within the sector.

With over 20 years of experience in supply chain management, operational excellence, and continuous improvement, Sanchay Roy has worked across various countries, including India, Europe, China, and Eastern Europe. Roy’s extensive background spans multiple industries, such as consumer goods, chemicals, and oil and gas. Similarly, Stewart Dunbar operates as the Business Opportunity Lead at Shell. With a career in supply chain management spanning over 30 years, Stewart has experience in several areas, including retail, consulting, and oil and gas.

Building on their extensive expertise, both Sanchay Roy and Stewart Dunbar recognize that the oil and gas industry faces unique Maintenance, Repair, and Operations (MRO) supply chain challenges. Unlike consumer goods or retail, where supply chain inefficiencies are rapidly visible, the impact on oil and gas is less apparent but critical. MRO involves ensuring machinery and operations run smoothly, requiring timely repairs and maintenance to avoid costly downtimes.

Sanchay Roy noted that “the role of MRO supply chain, particularly in upstream and oil and gas sector, cannot be overstated.”

Supply chain management in oil and gas can be perceived as secondary to production. However, Stewart Dunbar emphasized, “(…) supply chain is a critical support function.” This importance becomes even more evident when considering the significant influence of geopolitical and economic factors, such as global oil price fluctuations and international trade policies, on the supply chain. The COVID-19 pandemic further exposed these MRO challenges, underscoring the need for a strategic and integrated approach to manage the complexities effectively.

During the COVID-19 pandemic, Roy and Dunbar identified a significant gap in the literature on MRO supply chains. In response, they wrote “Improving Supply Chains in the Oil and Gas Industry” to address these challenges. Drawing from their experience, the book offers practical solutions to enhance operational excellence and efficiency in the industry.

Effective MRO supply chains are vital for the oil and gas industry’s upstream activities. These supply chains must ensure the availability of necessary equipment and services to maintain and repair assets ranging from new to decades-old infrastructures. As Dunbar noted, older assets often rely on outdated technology, leading to inefficiencies that newer technologies could mitigate.

The pandemic underscored the need for robust supply chain management, as disruptions had far-reaching impacts across industries. Both Roy and Dunbar stressed that continuous improvement and operational excellence are essential for the oil and gas sector. Roy pointed out that despite the industry’s perception that CI is more suited to manufacturing, the principles of CI – such as eliminating waste, optimizing processes, and fostering a culture of collaboration – are equally applicable and crucial.

Addressing these inefficiencies, particularly in older assets and MRO supply chains, requires not only continuous improvement but also a transformation of planning processes. Roy and Dunbar emphasized that adopting a production and operations planning (P&OP) approach – similar to the well-established sales and operations planning (S&OP) in consumer industries – is key to overcoming these challenges. This shift aims to align production and operational requirements, break down functional silos, and foster cross-functional collaboration.

As Stewart Dunbar explained, ”(…) the interaction between the parties in the plan needs to be a much more leveled playing field (…)”.

Sanchay Roy and Stewart Dunbar’s insights emphasize the importance of embedding continuous improvement and operational excellence into the oil and gas industry. Our guests underlined that sustainable transformation requires more than achieving specific objectives; it must be integrated into daily operations and not treated as a one-time project.

Both Roy and Dunbar agree that leadership plays a crucial role in driving sustainable transformation. Effective leaders foster a culture that embraces change, encourages collaboration, and supports continuous improvement from the frontline to senior leadership. To achieve this, Roy suggests adopting operational excellence as a common language and investing in training and culture for the long term. Meanwhile, Dunbar underscores the importance of leading by example and maintaining open communication to inspire trust and drive organizational change.

Listen to Sanchay Roy and Stewart Dunbar’s episode on the LEADERS in CI Community podcast to learn more. Discover how Roy and Dunbar highlight the critical need for the oil and gas industry to embrace continuous improvement and operational excellence.