In the Oil Industry offshore operations, both marine and aviation services play a key role in the supply chain, yet, they also represent a significant cost.
In May 2015, Actio reported about the work that it has been doing in the oil industry. In this edition, we are back to unveil a bit more about the work done so far.
In times when cost reduction is vital, a commonly asked question is if the existing resources are enough to match the business needs. Two of the projects Actio has been working on, are focused on the utilization of the marine and aviation passenger transport resources.
Traditionally, for each available resource, a daily rate is paid independently of the level of occupation or utilization. That means that both vessels and helicopters are payed even if they are not being used. To that daily rate, variable costs like fuel and maintenance are added to the monthly bill.
Once the cost structure was well understood, it was realized that the resources occupation was, on average, below 40% and had a variation of around 30%. Finding and understanding the key contributing factors for such low occupation was the next step.
Additional analysis allowed us to note that the day of the week, departure time, number of trips available and the number of used resources were the main contributing factors. The day of the week is related to the nature of the operation. Saturdays and Sundays are days with less demand. Even though there were schedules available for rush hours, it was noted that these weren´t being strictly followed, which was inflating the number of trips required to transport the passengers to their destinations.
Additionally, it was noted that every time that a single passenger needed, and the resources were available, as long the direct supervisor approved, a travel would be arranged for just that individual at the cost of one 25 seat vessel or a 6 passenger helicopter.
In order to control these factors, several actions were implemented:
- Changes on the charging model, from a fixed value to a utilization-based one, e.g.: monthly rent with hourly rate. This way, the monthly fixed cost was reduced and the number of used hours per day controlled to ensure balance between the voice of the customer (resources availability) and voice of the business (cost).
- Establishment and enforcement of fixed travelling schedules (adjusted to the demand of the several destinations). This reduces the flexibility of travelling, but ensures that everybody is on site at the right time.
- Switching helicopter routes by vessels routs, where economy was possible and time spent was not counter-productive.
- Elimination of helicopter routes for destinations with high level of flights with no passengers.
As a result of this effort, it was possible to release vessels and helicopters without putting operations at risk. Although the significant drop of oil price, that has been increasing pressure at the level of the operation cost reduction, the oil industry sector continues to invest on Lean Six Sigma as the reference methodology to increase process efficiency and ensure result sustainability. Actio is pleased to be part of their customer results and successes over the last 10 years.