Impact of Business Analytics on Supply Performance: A Caribbean

Perspective

Inter-American Supply Chain Forum March 15-16, 2012

Presenter : Mushtaq MohammedManufacturing Director

Methanex Trinidad Limited

Supply Chain in the Hydrocarbon Industry - Upsteam & Downstream

The industry is characterized by the following:

High capital investment

Access to hydrocarbon resources base

Access to technical services

Highly trained staff

Access to supply chain for materials

Typical Strategy for Businesses in the Primary Manufacturing Petrochemical Industry

The business is mainly a commodity business and the strategies are driven by the following:

Personnel & Process Safety

Operational Excellence

Low Cost

Major Value Drivers

Satisfying the global market

Reduction in re-active workload

Lower safety risks

Higher energy efficiency

Increased share value

Reliability How can Reliability create a successful business ?

PeopleReliability

WorkProcess

ReliabilityEquipmentReliability

SiteReliability

Maximize Production… Optimal Cost

Reliability Strategy

+

Sustaining Capacity

• Effective Turnaround Management

• Effective Maintenance Programs

• New Technologies

• Effective Turnaround Management

• Effective Maintenance Programs

• New Technologies Leading/Lagging Indicators,

Training, Prioritization and Work Processes to lower operating cost

On

-Str

ea

m

En

ergy

Efficiency Driven

Process Optimization

Reliability Strategic Focus AreasThe Reliability Strategic focus areas were summarized into three major areas for development: People:

— Resourcing — Leadership: Performance Management & Alignment— Competence of Workforce

Processes:— Work Safety Controls— CMMS (Computerized Maintenance Management System) — Quality Document Management— Business/Work Planning— Root Cause Analysis— Prioritization— Performance Metrics

Plant:— Relationship with Suppliers— PM Optimization— Plant Monitoring— Asset Integrity— Equipment History & Analysis

The Role of Supply Chain in Reliability

Many companies have centralized maintenance management systems, these systems do the following:

Act as a backbone by connecting and integrating Work Planning, Inventory, Finance, Purchasing and the Asset

Procurement activity is driven by outputs from this system

The configuration of these systems to give real time information and provide data for forecasting material and spares needs link directly to reliability and business strategy

CMMS System

ASSET & LOCATIONMANAGEMENT

WORKMANAGEMENT

PURCHASING

INVENTORYMANAGEMENT

FINANCE

CMMS

Procurement & Inventory – Industry Example

Valve – (12 hour delay)

1. How many times has this valve failed before? 3 times

2. Was there re-work in the last repair? Before the failure, the valve was sent to a contractor during the Outage for servicing

3. What is the status of the replacement valve? Under procurement (4-6 Months)

4. Were the materials to repair the valve available? Spring had to be sourced from external company (No Inventory)

IMPACT

I8 hours of the downtime that could have been prevented with the correct focus on inventory & procurement reliability

0.6 % of 97.5 % reliability eroded

1,800 T production loss

Profit of US $180,000

Reliability Leading Indicator Index

100 100 100 100 100 100100

0

10

20

30

40

50

60

70

80

90

100

%

LeadershipAlignment

BusinessPlanning

Root CauseAnalysis

Work SafetyControls

PlantMonitoring

AssetIntegrity

PMOptimization

Typical industry scorecard without supply chain metrics

Supply Chain Analytics & Reliability

Reactive Inventory Management Procurement & Inventory cost triple Incur Production Losses (Reducing Income) Geographic Location (long lead time) Unable to meet customers expectation (Contracts)

Proactive Inventory Management Reduce production down time Increase plant reliability Decrease high inventory costing Ensure availability of critical spares

Lessons Learnt

JAN11 - JUN

Include supply chain performance metrics into reliability score cards

Create a culture where technical persons view supply performance as important in achieving their objectives

Design the information feed from the backbone system to facilitate proper forecasting

Demonstrate the impact of supply chain performance on the company’s commercial delivery

Thank You

Any questions?