Michael strongly believes that production management is a key success factors for process manufacturers competing in a global market. He defines production management as the area of management information systems that work with the planning and scheduling applications that drive the manufacturing operations in a Continuous Improvement Loop. This supports a company’s Supply Chain Management by insuring the availability of right product at right time at the lowest cost.
As an example, Michael cites a refiner who imports heavy crudes. They may have several locations to decide where to process it. The refinery ultimately receiving this heavy crude must ensure that they have available tankage to receive the crude, processing capacity to run it and logistics capability to handle the products. They must also make sure they are receiving precisely the quantity for which they are being invoiced. One of the challenges is accurate measurement of water in the crude receipt. If a refinery needs to wait on a 2MM Barrel parcel to let it settle in a tank to accurately measure water–that takes time and at the current price of crude is huge investment tied up ($50/Bbl times 2MM = $100,000,000).
They also may have to consider the hydrogen and fuel requirements to keep the refinery in hydrogen and fuel balance. Doing monthly or even weekly mass balance on the refinery and the internal units does not generate enough visibility to maximize the operational efficiency for the refiner in a global market. To accomplish these objectives many sites are facing a measurement shortfall. An obvious example is the water in crude measurement. Typical errors here can translate into millions of dollars paid for water. Many refineries also have issues with high levels of unaccounted losses in the loss control reports. Top tier refineries maintain unaccounted losses to less than 0.5% on crude. That kind of performance is not possible if you only measure the loss once per month.
Companies are engineering new refineries today coming on-line in 5-7 years in parts of the world where the owners will own the crude feed. They are being designed with digital communications technologies in the processing equipment and systems to interact more tightly with the scheduling and planning systems to maximize and optimize these assets and the added value products coming from the crude.
Michael believes the challenge for existing refineries is to improve and integrate the production management systems to account accurately on a daily basis actual verses planned production. This allows the planning and scheduling departments to improve asset utilization and squeeze more efficiency from existing equipment. Production Management systems should provide key metrics for operations management to make decisions that maximize response to market demands, spot opportunities and operating flexibility to better differentiate themselves from their competitors. This agility coupled with improved asset utilization will help existing refiners better compete as the modern, high-tech refineries begin to come on-line.
Michael recommends beginning with a thorough analysis of the production management system as a first step. This can be the basis of building a business case for change to more agile production. Developing and providing decision alternatives with their business impact is an important part of this improvement plan. There is no one thing, but rather a combination of tools, work flow changes and operational discipline which can reveal the scale of performance improvements possible.