Energy Digital Magazine – August 2019 by Energy Digital

Disrupting the energy sector with a customer-centric approach

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SHAPING THE FUTURE SUPPLY CHAIN

A U G U S T 2 0 19

PETRO RABIGH Supply chain transformation in Saudi Arabia

EMBRACING THE DISRUPTION ERA Shell Lubricants has ripped up the supply chain management rulebook

Energy sector CEOs

CREATING BUSINESS VALUE THROUGH SUSTAINABLE ENERGY Ensuring you have the best partner at your side.

enelgreenpower.com

FOREWORD

elcome to the August edition

challenges of sustainability, both

of Energy Digital.

internally and externally. He

When it comes to global supply

stresses that the first step must be an understanding of the material

chains, one word continues to

impacts of your business from

dominate, regardless of industry

an environmentally sustainable

sector: complexity. Challenges

perspective.

such as heightened customer demand and a ceaseless focus

The twin themes of supply chain

on driving down costs mean that

and sustainability are present

companies must find ways to

through this issue. For example, we

transform their existing processes.

hear how Saudi Arabian business Petro Rabigh is focusing on its

In our cover story in this issue

procurement strategy, and discover

we look more closely at Shell

why Halliburton is coupling the latest

Lubricants. The company, which

technology with a competitive shift

carries out tens of millions of

in how it manages its supply chain.

deliveries to customers and

In addition, we take a deep-dive into

distributors worldwide per year, has

growth being driven by an aggressive

ripped up the rulebook when it

supply chain transformation at

comes to supply chain

Petronas Lubricants.

management. Enjoy the issue! Capgeminiâ&#x20AC;&#x2122;s global CSO, James Robey, discusses with us the

Marcus Lawrence marcus.lawrence@bizclikmedia. w w w.e ne rgydi gi ta l. com

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CONTENTS

12 REVOLUTIONISING THE SUPPLY CHAIN THROUGH DEMANDDRIVEN PLANNING

Internal and external sustainability

Sustainability and the bottom line

56 Energy sector CEOs

Events

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CONTENTS

Nordex

124 PEMEX

82 Petro Rabigh

114 ENGIE Electrabel

164 Petronas Lubricants

144 Dynegy

184 Haliburton

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SHELL

REVOLUTIONISING THE SUPPLY CHAIN THROUGH DEMANDDRIVEN PLANNING

AUGUST 2019

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SHELL

SHELL LUBRICANTS HAS RIPPED UP THE RULEBOOK IN SUPPLY CHAIN MANAGEMENT, FULLY DISRUPTING THE INDUSTRY

his article originally appeared in Energy Digital Magazine in June last year. At that time, Nick Lynch â&#x20AC;&#x201C; now working with supply

chain consultancy, SmartChain International â&#x20AC;&#x201C; was Global Planning Excellence Manager at Shell Lubricants. Then, he told us that global supply chains are facing increased customer and portfolio complexity. Heightening consumer demands are leading companies to look at ways to transform existing processes to drive efficiencies, lower costs, provide quality customer service, all whilst lowering working capital and inventory. No business is more invested than Shell Lubricants. The global leader (in terms of market share and branded product) in finished lubricants for the last 11 years, continues to house most of its downstream business on a single instance of SAP, ena-

AUGUST 2019

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DELIVERING SUPPLY CHAINS THAT WORK

SMARTCHAIN IS A COMPANY OF INDUSTRY AND CONSULTING SUPPLY CHAIN EXPERTS WITH A LONG TRACK RECORD OF DELIVERING SUSTAINABLE CHANGE. We strongly believe that the Demand Driven Adaptive Enterprise and the Demand Driven Operating Model are the models for the future. These models are already unlocking the full potential of the Supply Chain for the organisations that are willing to embrace them. Our mission is to support these organisations – like Shell – as they take this transformational journey.

smartchainllp.com info@smartchainllp.com

bling the company to standardise its work practices on a global scale. However, growing complexities and ambitious business plans have led to amplified pressures across its supply chain operations. “I think the challenge for supply chains, especially global supply chains that are heavily networked, is really what to do with this complexity,” Lynch said. “In 2013/4 Terra Technology, which is now part of E2open, published an annual cross-industry survey which

30mn Customers are served every day at 43,000 Shell-branded fuel retail stations

showed that whilst the number of prod-

ucts sold increases, the total amount

sometimes correct; often it is not even

sold remains pretty flat in most indus-

with best-in-class forecast perfor-

tries. Therefore, as the volume sold per

mance,” he said.

product goes down, we can expect

“Products that don’t sell to forecast

SKU level forecasting to get harder the

tie up precious working capital and may

more spread out a portfolio is. This is a

become excess or obsolete inventory.

trend we certainly recognise. The fu-

With more than 10,000 saleable SKU’s

ture is not likely to be simpler than our

it is easy to understand the pressure

business of today.

that this may put on operations. Those

“In practical terms this means that

products will have consumed capacity

with our traditional forecast driven

and materials that could otherwise have

MRP planning tools, we purchase raw

been used for other products that we

materials, manufacture products and

do need at that moment. These may be

put inventory into the warehouses

products that weren’t in the forecast

based on our forecast that predicts

which become a firefight and expedit-

that we’ll sell it. In reality, the forecast is

ing chase. This bullwhip or noise isn’t w w w.e ne rgydi gi ta l. com

SHELL

business, as well as 10,000 ocean-go-

“ WE USE INVENTORY BUFFERS TO BREAK THE BULLWHIP EFFECT IN THE SUPPLY CHAIN, AND SPECIFICALLY IN DEMAND-DRIVEN PLANNING, WE DO NOT USE THE FORECAST TO DRIVE OUR TRANSACTIONS”

ing vessels that carry Shell lubricants at any time. So, just in terms of scaling that, they’re just huge numbers,” he explained.

DEMAND-DRIVEN PLANNING In 2015, Lynch sought to look at the advantages of demand-driven planning, which would seek to sidestep such pressures routinely seen within traditional forecast driven methods and enhance Shell Lubricants’ supply chain capabilities. By implementing strategic inventory

18 limited just to our internal supply chain.

buffers, typically in areas where invento-

It is clearly visible in our extended sup-

ry is already held, demand-driven plan-

ply through to our suppliers.

ning works to decouple the supply chain,

“A strategy based around simply being “better” at forecasting was simply not going to be viable in the long term.

breaking down traditional MRP processes which create a bullwhip effect. “You see this happening where you

Working harder with our traditional

have a slight change in demand on one

MRP processes and tools would not be

end of the supply chain, and by the

enough. We had taken almost all the

time that has been filtered through all

low hanging fruits already.”

of the different replenishment calcula-

With 40 lube oil blending, base oil

tions that go all the way along the sup-

and grease manufacturing plants, Shell

ply chain, the variation that people at

Lubricants fills over 2mn bottles a day,

the end of the supply chain feel is

and undertakes 30mn deliveries a year

significant,” explained Lynch.

to direct customers and distributors. “We’re also supporting the marine AUGUST 2019

“We use inventory buffers to therefore break this effect in the supply

DEMANDDRIVEN INNOVATION: EPIC RESULTS Orchestr8 is the worldâ&#x20AC;&#x2122;s best supply chain planning platform with 15 years of demand driven implementation success. Designed by planners for planners. The global leaders choice.

www.orchestr8.com info@orchestr8.com

SHELL

chain, and specifically in demand-driven planning, we do not use the forecast to drive our transactions. Instead, we set up a buffer, where we wait until we have actual demand, and then make a decision based on this demand.” Deciding to take a very different approach to that of Shell’s implementation of SAP in the mid-2000s, Lynch said that he wanted to see how the business would benefit in the face of ongoing cost pressures regularly seen in the oil and gas industry. 20

However, in today’s supply chain climate, big changes programmes like this require very solid and credible business cases. Lynch required leadership and financial backing, and strenuously looked at ways to harness available data and support the required results. “We had to be absolutely clear on the business case and ran simulations around how demand-driven planning would work in a lubricant supply chain. There are very few industries doing this. Nobody’s tackled it globally yet, so I think Shell Lubricants is the first global supply chain to adopt this methodology in its entirety,” he noted. AUGUST 2019

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SHELL

“We’re talking about 30-plus key

implement demand-driven planning,

manufacturing plants around the world

Lynch liaised with Shell Lubricants’

and several hundred stocking points,

regional planning managers in the

distribution centres, regional distribu-

Americas, Europe, Africa and Asia

tion centres, warehouses etc. These

Pacific (APAC) to discuss the busi-

supply both local and networked mar-

ness’s ongoing supply chain roadmap.

kets, so accurate data was absolutely

“There was enough interest at that

crucial. It’s a multi-year project of sig-

first meeting to warrant their support

nificant change management scale,

for doing the first of the detailed simu-

which required significant commitment

lations, which was completed in the

to drive this transformation.”

North American business,” he said. By partnering with consulting firm,

DEVELOPING EXPERTISE

SmartChain LLP, the business then

In order to gain further support to

worked to simulate 12 months of real

AUGUST 2019

business data to look at how things ran during this period of time. With this data, Shell was able to simulate what would happen with a demand-driven methodology, with exceptional results. Noting that SmartChain LLP has been vital in transforming Shell’s supply chain capabilities, the firm has also been instrumental in delivering essential expertise across its entire design, build and implementation. “I reached out to SmartChain back in 2014 to take a first look and educate myself on this topic,” acknowledges Lynch. “I introduced demand-driven

“ WE HAD TO BE ABSOLUTELY CLEAR ON THE BUSINESS CASE AND RAN SIMULATIONS AROUND HOW DEMAND-DRIVEN PLANNING WOULD WORK IN A LUBRICANT SUPPLY CHAIN. THERE ARE VERY FEW INDUSTRIES DOING THIS”

planning to the Shell business with SmartChain in April 2015, which is essentially when we formally started, and

we simulated. With a lubricant business

they have been, effectively, our con-

of 5bn litres, this is huge but we must

sulting partner on this for the duration.

also get it right.

“It’s a small team of very high-calibre,

“SmartChain brings a wealth of ex-

specialised individuals who have imple-

perience and is actively supporting our

mented demand driven planning before

global rollout. We’re live in Egypt, Spain,

in various businesses, who could give

Italy, Turkey and our European Material

us the benefit of a proven methodology

Scheduling centre in Krakow. We’re

of how to design, build and implement

currently working with Russia, North

this. This was critical, because the size

America, Malaysia and the Philippines.”

of the prize at Shell could be anything between 20% to 30% reduction in

TECHNOLOGICAL DRIVE

working capital, garnered from what

Nonetheless, although the results from w w w.e ne rgydi gi ta l. com

SHELL

the North America simulation looked positive, Lynch explains that both the

positive results,” Lynch added. With such positive test results, sen-

European and Asia Pacific manage-

ior leaders tasked Lynch to source es-

ment teams required the simulation to

sential software to further transform

also be undertaken in these areas for

the company’s supply chain. “There

further assurance. Tests were there-

was no way we could support this with

fore undertaken at plants in Ghent,

a planner’s favourite tool…MS Excel,”

Belgium, as well as Shell’s Hong Kong

Lynch said with a smile.

plant and network. “They are all very different, with very

Whilst material requirement planning (MRP) capabilities in traditional enter-

different supply chains in terms of the

prise resource planning systems such

customers they serve, the geography,

as SAP and Oracle remain forecast-

the product portfolio, the networking,

driven, Shell looked at industry soft-

etc., but all simulations produced very

ware endorsed by the Demand Driven

AUGUST 2019

FACT & FIGURES

Institute, which could not only remain compliant with Shell’s IT standards, but conform to the demand-driven way of doing planning across its entire business portfolio. “The Demand Driven Institute is run by Carol Ptak and Chad Smith, who are the authors of the bible of MRP in its current form. They have introduced demand-driven MRP as a new chapter, where they have codified the structure for how demand-driven planning should be implemented,” explained Lynch. “The software had to be globally scalable, match the strict Shell IT strategy of how to buy software, and had to be cloud-based.” Narrowing its options down in late 2016, the company undertook extensive demos and tests, bringing demand-driven planning to fruition in under two years. Partnering with Orchestr8, Lynch gained leadership support and submitted the group investment proposal required to proceed with such revolutionary changes, in order to enable Shell IT and the software company to build the required infrastructure.

• Shell makes and sells a wide variety of lubricants for the automotive, heavyduty transport, mining, power generation, construction and general manufacturing sectors • Leading brands include Shell Helix, Shell RIMULA, Pennzoil, Quaker State AND Shell Tellus • Shell Lubricants fills over 2mn bottles a day and undertakes 30mn deliveries a year to direct customers and distributors • Shell has 40 lube oil blending plants, five base oil manufacturing plants, as well as 10 grease manufacturing plants • Partnering with consulting firm, SmartChain LLP, enabled Shell to simulate 12 months of real data to look at how things ran during this period, and then simulate what would happen with a demand driven methodology

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SHELL

“With Shell being on a single instance of SAP, it meant that with Orchestr8, Shell IT only had to build the interfaces from our host SAP system into Orchestr8 just the one time. Every country around the world is on the same system,” reflected Lynch. “We went live with our pilot in October 2017. So, March to October we completed the design, build and first implementation. That was a terrific effort by all the folks involved.” 26

UNLEARNING OLD HABITS Introducing such a change from traditional processes; however, it remains clear that demand-driven planning will only remain successful if it is embraced by those at the helm.

the expediting, changing schedules,

This is a challenge where Lynch

etc. – then the day in the life of the sup-

remains confident the business will

ply chain individual will feel quite differ-

overcome.

ent when this is fully implemented.”

“We’ve put nearly 200 people in

Demand-driven planning will be

planning through certified demand-

a distinct game changer for Shell

driven planner training and are taking

Lubricants, and enable the business

them through a sensible change jour-

to better serve its customers, with

ney throughout the implementation,”

a higher stock availability and a lower

he said.

working capital commitment.

“If you can take out the firefighting, and the noise within the business – AUGUST 2019

“If you think about a change programme, this is changing the planning

in 15 time zones around the world, as

over to this, more and more companies

well as the different depots and plan-

will be forced to take a good look at

ning locations. With the first implemen-

their planning processes and consider

tation in October 2017, we will be finish-

whether to move away from 20+ years

ing the bulk of the implementation in

of forecast driven MRP and the industry

2019 with just a couple spanning over

that exists around that.

into 2020. â&#x20AC;&#x153;Shell Lubricants is an enormous supply chain, and I think this will provide a huge competitive advantage for Shell,â&#x20AC;? concluded Lynch.

* All information correct at time of publication

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LEADERSHIP

INTERNAL AND EXTERNAL SUSTAINABILITY 28

Capgemini’s global CSO, James Robey, has spearheaded sustainability initiatives both internally and externally with the company’s numerous clients…

AUGUST 2019

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LEADERSHIP

ames Robey has been working at the multinational professional services and business consul-

tancy giant Capgemini for over two decades, ten of which he has served as CSO. It was during his first seven or eight years developing new business, looking after clients and affecting internal change programmes at the company that Robey started to read up on some of the sustainability challenges the company faced and it became increasingly clear, whether it be climate

change or population explosion, that sustainability was to have a profound impact on how business needed to operate over the next 10, 15, 20, 25 years. “As a result of a series of conversations with our senior leadership we started to create a sustainability program to start driving change within Capgemini which I did initially from a UK perspective,” he explains. “And for the last six or seven years, I’ve been doing that from a global perspective.” So, where did Robey and his team start, when addressing sustainability both internally, to its massive global operations and externally – to its numerous clients. “The starting point was reAUGUST 2019

ally two or three-fold,” he explains. “Part of it was about really understanding the material impact that the business had from an environmentally sustainable perspective. So, we put into place some detailed measurements so we could understand our environmental impacts.” Robey then orchestrated some bold targets for the UK business. “At the time, very few people were touching sustainability targets so it was quite a challenge in the sense that you couldn’t just go out there and benchmark your targets against everybody.” Three key areas Robey identified as being in need of refinement from a sustainability perspective was around travel, energy and Capgemini’s carbon footprint. “We decided to set bold targets on the ground. The scale of the challenge means bold targets are needed. And in many ways, it’s better to set a really big target and get somewhere near that target than it is to set a really low and easy target and get over it because you’re still making less of an impact.” “We’ve always brought the business with us and one of the things we did right at the beginning of the programme was to create a sustainability board for the w w w.e ne rgydi gi ta l. com

LEADERSHIP

“ Just by changing the mindset, you realise that the sorts of business transformation projects we might do can actually have a really positive sustainability benefit alongside a really positive business benefit” — James Robey, Global CSO, Capgemini

UK business; we now have one at group level too. But that sustainability board was comprised of the senior executives and the numerous CEOs, because of the way the business is structured. This has been really important in both the governance of the programme, but also to the drive to really push change through the organisation. Because ultimately at the end of the day, sustainability is a business change programme.” Sustainability continues to affect change in virtually every aspect of business and supply chain and construction are no exceptions. “We look at the end-to-end responsibility surrounding sustainability. We have sustainability supply chain experts in the team and although I don’t have sustainable construction people, we work very closely with our corporate real estate team on office refurbishment and office efficiency. They’re a really strong centre of excellence within that team in terms of driving down energy use and increasing efficiency.” Travel was identified as the area in which the biggest single impact for sustainability could be initiated. Robey and his team wanted to look at travel

AUGUST 2019

from a holistic perspective and not just

you’re stuck in the wrong part of the

through the lens of carbon footprint.

world on the Friday night and they can-

“We wanted to look through the lens of

cel the last flight. It’s not great. But we

employee wellbeing, employee safety

wanted to reframe the way we thought

and operational efficiency. So, Travel-

about traveling, and we’re continuing

well was a programme that looked at

to build on that. At the moment we’re

travel from an end-to-end perspective

halfway through a project we’re doing

to address that issue. We said, ‘If we can

around virtual collaboration hubs. So,

find smarter ways of delivering, that’s

that’s absolutely something we’ve made

good for the environment and uses

progress on, but it’s actually something

less carbon, but also good for people’s

we’re continuing to invest in.”

work-life balance, then that’s good for operational efficiency. We’ve all had

INTERNAL SUSTAINABILITY

those nightmare occasions where

Capgemini, under Robey’s guidance, w w w.e ne rgydi gi ta l. com

LEADERSHIP

set a series of science-based targets as an organisation two years ago targeting 2020 and 2030. Robey and his team then launched Tenfromten last year, which unpicked some of the lessons they’d learnt on their journey. “There’s a whole range of things we’ve been doing from an office energy efficiency perspective. Across the business, we have made enormous inroads in our energy efficiency across the estate, and that’s everything from relatively straightforward updatings to putting in smart light34

ing systems, updating heating, ventilation and air conditioning systems. We have put in solar arrays at a number of our centres around the world, particularly in India.” Capgemini built and launched a UK data centre called Merlin in Swindon in 2010. “The question we asked ourselves was what would it look like to build an ultra-sustainable data centre? So, you’ll know that most data centres run somewhere between 1.7 to 2 as a PUE, so, you’re using as much energy on powering the centre as you are running the kit. Merlin runs at about 1.09, which for anybody who knows what data centres are doing, is quite remarkable.” AUGUST 2019

CLICK TO WATCH : ‘CAPGEMINI INVENT: BRINGING TO LIFE WHAT’S NEXT’ 35 One of Robey’s innovations at Capgemini is two by two grid on which one axis is ‘impact’ and on the other is ‘visibility’. “So, you would have some initiatives which have really high impact. So, for example, we talked about the data centre,or the changes you might do in a building. They’re really important from a high impact perspective, but of course, people don’t know about them, or they only know about them if you communicate about them. So, we wanted to look across the grid, and obviously not the low, low box, but we wanted to make sure that in parallel within those w w w.e ne rgydi gi ta l. com

LEADERSHIP

really high visibility initiatives, we were also doing things which were perhaps at a smaller environmental footprint, but nonetheless very visible. So, right at the beginning of the programme, we took all the desk bins away that people traditionally had. Later on, we replaced all the one-use plastic cups with china mugs and things like that. They’re not our biggest environmental impact, but they’re an important part of sending a signal to our 8,000 people that we’re serious about this; we’re investing.” 36

SUSTAINABILITY IN THE SUPPLY CHAIN Robey is clearly enthusiastic regarding the innovative sustainability procurement methodology Capgemini has

Act. For a lot of our smaller partners,

devised. “It was all about being able to

there’s been quite a big element of edu-

reach out to our suppliers, to under-

cation involved, as well as engagement

stand their position and what they’re

and assessments.”

doing from a sustainability perspective

In terms of sustainability at Capgem-

to vet their performance. But what’s

ini the biggest external change, the

been really innovative about the way

biggest impact the company can affect

we develop the system is it’s useful for

is the work it does with its numerous

engaging and pushing information out.

global clients. “There’s the whole shift

It’s broader than the pure environmental

towards the client agenda, from my per-

sustainability. We’ve used the platform

spective,” he explains. “Just recognising

for going out to 100% of the UK supply

the one or two percent with some of

base on topics like the Modern Slavery

our big clients has a massive potential

AUGUST 2019

“We have made enormous inroads in our energy efficiency across the estate, and that’s everything from relatively straightforward updates to putting in smart lighting systems, updating heating, ventilation and air conditioning systems” — James Robey, Global CSO, Capgemini

impact, which could be larger than our

our retail clients or some of our manu-

entire global footprint as an organisa-

facturing clients or some of our energy

tion. Day in and day out, when we think

clients, you suddenly discover that

about our impact as a business, it’s our

they have carbon footprints which are

work with the clients that has the most

maybe 50, 100, or maybe 200 or more

profound effect. If you quantify life in

times Capgemini’s impact.”

terms of carbon, just as an easy metric,

So, how does Capgemini help its

we’re around about half a million tonnes

clients? Robey sees sustainability as

per year. That’s the carbon footprint of

“business change, and transformation”,

our operations. We’re about just over

which is at the heart of what Capgem-

200,000 people spread across 40 or

ini does for its clients, for the last 50

so countries. However, if we compare

year or so, “usually using IT”. “About 12

that half a million tonnes with some of

months ago now, we launched a new w w w.e ne rgydi gi ta l. com

LEADERSHIP

target for the group to help our clients

angle of course, is a million litres of

save 10 million tonnes of carbon. Thatâ&#x20AC;&#x2122;s

diesel is ÂŁ1.4 million of costs, and that

about starting to shift the corporate

would be a traditional business change

mindset into realising the opportunities.

or optimisation. Of course, saving a mil-

Through doing the things that we do

lion litres of diesel saves around a three

every day as a business we have a fan-

and a half thousand tonnes of carbon.

tastic potential to make a real difference

All of a sudden, just by changing the

to our clients. For example, we might

mindset, you realise that the sorts of

work with an organisation which has a

business transformation projects we

large fleet of trucks, and a typical busi-

might do can actually have a really

ness challenge might be how to save

positive sustainability benefit alongside

a million litres of diesel. The traditional

a really positive business benefit.â&#x20AC;?

angle on that, the traditional business 38

AUGUST 2019

Capgemini has always been very

CLICK TO WATCH : ‘CAPGEMINI CLOUD PLATFORM (CCP)’ 39

active in the IT space and this repre-

that there’s a big opportunity for us to

sents a massive opportunity when it

help our clients, and that’s the external

comes to sustainability. One of the big

strand of what we’re driving at from a

topics in the IT industry at the moment

sustainability perspective.”

is of course revolving around migration

“Of all the things we’re doing at the

to the cloud, and cloud computing.

moment, I think that client angle is the

“If you do migration to the cloud cor-

most exciting. I’ve given you a couple of

rectly and smartly, you can save energy,

examples. We did another project with

anywhere between 60 and 70% of the

a big manufacturing company, helping

carbon impact of your IT systems just

them to visualise the carbon impact of

by migrating from a traditional dedi-

their global IT estate, with some dash-

cated server-based view of the world to

boarding and some visualisation, and

a smart cloud view. So, again, it’s going

again, some of that has really brought

through this process of recognising

to life for their clients just the quantity of w w w.e ne rgydi gi ta l. com

LEADERSHIP

“ If you do migration to the cloud correctly and smartly, you can save energy, anywhere between 60 and 70% of the carbon impact of your IT systems” — James Robey, Global CSO, Capgemini

AUGUST 2019

energy flows associated with running the IT systems they rely on. This has really highlighted some very significant opportunities for them to optimise, to virtualise, to drive efficiency.” I suppose the way we tend to think about it, in terms of if you’re going to have a conversation with a CIO, which I was doing last week actually with a CIO of another big manufacturing company, is from an IT perspective, we think about three things. We think about how can you increase the efficiency of your IT estate as a company. So, that’s energy efficiency, that’s virtualisation. That’s the first level. The next level around is how can you use IT to make your business more efficient. Then the third ring around the outside is how can you start to use IT to think about the value chain for everything, from your suppliers to your customers, to actually use IT to reduce the environmental impacts of your reason for being.”

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S U S TA I N A B I L I T Y

Sustainability 44

and the

bottom line Energy Digital spoke with Anthesis CSO Paul Crewe to learn how the global sustainability services and solutions consultancy can help businesses deliver sustainability strategies underpinned by technical innovation WRITTEN BY

AUGUST 2019

DAN BRIGHT MORE

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S U S TA I N A B I L I T Y

aking its name from the Greek word for the stage of a plant’s lifecycle when it is most productive, Anthesis was founded in 2013 and

driven by the determination to reduce risk, increase resilience and realise opportunity to deliver truly sustain-

able organisations. Employing a team of 260 with a global reach across 11 countries, Anthesis develop financiallydriven sustainability strategies that go hand in hand with commercial success, anchored by technical innovation. “We 46

have grown organically through acquisitions to be able to provide support for all the key aspects of sustainability; from energy reduction, regeneration

sion is able to create bespoke plat-

and storage, to waste and resource

forms and applications for businesses

management, the circular economy

to help them achieve those sustain-

and carbon footprint reduction,”

ability goals. “We are unique in the fact

explains CSO Paul Crewe. “Within

that we don’t just provide traditional

the group we also have a sustainable

consultancy advice, we’re able to offer

chemistry division helping organi-

absolute solutions to aid the delivery of

sations fulfil their legal requirements

sustainability initiatives,” adds Crewe.

and a team focused on compliance

“Additionally, in the area of energy and

for CDP (Carbon Disclosure Projects)

renewables we provide support with

as part of our sustainability strategy,

alternative financing to access funds to

which also supports the United Nations

accelerate the delivery of those tech-

sustainable development goals.”

nologies at scale and at pace.”

Meanwhile, its software design diviAUGUST 2019

Allied to its bespoke software solu-

on the back of a Williams Formula 1 car and adapted to fit the edge of a shelf in open refrigerated cabinets. Like the automotive aerofoil, which helps keep a car firmly on the road at high speed, in its vertical position an aerofoil shelf works by keeping the cold air trained inside the case rather than pouring out into the aisle and wasting energy.” In Crewe’s previous role as Head of Sustainability, Engineering, Energy and the Environment at Sainsbury’s, he supported the introduction of this technology across the whole of the supermarket giant’s estate to deliver significant energy reductions. “At Antions, Anthesis also focus on physi-

thesis we’re helping to roll this solution

cal technologies to drive significant

out across the world enabling our

benefits and savings in areas like

customers to accelerate their plans

energy, where the company is con-

with economical business cases with

stantly looking for the next innovation

a proven ROI,” he adds.

to share with clients to make meaning-

Alongside such practical innova-

ful step changes towards driving out

tions, digital platforms have allowed

carbon and reducing energy consump-

for the creation of software systems

tion. “We’re partnering with an aerofoil

which ingest data on a massive scale

technology company to significantly

to deliver information that is informa-

reduce the refrigerated energy load

tive, intuitive and capable of providing

within display cases in retail supermar-

actionable insights, based on what is

kets,” reveals Crewe. “The tech is actu-

actually happening in an organisation,

ally based on the aerofoil blade used

to drive cost effective solutions that w w w.e ne rgydi gi ta l. com

S U S TA I N A B I L I T Y

can also provide a positive impact with regard to climate change and sustainability. “It’s an important area of focus for Anthesis,” admits Crewe. “We not only help organisations understand their energy consumption at a micro level, with the data platforms we deploy we also become very intuitive around what a building, project or operation should be doing via self-learning within those environments. People can be quite blasé about data but it’s a vital part of business transformation and under48

standing your supply chain’s end-toend commodity needs (from materiality to the environment and the social governance relating to a product) to help businesses make the right decisions both financially and environmentally. The cloud is critical here… Data that’s easily accessible will drive efficiency and awareness at speed and at scale.” Once just a word used as part of a CSR plan, Crewe believes sustainability is now unequivocally mainstream, having become a critical commercial aspect of any organisation. “Once they understand what sustainability means for them it can inform business decisions and have a massive impact,” he AUGUST 2019

Paul Crewe, CSO, Anthesis

CLICK TO WATCH : ‘ANTHESIS CONSULTING GROUP – SUSTAINABLE DESIGN AND INNOVATION’ 49 argues. “For example, energy, along with wages, is often the highest controllable cost, so with the rising cost of carbon taxation on energy it’s an area we can help businesses both mitigate against and create revenue streams through the deployment of renewable energy and storage. The CFOs of companies embracing sustainability are understanding it does have a critical commercial aspect to stay optimised and efficient with a positive impact on the bottom line.” What advice would he give companies eager to achieve this type of w w w.e ne rgydi gi ta l. com

S U S TA I N A B I L I T Y

positive impact on their sustainability

globe understand both the social and

journey? “Regardless of the sector,

economic impact of sustainability:

if you can truly understand how your

“I had the privilege of leading some

business operates from an energy,

of the largest and highest returning

waste, water and carbon perspective,

investments in the company’s history,”

these key drivers of cost generation

he remembers. “From rolling out en-

can become revenue income opportu-

ergy lighting across the estate through

nities. Working with an organisation

to implementing the largest multi-wreath

like Anthesis can help pinpoint demon-

array of PVs in Europe while pushing in-

strable gains, programs of investment

novative tech such as the aerofoil shelf

and positive behaviour change to drive

and photovoltaic sensor opaque ther-

those in real time,” asserts Crewe,

mal technologies. We also explored the

whose time with Sainsbury’s enabled

increasing benefits of battery storage

him to help organisations across the

and smart opportunities with control

AUGUST 2019

a year with funding from BEIS (the government department for Business, Energy & Industrial Strategy) to create a carbon and energy footprint, modelling and target tool. “Our internal team has developed the platform and a combination of in-house colleagues have provided expertise and guidance. In a nutshell it’s been a ground-breaking project to measure city-level emissions, model future scenarios, set reduction targets (in line with international standards) and deliver pathways to implement change.” It will be rolled-out to other UK core cities in the coming months and there are plans to create different systems linked to IoT to connect these

versions of the tool, working alongside

technologies up and generate signifi-

corporate entities and sectors.

cant value.” Crewe believes Anthesis are well

Anthesis work in partnership with academia to evaluate and understand

place to help organisations with the

opportunities with emerging technolo-

culture shift towards implementing

gies like these and is also allied with

a sustainability strategy that goes

a number of NGOs and non-profits,

beyond compliance with new technolo-

working closely with the likes of the

gies and tools like SCATTER (Setting

Waste Resources Action Program

City Area Targets and Trajectories for

to help support solutions for reduc-

Emissions Reduction). Anthesis has

ing waste across the UK and Europe.

been working with Greater Manchester

“We’re also a partner of the Consumer

Combined Authority and the Tyndall

Goods Forum, an organisation set

Centre (Manchester University) for over

up to provide sustainable focus and w w w.e ne rgydi gi ta l. com

S U S TA I N A B I L I T Y

intelligence insight for retailers and

certainty around what it will mean for

manufacturers across the globe,” adds

their business. Crewe also notes the

Crewe, who is proud of the opportu-

rate of change with technology has

nities taken by Anthesis to provide

surpassed expectations in the last few

thought leadership and guidance on

years… “For example, with energy light-

food waste across the UK as part of its

ing the efficiency of the LED proces-

collaboration with the Institute of Gro-

sors has improved incredibly. Some-

cery Distribution (IGD).

times organisations see that rate

Crewe is mindful of the obstacles

of change and then choose to wait for

to further progress and notes that the

the next iteration, so it can almost be-

shifting sands of government legisla-

come a challenge to tick that box and

tion can often cause uncertainty when

try something new.”

it comes to driving innovation and in52

Awareness around sustainability has

vestment. Meanwhile, the spectre

spiked. Thanks to TV shows like Blue

of Brexit has caused organisations

Planet, plastics has become extremely

to slow down until they have more

topical. “We have a division dedicated

CLICK TO WATCH : ‘2019 PREDICTIONS SERIES – SUSTAINABLE FINANCE AND THE TCFD’

AUGUST 2019

“ Regardless of the sector,if you can truly understand how your business operates from an energy, waste, water and carbon perspective, these key drivers of cost generation can become revenue income opportunities” — Paul Crewe, CSO, Anthesis

to helping people across the world to

will impact on the work Anthesis does?

plan, mitigate and do the right thing by

“The next ten years will be crucial to

their business when it comes to pack-

limit global temperature rise,” he says.

aging and the use of plastics. During

“There’s a clear message: rapidly de-

my time in retail it’s one of the biggest

carbonize the global economy to avoid

examples of the profile of an issue be-

the worst impacts of climate change.

ing raised, it’s such a positive trend and

Changing weather patterns will produce

something we’re being asked to help

an impact through temperature change

on more and more,” says Crewe.

and rising sea levels. We have to start

The recent IPCC (Intergovernmental

planning to mitigate and adapt to the

Panel on Climate Change) Special

IPCC report findings. It’s an area of

Report was strident about what climate

importance not just for business to get

change means for business. What are

right but for communities, cities and

Crewe’s predictions for how this report

countries across the globe. The risks are w w w.e ne rgydi gi ta l. com

S U S TA I N A B I L I T Y

“ We not only help organisations understand their energy consumption at a micro level, with the data platforms we deploy we also become very intuitive around what a building project or operation should be doing via self-learning within those environments” — Paul Crewe, CSO, Anthesis

real so we need to support our clients.”

help prepare our clients for disclosure

Looking ahead, Crewe emphasises

on financial reporting on climate re-

the need for Anthesis to continue to support its partners and their clients

lated matters.” In helping companies achieve this

with their legislative ethos require-

type of goal Anthesis has been work-

ments to ensure they have up to date

ing with an international retailer which

ethos assessments while helping to

was aiming for ambitious energy and

support energy reduction in their build-

carbon reduction targets within their

ings allied to delivering good rates of

corporate sustainability strategy. An-

return on their investment. “With new

thesis undertook investment grade

carbon reporting legislation (Stream-

audits to identify energy conservation

lined Energy and Carbon Reporting –

measures (ECM), financial and non-

SECR) coming into effect in April 2019,

financial benefits and payback periods.

we’re being asked more and more to

“We worked with the client team to

AUGUST 2019

build a business case for the imple-

group has come and the trust they’ve

mentation of key recommendations,”

earned: “Anthesis have been excellent

recalls Crewe. “The solution included

partners with their concentration on

technical insulation to reduce heat loss,

technical excellence and offering top

gas usage and costs. We also project

client value. They are environmental

managed the installation across every

experts, big enough to provide global

UK site. In the end our ECM solution

services but small enough to provide

offered projected energy savings of 5.6

the independence and agility that

million kWh per year and an impressive

provides great results.” Darrel Stick-

payback period of just 1.8 years.”

ler, Global Environment/Sustainability

Crewe believes working in partner-

Lead, Cisco Systems.

ships is where Anthesis will continue to excel. Leaving the last word to clients like Cisco Systems shows how far the w w w.e ne rgydi gi ta l. com

TOP 10

AUGUST 2019

ENERGY SECTOR CEOs We look at the top 10 CEOs in the energy industry in accordance with S&P Global Platts Top 250 global energy company rankingsâ&#x20AC;¦ WRITTEN BY

MARK SPENCE

* Rankings compiled in accordance with: www.top250.platts.com w w w.e ne rgydi gi t a l . com

TOP 10

DARREN W. WOODS TITLE CHAIRMAN & CEO COMPANY EXXON MOBIL CORP Woods was elected Chairman and CEO by the ExxonMobil Board of Directors effective from 1 January last year. He first joined Exxon Company Interna-

10 58

PATRICK POUYANNÉ

tional in 1992 as a planning analyst and progressed through a number of domestic and international assignments for Exxon Company International, ExxonMobil Chemical Company, and ExxonMobil Refining and Supply Company. In 2016 Woods was elected

TITLE CHAIRMAN, CEO & PRESIDENT COMPANY TOTAL SA

president of Exxon Mobil Corporation

Pouyanné joined Total back in 2000

tors, before taking up his current role.

and a member of the board of direc-

when they absorbed petroleum company Elf where he was originally the general secretary for the Angolan subsidiary. In 2002 he became Total’s senior vice president of the exploration production department in charge of the finance, economics and information systems. In May 2015, he was elected as a member of the board of directors of Total. In December Pouyanné was appointed chairman and CEO of Total, combining both roles. AUGUST 2019

SANJIV SINGH TITLE CHAIRMAN & MANAGING DIRECTOR COMPANY INDIAN OIL CORP LTD Sanjiv Singh has been with India Oil for over 35 years, spearheading refinery operations as well as mega greenfield and brownfield projects in refining and petrochemicals. He was appointed Chairman in June

JOSEPH W. GORDER

2017 and is also Chairman of Chennai Petroleum Corporation Ltd. (CPCL) and Hindustan Urvarak and Rasayan Ltd. (HURL). In 2016 he was the recipient of the Fellowship Award of the Centre for Excellence in Project Management (CEPM) for conceiving

TITLE CHAIRMAN, CEO & PRESIDENT COMPANY VALERO ENERGY CORP

new projects and leading implementa-

Joseph Gorder was first elected to

refinery locations.

tion of mega projects across Indian Oil

Valero’s board back in February 2014, becoming CEO in May of the same year and Chairman that December. Previously he was President and Chief Operating Officer since November 2012, Executive Vice President and Chief Commercial Officer in 2011 and oversaw Valero’s European operation from its London office. Gorder also serves on the board of directors of Anadarko Petroleum Corp.

w w w.e ne rgydi gi t a l . com

TOP 10

HOULIANG DAI TITLE VICE CHAIRMAN & PRESIDENT COMPANY CHINA PETROLEUM AND CHEMICAL CORP Houliang Dai started his career with China Petroleum and Chemical Corp (Sinopec) in December 1997 when he

06 60

VAGIT YUSUFOVICH ALEKPEROV

TITLE CEO, PRESIDENT & EXECUTIVE DIRECTOR COMPANY PJSC LUKOIL

was appointed as Vice President of Sinopec Yangzi Petrochemical Company. Throughout his career with Sinopec he has been variously appointed as Director and Vice President, Vice Chairman and President, Director, Chairman and President and Chairman of Sinopec Yangzi Petrochemical Company. Over the last decade Dai has served as a senior vice president

Azerbaijani and Russian businessman,

and Chief Financial Officer of the

Vagit Alekperov is reputed to be the

groupâ&#x20AC;&#x2122;s listed arm, Sinopec Corp.

eighth richest person in Russia accord-

www.sinopecgroup.com

ing to Forbes magazine. During the late 1960s Alekperov worked in the oilfields of Azerbaijan and West Siberia before graduating from the Azerbaijan Oil and Chemistry Institute in 1974. Following a raft of professional achievements, he was appointed President of OAO LUKOIL in 1993 and has maintained his position ever since.

AUGUST 2019

MUKESH DHIRUBHAI AMBANI TITLE CHAIRMAN AND MD COMPANY RELIANCE INDUSTRIES LTD.

04 HWAN-EIK CHO TITLE PRESIDENT, CEO AND STANDING DIRECTOR COMPANY KOREA ELECTRIC POWER CORP

Indian business magnate Ambani, is the chairman, MD and largest shareholder of Reliance Industries Limited, a Fortune Global 500 company. According to Forbes the oil and gas giant is worth around $51bn (revenue). A vast list of honours includes being named Economic Times Business Leader of the Year and the only Indian to be featured on Forbes’ Global Game Changers List in 2017.

Chief Executive Officer and Standing Director of KEPCO since December 17, 2012. Prior to his current position, he served as Chair-professor at Hanyang University, President of the Korea Trade-Investment Promotion Agency, CEO of Korea Export Insurance Corporation and Vice Minister of the Ministry of Commerce. Cho received a Ph.D. in Business Administration from Hanyang University. www.kepco.co.kr

swiss-image.ch/Photo Remy Steinegger © World Economic Forum

Hwan-Eik Cho has been President,

03 w w w.e ne rgydi gi t a l . com

Photo: Christian Schlüter/E.ON

TOP 10

02 DR. JOHANNES TEYSSEN

Teyssen became a member of the

TITLE CHAIRMAN OF THE MANAGEMENT BOARD & CHIEF EXECUTIVE OFFICER COMPANY E.ON SE

in Munich. By 2010, Teyssen was

Board of Management of the E.ON Group’s central management company appointed to the position of CEO of E.

Johannes Teyssen’s E.ON journey

ON SE. Other key roles have included

started in 1989 when he joined the

President of Eurelectric (2013-2015),

electricity generation division of E.ON’s

World Energy Council Vice Chair

predecessor VEBA in Hanover. From

(2006-2012), member of the Presiden-

1998 to 2001, Teyssen managed an

tial Board of the Federation of German

associated company of E.ON operat-

Industries (2010-present) and member

ing in electricity and gas distribution

of the Supervisory Board of Deutsche

and sales. From 2001 to 2006,

Bank AG (2008-present).

AUGUST 2019

ALEXEY BORISOVICH MILLER TITLE DEPUTY CHAIRMAN & CHIEF EXECUTIVE OFFICER COMPANY PJSC GAZPROM

the Saint Petersburg Mayor’s Office under Vladimir Putin. An array of high-profile, senior positions followed. In 2000, he was appointed Deputy Minister of Energy of the Russian Federation, before succeeding Rem

Following his graduation from the

Viakhirev as Chairman of the Manage-

Leningrad Institute of Finance and

ment Committee of Gazprom (CEO) in

Economics in 1990, Alexey Miller took

2001. Among a series of professional

up a number of notable roles prior to

accolades, Miller was also named

becoming CEO at Gazprom. In

Person of the Year by Expert magazine

1991-96, Miller served with the

– the influential and respected busi-

Committee for External Relations of

ness title – back in 2005. 63

01 w w w.e ne rgydi gi t a l . com

EVENTS & A S S O C I AT I O N S

The biggest industry events and conferences WRITTEN WRITTENBY BY LAURA XXXXXXMULLAN XXXXX from around the world

03–06 SEPT 2019 SPE Offshore Europe [ ABERDEEN, UK ] Globally recognised as one of Europe’s top exploration and production (E&P)

14–16 OCT 2019 International Conference on Power and Energy Technology

events, SPE Offshore Europe is con-

[ RABAT, MOROCCO ]

sidered a must-attend conference.

This year will see the kick-off of the

Attendees can expect to keep up-to-

2nd International Conference on

date with the latest technologies

Power and Energy Technology. Set to

shaking up the oil and gas industry.

be held in Mohammed V University in

Located in Aberdeen in the UK, over

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36,000 attendees and 900 suppliers

year’s event is ‘bridging and connect-

are anticipated to attend the event.

ing’ – across disciplines, practices, places and understandings.

AUGUST 2019

17–19 FEB 2020

4th International Conference on Fossil and Renewable Energy (F&R Energy) Hosted by the non-profit

25–27 FEB 2020 International Petroleum (IP) Week

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[ LONDON, UK ]

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European Utility Week is

F&R Energy is an impor-

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a highly-anticipated

tant gathering that

International Petroleum

event in the energy mar-

gives business leaders

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ket, with an expected

the opportunity to foster

event which gives oil and

audience of over 18,000

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sionals. The event will

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ises gripping debates

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12–14 NOV 2019 European Utility Week

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w w w.e ne rgydi gi ta l. com

A sustainable pioneer in the wind energy market WRIT TEN BY

L AUR A MULL AN PRODUCED BY

TOM VENTURO

AUGUST 2019

w w w.e ne rgydi gi ta l. com

THE NORDEX GROUP

Following a pivotal merger between Nordex and Acciona Windpower in 2016, the Nordex Group is disrupting the sustainable energy market with its customer-centric approach

ind power has proven to be big business. According to the American Wind Energy Association (AWEA), US wind power produc-

tion has tripled over the past decade and there are now more than 54,000 wind turbines operating in 41 states 68

as well as Guam and Puerto Rico. Following a pivotal merger, Nordex Group has profited from this tailwind and today, it stands as the fourth largest wind turbine provider in the marketplace. By bringing together the expertise of both Nordex and Acciona Windpower, Head of Project Management, John McComas, says that this union has been critical to positioning itself as a wind energy front runner. The advantages have been tenfold. “One of the immediate benefits is size,” McComas explains. “Acciona Windpower and Nordex on their own were smaller organizations and were not reaching all markets. By merging, we’ve created the fourth largest wind turbine supplier in the marketplace. Since the marketplace itself is competitive and volume driven, this merger really helped us increase our offering to large-scale clients.” By blending two AUGUST 2019

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THE NORDEX GROUP

70 digitally-savvy companies, the merger has also helped to foster innovation. The Nordex Group has launched and installed one of its highest yielding and quietest onshore turbines. “In 2019, we will be installing our first commercial 4.5 MW wind turbines in international markets that will incorporate the best elements from the Acciona Windpower turbine with the original Nordex turbine,” notes McComas. The Nordex Group not only competes with the wind sector but also has to go head to head with the solar, nuclear, hydropower among other sectors. AUGUST 2019

“ We’re a very flexible and customeroriented organization. We adapt according to feedback in order to provide the best solution from a project to project basis” — John McComas, Head of Project Management

CLICK TO WATCH : ‘WIND TURBINE 3D ANIMATION – NORDEX’ 71 What distinguishes the firm from the rest,

Keeping a vigilant eye on market

argues McComas, is how it collaborates

dynamics, the Nordex Group under-

closely with its clients from start to finish.

stands that the cost of energy is one

“These are projects that are incredibly

of the most important key performance

complex with millions of dollars of invest-

indicators (KPIs) facing the sector

ment, so collaboration is absolutely key,”

today. “The cost of energy reduction

he explains. “No one benefits if people

initiative has become culturally ingrained

are pointing fingers at each other and

in the organization. We actively ask

making excuses. Ultimately, it’s much

ourselves if we can do our tasks more

more positive for the project and every-

efficiently without sacrificing safety

one involved that we work hand in hand

and quality. I think it’s been a success.”

and keep our eye on what the goal really

One way that the wind turbine provider

is: to safely get turbines in the ground

reduces costs is by working closely

and to have them producing clean and

with clients to streamline their opera-

cost-effective power.”

tions. “As soon as the agreements are w w w.e ne rgydi gi ta l. com

THE NORDEX GROUP

inked we have meetings about cost whereby we talk with clients and their selected contractors to see if there’s anything that can be done to cut unnecessary costs out, while still maintaining the positive elements of each party’s relationship,” McComas says. “We have meetings to teach them about how best to install the turbine, what best practices are, what they need to be watchful of, some of the lessons learned that others have encountered. We invite them to our facility to take a look at the manufacturing process. We invite them to audit that process.” 72

Offering powerful wind turbines across the globe, the joint company has more than 30 years’ experience harnessing wind energy. Through its trailblazing turbines the company has delivered more than 23 GW of sustainable energy, but despite its impressive reach it has always ensured that its projects are tailored to the specific client in mind. “We specialize and focus on specific constraints that each developer may have,” explains McComas. “There may be a sound requirement; there may be some greater electrical requirements.” “We’re a very flexible organization” he adds. “We’re not mechanical in what we offer from one project to the next. We listen to our clients, we listen to our partner contractors, AUGUST 2019

“ These are projects that are incredibly complex and could be worth millions, so collaboration is absolutely key” — John McComas, Head of Project Management, Nordex

w w w.e ne rgydi gi ta l. com

THE NORDEX GROUP

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75 and we adapt according to feedback in order to provide the best solution from a project-to-project basis.” To meet the ever-changing demands of its clients, the Nordex Group has kept its finger on the pulse of the latest innovations in the sector and it has significantly invested in R&D. “There’s a lot of generation technologies in the marketplace and we need to be able to demonstrate that we can offer the best, most sustainable, most cost-effective technology there is,” observes McComas. “Additionally, regulations are becoming stricter, testing requirements for the

C OMPA N Y FA C T S

• According to the American Wind Energy Association, US wind power has tripled over the past decade and there are now more than 54,000 wind turbines operating in 41 states, Guam and Puerto Rico • The joint company has more than 30 years’ experience harnessing wind energy and has delivered more than 23GW of sustainable energy

equipment are becoming more robust, w w w.e ne rgydi gi ta l. com

Gemini Energy Services is an Independent Service Provider for Wind and Solar Projects across North America, built on a foundation of military backgrounds.

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and I would say it’s important for all wind turbine and renewables manufacturers to understand what these requirements are, incorporate them into existing technologies – and to do so quickly.” At the Nordex Group, this has involved forging strong partnerships with industry leaders. “We can’t do these projects on our own,” McComas adds. “Over the years, we’ve developed strong partnerships with companies, even though we may not have contractual relationships with them. The names that stand out the most are RES America and IEA, AUGUST 2019

in terms of construction. When it comes

employees – people that have truly

to transportation, we’ve worked closely

gone up the ranks and are now in lead-

with DSV, Coli, Oldendorff, Totrans,

ership positions.” With offices and

BNSFL and ATS and we’ve also had

subsidiaries in more than 20 countries,

a very good manpower partnership with

the wind turbine provider has a truly

One Wind, Run Energy, and Gemini.”

global reach and this expansion is only

With around 5,000 employees under

set to continue. This has proven to be

its wing, the workforce undoubtedly

a key tool for retaining top expertise

has an important role to play in fostering

and talent.

continuous improvement. “The people

“Retention is a key issue for every

who work on these projects every day

manager in the marketplace,” McCo-

are the most important asset we have,”

mas says. “I think we stand out because

notes McComas. “One of the competi-

we provide opportunities to our employ-

tive advantages we have as an organi-

ees. If they work hard and are open to

zation is that we have a lot of seasoned

it, then the company will find them an

Merger occurred in

2016

5,000

Approximate number of employees

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THE NORDEX GROUP

opportunity around the globe. We also

and center of everything it does. From

have a very personal relationship with

hazardous weather to working at heights

our employees. The people on site

or near high voltages, workers face

know that they can contact the leader-

a series of risks and therefore a strong

ship team directly and the fact that they

safety culture has been embedded into

have a voice and can project that voice

the organization. â&#x20AC;&#x153;In project manage-

to leadership is important.â&#x20AC;?

ment, for instance, we demonstrate

Recognizing the importance of its

that safety is important to us by being

employees, the company has also

involved in safety walks and safety

worked hard to ensure safety is front

audits when we go and visit sites. This

AUGUST 2019

“ Listening to the people that are actually conducting the work is key and trying to reflect that in actual change is very important to the overall culture of the firm” — John McComas, Head of Project Management, Nordex

ensures that our safety culture is well

that in actual change is very important

observed,” McComas explains. “We

to the overall culture of the firm.”

also have weekly discussions with site

Today, the Nordex Group has several

managers and safety personnel to hear

projects underway and is nearing

what they’re seeing, what is being

completion on a 95 turbine project in

changed and what they think would be

Kansas, a 101 turbine project in Nebras-

good to incorporate from a safety

ka, and a 16 turbine project in North

standpoint moving forward. Listening

Dakota. Elsewhere, the firm is set to

to the people that are actually conduct-

build its ninth wind farm in Texas.

ing the work is key and trying to reflect

Looking forward, McComas is optimistic w w w.e ne rgydi gi ta l. com

THE NORDEX GROUP

“ The people who work on these projects every day are the most important asset we have” — John McComas, Head of Project Management

AUGUST 2019

that this upward trajectory will continue in the years to come. “I think most of the globe is starting to flip the switch on what is necessary for the future of energy production,” he reflects. “More regions, particularly industrial countries, are starting to realize the need for greater levels of social and environmental responsibility. I think that the renewable market is going to stay strong and I see a lot of positive things for the Nordex Group moving forward. We have just released our new Delta 4000 wind turbine with a 4.0-4.5 MW generator with a 149m rotor. The first turbines have been installed in Germany and further ones will be installed internationally in 2019 and we expect to see the first installations in the US in 2020, which is very exciting. Ultimately, we don’t just supply a product that is competitive; we also provide a service that suits everyone’s specific needs. I think that’s what will propel us forward and make us successful.”

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Transforming supply chain strategies at Petro Rabigh WRIT TEN BY

SE AN GA LE A-PACE

AUGUST 2019

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PETRO RABIGH

Michael Gustafson, General Manager of Material, Procurement and Contracts discusses the procurement methods that Petro Rabigh is utilising through significant change in Saudi Arabia

n a country driven by change amidst the incoming Saudi Vision 2030, companies in Saudi Arabia have an obligation to

adapt to and embrace the latest trends in order to thrive in a competitive petrochemical industry. With ambitions of becoming one of the most profitable refinery and petrochemical plants in the world, Petro Rabigh knows first-hand just how vital the next few years are to the future of Saudi Arabian businesses. Originally formed in 2005 as part of a joint venture between Saudi Aramco and Sumitomo Chemical, Petro Rabigh produces 18.4mn tons per annum (mtpa) of petroleum-based products and 2.4mtpa of ethylene and propylene-based derivatives. With the plantâ&#x20AC;&#x2122;s Phase I and recently launched Phase II together valued in the region of $20bn, Michael Gustafson, General Manager of Material, Procurement and Contracts, believes that these AUGUST 2019

“ We have two incredible foundation partners in Saudi Aramco and Sumitomo Chemical; a terrific partnership with aligned goals that have brought the strengths and diversity of two great organisations into this project” — Michael Gustafson General Manager of Material, Procurement and Contracts

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PETRO RABIGH

foundation partners laid the ground

MAINTAINING PROCUREMENT STRATEGIES

work for the company’s success.

As a way of affirming Petro Rabigh’s

“We have two incredible foundation

commitment to the Saudi Vision, the

partners in Saudi Aramco and Sumi-

company has confirmed the imminent

tomo Chemical; a terrific partnership

arrival of The Petro Rabigh Phase II

with aligned goals that have brought

expansion project, which provides an

the strengths and diversity of two

even more diversified product slate

great organisations into this project,”

with the implementation of a number

says Gustafson. “Both companies

of new high added value petrochemical

possess a deep set of technical and

products. The project is set to cost

commercial experiences and world

approximately $9.4bn with capital

class product mix that continues to

project debt funding. Gustafson

improve with expansions to capitalize

outlines the procurement strategy his

on the strategically placed location

company is utilising in this exciting

and resources.”

new era for the Kingdom.

AUGUST 2019

“ People think of procurement as being some sleepy, back office support group – but it’s not. You’re actually on the front line and if this spare part, chemical additive, or catalyst doesn’t arrive on time, you could shut down a facility” — Michael Gustafson General Manager of Material, Procurement and Contracts

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“We’ve almost finished Phase II to

under the same roof. Gustafson

expand our business. It’s like you’re

maintains its current procurement

running on a treadmill and the speed

strategy is to enhance its existing

is set at a six-minute mile but you’re

arrangements.

used to running an eight-minute mile,”

“In general, the majority of our

he explains. “People think of procure-

strategy is to push our agreements

ment as being some sleepy, back

and expand into MRO and chemical

office support group. But, it’s not.

agreements,” he explains. “This is

You’re actually on the front line and if

opposed to the ongoing spot buying

this spare part, chemical additive, or

that takes place, which decreases the

catalyst doesn’t arrive on time, you

time it takes to turnaround, as well as

could shut down a facility.”

the cycle time.”

Procurement is certainly an area

In a bid to handle its supply chain

that Petro Rabigh prioritises. The

items more effectively, Petro Rabigh

firm has three different departments

has made the decision to split into

operating in that area of its organisa-

two separate groups.

tion; with contracting, material handling and procurement all housed

“The group here in Saudi Arabia handles all the inbound supply items

E X E C U T I V E P R OF IL E

Michael Gustafson Having joined Petro Rabigh in 2017, Michael has used his 25+ years of experience and knowledge from working in commercial and business development, acquisitions, divestiture and supply chain management to develop the supply chain infrastructure for the $20bn Refinery & Petrochemical business in Saudi Arabia. Michael has outlined his intention for Petro Rabigh to embrace the incoming Saudi Vision 2030 and is responsible for driving the company’s procurement strategy.

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CLICK TO WATCH : PETRO RABIGH ENRICHING LIFE 91

and we have a separate organisation that is responsible for the finished goods and products. It’s primarily more of a marketing and sales function,” explains Gustafson. “Alongside that, there’s the production planning which coordinates what the needs of the refinery and petrochemical business are, as well as the requirements of our customers. I believe it’s very much a collaborative effort to enable the supply chain to get going.” With the company investing almost $400mn annually on its supply chain

“ The group here in Saudi Arabia handles all the inbound supply items and we have a separate organisation that is responsible for the finished goods and products. It’s primarily more of a marketing and sales function” — Michael Gustafson General Manager of Material, Procurement and Contracts

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activities, Gustafson is well aware

EMBRACING SAUDI VISION 2030

just how big Petro Rabigh’s supply

In a bid to reduce Saudi Arabia’s

chain is. “The magnitude of it is that

reliance on oil and diversify its economy,

it spans to over 2,000 suppliers

Crown Prince Mohammad bin Salman

worldwide that are split evenly

announced plans in 2016 to launch

between America, Asia and Europe,”

Saudi Vision 2030. With around 80

says Gustafson. “Of those, we have

projects expected to be completed in

around 1,200 really active, highly

Saudi Arabia by 2030, Gustafson

consumable suppliers. They deal

believes it’s an interesting time to be

with everything from highly danger-

involved in such a historic process.

ous explosive and chemical addi-

“These are exciting times for Saudi

tives, all the way to papers and pens.

Arabia. When I tell my friends about it

We cover the full spectrum.”

back home in America, I feel like I’ve w w w.e ne rgydi gi ta l. com

C OMPA N Y FA C T S

Rabigh Refining & Petrochemical Co. — Petro Rabigh — was founded in 2005 by the Red Sea in the Kingdom of Saudi Arabia as a joint venture between Saudi Aramco and Sumitomo Chemical from Japan. The original 10-billion dollar Phase I of the plant is the world’s largest single-phase integrated refining and petrochemicals complex, making the company one of the Kingdom’s largest producers of polypropylene, polyethylene and mono ethylene glycol, and the sole producer of propylene oxide in the Middle East. The Phase II expansion, which came into full operation in early 2018, diversifies the product slate with new high value-added petrochemicals aimed at making the Kingdom’s downstream industry more competitive and affording potential investors the opportunity to manufacture new products and create new jobs and skills.

AUGUST 2019

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“ These are exciting times for Saudi Arabia.When I tell my friends about it back home in America, I feel like I’ve got a front row seat,it’s a major transformation in the Kingdom and these are fabulously exciting times.There are things going on in Saudi Arabia that are truly historical” — Michael Gustafson General Manager of Material, Procurement and Contracts

got a front row seat,” explains Gustafson. “It’s a major transformation in the Kingdom and these are fabulously exciting times. There are things going on in Saudi Arabia that are truly historical.” Petro Rabigh has responded to Vision 2030 by embracing all 24 areas highlighted in the vision to provide a thriving economy, a vibrant society and an ambitious nation for the Kingdom of Saudi Arabia. In order to meet these requirements, Petro Rabigh has rolled out a number of initiatives such as plans to increase women’s participation in the w w w.e ne rgydi gi ta l. com

PETRO RABIGH

to logistics and building relationships

FORMING KEY STRATEGIC PARTNERSHIPS

for additional direct foreign invest-

Establishing and maintaining key

ments. However, Gustafson insists

partnerships are vital to any success-

Petro Rabigh isn’t finished yet.

ful business. Over the last five years,

workplace, supporting improvements

“We could and will do more in the

Petro Rabigh has collaborated with

area of women participating in the

Germany-based logistics firm, DHL,

workplace; I just hired the first female

to provide all of its inbound logistics

secretary at Petro Rabigh and she’s

activities, in addition to operating its

doing a great job,” says Gustafson.

warehouses. However, having consult-

“We also have several women within

ed their Key Performance Indicators

the supply chain organisation and we

(KPIs), Petro Rabigh recently split the

intend to hire more in the future.”

contract with Kuehne & Nagel to

AUGUST 2019

handle all of the company’s interna-

hip. DHL and Kuehne & Nagel are

tional forwarding activities.

two world class organisations and

“We’re very excited with this joint effort between the two

they’ve done a great job.” Gustafson affirms how much

companies. It will enable us to draw

Petro Rabigh relies on the consist-

on the strengths of each company

ent performance of its suppliers.

to ensure a smooth supply chain

“The notable suppliers that have

process,” says Gustafson. “They

been consistently reliable for our

are our two primary partners that

business include the likes of CS

we’ve got on the logistics side and

Japan, Gold Wing, Axens, Eable-

they’re absolutely essential to us.

Burgmann and SPIG. We’re highly

Our partners have to over-commu-

dependent on the performance of

nicate and be joined with us at the

these five outstanding suppliers/ 99

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Range of products and services

Mechanical seals for pumps

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vendors in particular, as well as to

investment opportunities to local

the other 1,200 active suppliers in

and foreign investors in conversion

our network.”

industries. Gustafson believes it’s

The introduction of Petro Rabigh’s

an ideal investment opportunity.

collaboration with Rabigh PlusTech

“This large scale, secure complex

Park saw it become the first private

also houses the Sumitomo Chemical-

industrial estate for conversion

run Rabigh Plastic Technical Centre

industries in Saudi Arabia. Located on

that provides tenants with technical

a site adjacent to the Petro Rabigh

support and training in plastic

refinery, it provides a place to convert

processing technology, warehousing,

petrochemical products into down-

plug and use utilities and feedstock

stream products and offer substantial

supply agreement opportunities for

101

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A world leader in sulphur processing and handling IPCO, previously operating as Sandvik Process Systems, is a world leader in the design, manufacture and installation of sulphur solidification and handling plants. We supply equipment for every stage of the process, from degassing and filtering of molten sulphur through a range of different solidification options, to downstream conveying, storage, reclamation, bagging and ship, rail or truck loading. Our ranges include the renowned IPCO RotoformÂŽ, the worldâ&#x20AC;&#x2122;s favourite premium sulphur solidification process with more than 700 systems supplied, and our high capacity rotating drum granulator, both delivering a premium quality formed product. IPCO sulphur processing systems are in operation around the world and we support them all through a global service network.

ipco.com

103

sustainable, competitive prices,” says Gustafson. “Rabigh PlusTech Park provides for 37 investors, including nine manufacturing companies that have started production, eight that are under construction and over 30 under negotiations.”

SUSTAINING A SUCCESSFUL FUTURE Petro Rabigh has begun to explore options to fully automate its warehouse operations and review the way they receive, monitor and move spare parts

“ Rabigh PlusTech Park provides for 37 investors, including nine manufacturing companies that have started production, eight that are under construction and over 30 under negotiations” — Michael Gustafson General Manager of Material, Procurement and Contracts

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The range of HERMETIC pumps covers canned motor pumps, magnetic drive pumps, and vacuum pumps. HERMETIC manufacturers standard pump designs and a variety of special designs engineered for specific customer needs, including ATEX explosion proof and API-685 compliant designs for the Oil & Gas, Petrochem and Chemical industries. HERMETIC pumps operate in environments with fluid temperatures that span from –160 °C up to +480 °C, system pressures up to 120 MPa and canned motor powers from 1 kW up to 690 kW.

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$10bn Approximate revenue

2005

Year founded

3,600

Approximate number of employees

105

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How have we maintained top sales in the logistics equipment field since our founding in 1972? Chiba Sogyo has continued to support the distribution which is the core of our economic activities. Ever since our founding, we have constantly led the logistics equipment industry. “How can we satisfy customer needs to the greatest possible extent?” – To achieve this goal, we have accumulated knowledge and expertise, and then steadily incorporated this wisdom into our services. CS JAPAN CO., LTD 2-2-18 Tmasakinsi, Ichihara City, Chiba, Japan 2900044 Tel: +81-436-23-0511 Fax: +81-436-23-1611 www.csjapan.net kawarai@csjapan.net

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107

around. This ability to consistently adapt to change is something Gustafson places a lot of importance on. “In the area of supply chain, I believe we still have work to do in digital transformation,” explains Gustafson. “However, in other areas of the company there has been much more progress made, especially in operations.” “When things start to change, you’ve got to be able to adapt very quickly. Whether it’s changing your grades or

“ When things start to change,you’ve got to be able to adapt very quickly.Whether it’s changing your grades or the type of product mix that you can develop” — Michael Gustafson General Manager of Material, Procurement and Contracts

the type of product mix that you can w w w.e ne rgydi gi ta l. com

PETRO RABIGH

Our Website Contact us JANUARY 2019

109

develop. You’ve got to stay ahead. We’ve got a lot of big changes going on at

ongoing operations,” says Gustafson. “Our processes and practices must

the moment with climate change and

change and this will be enabled through

environmental conditions. And if we

the finalisation of the ARIBA implemen-

don’t change, then it’s going to hurt us.”

tation, integration with SAP and further

As far as the future is concerned at

digitalisation of the processes.”

Petro Rabigh, the company has lofty

“This is crucial for us to handle the

ambitions of becoming the best in class

increase in volume due to the expand-

in the Gulf Cooperation Council (GCC)

ed capacity of the operation. We must

within the next 18 months. “We have to

reduce the number of touches on work

deliver on the business expectations in

orders from procurement to pay with

two areas: 99% availability and on-time

seamless vendor integration through

delivery of materials to support the

the process.” w w w.e ne rgydi gi ta l. com

Tel +966 13 341 0515 | Fax +966 13 341 1052 | E-mail info@goldenwing.com.sa | www.goldenwing.com.sa

Golden Wing has been providing industrial solutions for the petrochemical bulk material and wrapping industry in Saudi Arabia for almost 40 years. The portfolio comprises the installation of total systems for filling, palletizing and wrapping as well as conveyor technology. From its history as an equipment supplier, Golden Wing grew into an EPC contractor. Bagging Machines Filling Machines Net/Gross Weighing Palletizing

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111 Petro Rabigh also plan to begin to take steps to become a world-class service minded organisation that will enable the firm to provide exceptional customer service that goes beyond expectations.” “This can happen when we break down silos, over communicate to customers and provide proactive service levels with their absolute best interest in mind,” explains Gustafson. “We will do this through cross development opportunities with operations, by co-locating people closer to the customers they

“ Our processes and practices must change and this will be enabled through the finalisation of the ARIBA implementation, integration with SAP and further digitalisation of the processes” — Michael Gustafson General Manager of Material, Procurement and Contracts

serve and rewarding people for delivering on their commitments.” w w w.e ne rgydi gi ta l. com

PETRO RABIGH

Petro Rabigh also plans to increase its employee development, training and planning to ensure everyone successfully obtains their Certified Supply Chain Professional certification as well targeting an 85% or higher Saudization level and a 40% rise in the hiring of women. In addition, the firm expects to make a more deliberate effort in its supply relations and strategic sourcing. “We will be conducting a major supplier recognition conference soon 112

in order to build deeper, strategic relationships with key suppliers and vendors,” says Gustafson. “This will take time, but the idea is to personally visit our key suppliers for them to understand the direction we’re going, how they can optimally support and ways we can further collaborate together to meet the Saudi Vision 2030 plans.” With major changes incoming at Petro Rabigh and in Saudi Arabia itself ahead, Gustafson remains determined that the future is bright for the company in the next 18 months and beyond. “The vision for the future is to continue to make the Material, Contracting and AUGUST 2019

“ The vision for the future is to continue to make the Material, Contracting and Procurement organisation a great place to work” — Michael Gustafson General Manager of Material, Procurement and Contracts

Procurement organisation a great place to work. We also envision becoming a leader in driving collaborative value through matrixed processes, creativity commercial acumen and focused commitment to the priorities that will make Petro Rabigh the most valuable company in the region.”

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113

114

ENGIE ELECTRABEL: DIGITISATION LEADING TO CUSTOMER SATISFACTION WRITTEN BY

LAURA MULLAN

AUGUST 2019

115

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ENGIE ELECTRABEL

As an environmentally-conscious, customer-focused energy provider, ENGIE Electrabel is going back to basics to ensure its IT systems are a solid foundation for innovation No one is on course for the energy revolution quite like ENGIE Electrabel. By championing the so-called ‘three 116

Ds’ – decarbonisation, decentralisation, and digitalisation – the Belgium-based subsidiary of ENGIE is leading the way towards a low-carbon future. Yet, the company’s digitisation strategy is not only helping it take up the fight against climate change, it is also aiding ENGIE Electrabel’s efforts towards operational excellence and customer satisfaction. At the heart of the company’s digitisation is Chief Information Officer Marc-Grégoire Lallemand. IT is, by all accounts, a driver of business at ENGIE Electrabel Marketing & Sales activities, and Lallemand is confident that digitisation will be crucial in making its low-carbon, customer-focused vision a reality. “At ENGIE, we’re really transforming the business,” Lallemand observes. “We have positioned ourselves as a company that goes beyond the standard sale of energy.

AUGUST 2019

117

— Marc-Grégoire Lallemand, Chief Information Officer, ENGIE

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Helping clients accelerate the pace of change, driven by the demands of digital customers and the need to transform the production and consumption of energy. www.cgi.com/utilities

IT and Business consulting

Systems integration

Outsourcing

We’re looking to produce more creative

continents and 70 countries, thousands

tools to make progress in the world,

of activities happen at ENGIE Group

whether that’s for the environment or

every day. For Lallemand, if the basic

for our customers, and certainly, in

IT systems can run efficiently, silently,

my world of marketing and sales, it is

and at a reasonable cost, then his team

extremely IT-driven.”

can focus on projects that add value for its customers.

SILENCE IN IT

To meet the demands of Business

Not only is Lallemand a CIO, he also

4.0, Lallemand and his team improved

describes himself as a Chief Silence

the company’s operational excellence

Officer and is keen to promote a dual

whilst reducing its operating expense.

strategy based on silence in IT to

Between 2011 and 2016, the firm reduced

enable a move to Business 4.0. With

its IT operational costs by 40% and it

a strong presence spanning six

intends to reduce it further thanks to

AUGUST 2019

“ It’s very encouraging to see that we are moving the needle, we are really changing the company from an industrial company that only produces and sells energy to a more creative one, that is working for progress in this world” — Marc-Grégoire Lallemand, Chief Information Officer, ENGIE

issues instead of focusing on future innovations and that’s why we have been focusing on silence in IT to start with.”

CUSTOMER-CENTRIC Since 1905, ENGIE Electrabel has evolved to become more than just an energy provider. As part of the ENGIE Group, it has honed its vision and become a customer-focused company that offers a spectrum of innovative ideas and digital tools. By overhauling its system architecture and offering personalised services, ENGIE is empowering its customers and raising the bar in the energy sector.

its lean 2018 programme. By stream-

“There is a lot of IT-intensive activity

lining the basics and getting silence

at ENGIE and its very customer-focused,”

in IT, ENGIE Electrabel has gained

says Lallemand. “We’ve been busy

the freedom and resources to focus

developing new products and services

on disruptive digital tools.

to empower our customers because

“You cannot move to Business 4.0

whilst having energy is important, what

if you can’t sufficiently free up your

we really want to offer is comfort, as

resources and if don’t have silence in

well as energy.”

IT,” Lallemand explains. “Until your curteam don’t have the time to work on

DIGITALLY DISRUPTING THE ENERGY SECTOR

the next phase, the next developments.

Thanks to digital trends such as artifi-

It is extremely ineffective and costly if

cial intelligence (AI) and big data,

your resources are busy tackling past

ENGIE is gaining a 360-degree view

rent IT systems are up to scratch, your

w w w.e ne rgydi gi ta l. com

119

ENGIE ELECTRABEL

120

AUGUST 2019

of its customers, building intelligent applications, and creating a dialogue with its customers. In this way, ENGIE Electrabel is not only providing energy, but also providing peace of mind. “Big data is extremely important in today’s world and so it is clear to see why ENGIE wants to become a datadriven company,” comments Lallemand. “Certainly, in order to provide added value to the customer, we need to be able to get and crunch the data for our customers and offer personalised solutions that make sense for them. Customers were accustomed to just getting energy from us in the past but now what we really provide is services. That is where big data comes into play.” Robotic process automation is another area of focus for the Belgian firm. “The main purpose of our RPA project is to reduce the repetitive, low valueadding tasks that our staff often have to do,” notes Lallemand. “This gives our workforce more time to serve the customer and they are happier because they can focus their efforts on more meaningful, customer-focused jobs. “As well as this, we have also just launched a messaging platform so w w w.e ne rgydi gi ta l. com

121

ENGIE ELECTRABEL

122

that we can speak directly with our

2.8mn customers, the firm is leading

customers using the everyday tools

the transition towards a low-carbon

they use to talk with their family and

future. However, ENGIE Electrabel

friends.”

doesn’t underestimate the challenges that lie ahead and is keen to evolve

CONTINUALLY EVOLVING As a customer-focused energy provider,

and grow. “We are in the midst of a big transfor-

a responsible producer of electricity,

mation programme that has been very

and a committed societal player, ENGIE

successful for ENGIE,” says Lallemand.

Electrabel is striving to be top energy

“It’s very encouraging to see that we

supplier for Belgium. Boasting around

are moving the needle, we are really

AUGUST 2019

“It all comes back to the ‘three Ds’ — decarbonisation, decentralisation, and digitisation” — Marc-Grégoire Lallemand, Chief Information Officer, ENGIE

123

changing the company from an indus-

Whether its creating new, innovative

trial company that only produces and

digital tools or working closely with

sells energy to a more creative one, that

partners it seems that agility and custom-

is working for progress in this world.

er centricity has been key to ENGIE

“This is a big shift in our mindset and it all comes back to the ‘three Ds’ –

Electrabel’s success – and, of course, this has all be achieved silently with IT.

decarbonisation, decentralisation, and digitisation,” he adds “This shift is about much more than the IT, of course, but the company’s digitalisation strategy is crucial to making these changes a reality.” w w w.e ne rgydi gi ta l. com

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AUGUST 2019

POWERING PEMEX INTO PROFITABILITY Rodrigo Becerra Mizuno, Corporate Director and CIO at Mexico’s largest economic contributor, reveals how technology is playing a central role in the implementation of the oil and gas company’s 2017-2021 Business Plan WRITTEN BY

TOM WADLOW

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125

PEMEX

RODRIGO BECERRA MIZUNO, CORPORATE DIRECTOR AND CIO AT MEXICO’S LARGEST ECONOMIC CONTRIBUTOR, REVEALS HOW TECHNOLOGY IS PLAYING A CENTRAL ROLE IN THE IMPLEMENTATION OF THE OIL AND GAS COMPANY’S 2017-2021 BUSINESS PLAN

n 20 December 2013, Mexico’s oil and gas industry entered a new age. Having operated under a monopolised umbrella

for 75 years, President Enrique Peña Nieto signed a momentous energy reform bill which opened up the country’s largest revenue-generating Technology to

126

private competition. For national oil and gas giant Petróleos Mexicanos (Pemex), this signalled a huge about-turn, an overnight change of course not witnessed since its formation in 1938. A massive transformation was required, from a company operating as a monopoly to one that can stand up to competitors. Once charged with delivering hydrocarbon energy across the whole of Mexico at whatever the cost, Pemex is now focused on efficiency, profitability and long-term survival. It was the enormity of this challenge which lured Corporate Director and CIO Rodrigo Becerra Mizuno away from a decade of servitude at Microsoft. “I thought this would be the biggest professional challenge of my career,” he recalls, “so when CEO at the time Jose Antonio González Anaya invited me, I was AUGUST 2019

127

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PEMEX

“ WE’RE OPEN, WE’RE LOOKING FOR TALENT, WE’RE LOOKING FOR YOUNG PEOPLE, AND WE’RE GOING TO GIVE THEM THE OPPORTUNITY TO DEVELOP THEIR SKILLS” — Rodrigo Becerra Mizuno, Corporate Director and CIO, Pemex

TECHNOLOGY AND THE ROAD TO PROFIT While the enormity and scope of operations no doubt presents a competitive advantage over new entrants to the market, it exemplifies the challenge Becerra Mizuno and the Pemex leadership are facing. The 56-page 2017-2021 Business Plan signposts Pemex’s road to profitability, and notably sets a target to achieve financial balance in 2019/2020. Technology will be crucial

extremely excited. I knew technology 130

would be at the forefront of this transformation. “On top of this, Pemex is the largest

to realising this ambition. “If certain markets we are serving are not profitable, we don’t have to operate in them anymore,” Becerra

company in Mexico and one of the

Mizuno says. “In that case, we have to

largest in the world.”

make better decisions with the infor-

The numbers back this up. As the

mation or the data that we have. That’s

eighth largest oil producer and drilling

where technology plays a major role,

company in the world, Pemex’s $52bn

because it can streamline our opera-

revenue is equivalent to the entire GDP

tions and create a better more profita-

of Uruguay. It generates 2.5mn barrels

ble and safer environment.”

of oil and 6mn cubic feet of natural gas

Brief set, what did the technology

a day, delivering this to over 11,000

landscape look like when Becerra

service stations in Mexico and abroad

Mizuno arrived in September 2016?

via 83 land and sea terminals. From

“I found that Pemex had a large

exploration, production and refining

amount of technology infrastructure.

to logistics and marketing, Pemex

They own it, they develop it, they

covers the entire value chain.

construct it, they deploy it. Everything

AUGUST 2019

was done in-house. I said to myself, we need to change.” Much of this sprawling infrastructure owes its existence to a self-built telco network, the second private largest in the whole country, which includes 130,000 phone lines and 10 data centres. Pemex was founded nine years before Mexico’s national telecoms company Telmex, and hence had to build its own communications capability from scratch. There was a time when people who worked for Pemex had two telephones at home: one from Pemex and the other one from Telmex. “They got used to building their own technology infrastructure from the bottom up,” Becerra Mizuno says, “and they used to do it extremely well.

£52bn+

Approximate annual revenue

1933

Year founded

70+

Number of different products sold 131

2.5mn

Number of barrels of oil produced a day

But the world changed, and there are people that can do it better, because they specialise on that.” Privatisation of these telco assets has

Becerra Mizuno is referring to up-

proven vital in simplifying Pemex’s tech-

coming presidential elections which,

nological landscape, which Becerra

depending on the result, could signal

Mizuno stresses needed streamlining

further reform at Pemex. The need to

with a degree of urgency. “We needed

demonstrate the viability of the 2017

to kickstart this immediately because

–2021 Business Plan to any incumbent

we are working on the political clock,

administration, and indeed the Mexican

so we had to hit the ground running.”

public, is therefore paramount. w w w.e ne rgydi gi ta l. com

PEMEX’S PARTNER IN DIGITAL TRANSFORMATION Huawei is a leading global Information and Communications Technology solutions provider. Our industry-leading products and solutions have been deployed in more than 170 countries. In the 2017 Global Fortune 500 list, we ranked 83rd, thanks to our customer-centric vision and yearly investment in R&D (at least 10 percent of revenue). Huawei has delivered services to 70 percent of the world’s top 20 oil and gas companies. Mexico and Spain are prime examples. Mexico — Pemex, the largest company in Mexico, dedicated to petroleum and petrochemicals, is undergoing a major Digital Transformation project, expected to be the largest of its kind in the Latin America O&G Industry. Huawei helps Pemex ICT transformation by successfully deploying Agile Campus and IMS(IP Multimedia System) solution. Based on integrated networking and collaboration solution, more than 60,000 employees distributed in 13 branches enjoy ultimate experience. Huawei 8-inch HD video phone provides easy and secure collaboration, Agile campus switch makes network intelligent and smoothly evolution for future. At the same time, Huawei unified solution accelerates and simplifies Pemex network operations, improve O&M efficiency by 50 percent. Spain — CEPSA, one of the leading energy companies in Spain, has to process massive amounts of data during crude oil exploration and production, therefore, there is a need for an effective data analysis solution in order to improve exploration and production efficiency. As CEPSA’s business grew rapidly, traditional databases failed to meet ERP system requirements and were holding back business development. Additionally, traditional servers and storage require high maintenance skills. CEPSA was looking for a cost-effective solution that could be flexibly expanded. Huawei provided solutions for CEPSA, including mission-critical servers, storage, switches to build a reliable and stable new-generation database system. Huawei servers greatly enhance CEPSA’s ERP system performance, which has led to an improvement in production efficiency. CEPSA’s financial analysis system has doubled the number of transactions it can process, meeting strict service requirements.

Huawei servers achieve a failure rate 15% lower than industry average, guaranteeing that the system runs reliably. Huawei uses industry standard components, greatly reducing costs for procurement and future capacity expansion.

Huawei cooperates closely with top global partners in the oil and gas industry. In oil and gas industry, we focus on digital pipeline, oil and gas IoT, High-Performance Computing (HPC), and operations management application platforms. Huawei is committed to providing one-stop ICT infrastructure solutions. Meanwhile, we have established an open, diversified, and win-win ecosystem. These include underlying automation enterprises, upper-layer application providers, and oil and gas engineering design enterprises worldwide. • Huawei’s server and Schlumberger’s reservoir analysis software have completed integration and admission testing • Huawei and Honeywell have jointly developed and officially released a wireless gas detection solution based on Huawei eLTE • Huawei and PCICT, a branch of Sinopec, together have developed a smart engineering solution for oil refining

Huawei is commited to being Pemex’s best partner in its digital transformation. Huawei is dedicated to building innovative infrastructure platforms for enterprise digital transformation by making optimal use of emerging technologies, such as cloud computing, SDN, Big Data, and the IoT. Also, by working closely with skilled partners, Huawei helps enterprises attain their goals of agile, intelligent digital upgrades. To date, 197 companies in Fortune’s Global 500, 45 of which are in the top 100, have selected Huawei as their partner for digital transformation. Huawei looks forward to implementing digital transformation with you and creating a fully connected and intelligent world.

PEMEX

THE GREAT ENABLER Tangible progress has already been made. According to Becerra Mizuno, $50mn of savings have already been realised through strategic moves such as telco asset stripping, and by the end of the year Pemex will be relieved of its data centre management burden, instead operating on a hybrid cloud model and paying on demand for what it uses. Becerra Mizuno also points to a shift in spending priorities. “When I arrived, 134

our budget was 90% focused on investment, 10% on operational excellence. That means that 90% of things we did here with our budget was purchasing, which is how we arrived at this point where we have amassed a large amount of infrastructure.” “This year, we’re shifting that mix to 70% opex, 30% capex. We’re still not done, but we have changed the way we’re doing business now. We’re hiring service, not buying it.” The CIO points to the influence of both CEOs he has worked under – Jose Antonio González Anaya and now Carlos Treviño Medina. Without their leadership, much of this change would not have materialised. AUGUST 2019

“ I FOUND THAT PEMEX HAD A LARGE AMOUNT OF TECHNOLOGY INFRASTRUCTURE. THEY OWN IT, THEY DEVELOP IT, THEY CONSTRUCT IT, THEY DEPLOY IT. EVERYTHING WAS DONE IN-HOUSE. I SAID TO MYSELF, WE NEED TO CHANGE” — Rodrigo Becerra Mizuno, Corporate Director and CIO, Pemex

This shift in priorities is better demonstrated by the recent Pemex Drive event, which invited key industry stakeholders to learn about the company’s new technology-driven strategy. “We also wanted to create excitement around the company, which had been lost. It’s only now been revived by this and many other factors as well, including the efforts of the CEO.”

POWERED BY PARTNERS Touting potential partners was also a key objective at Pemex Drive. Indeed, a major facet of the 2017-2021 Business Plan involves the creation of joint ventures along the company’s entire value chain as a mechanism to increase investment and efficiency. One example of this in action is a software factory developed with French consulting giant Capgemini. Based on mutual incentives such as delivering cost savings for one another, this initiative has already helped Pemex to begin cutting the sprawling number of costly applications embedded throughout its operations. By carefully identifying which processes could either be outsourced, merged or removed entirely, Becerra w w w.e ne rgydi gi ta l. com

135

Automation and the Industrial Internet of Things

Why is is everyone everyone talking talking about about it? it? Why Improved sensing technologies Cost-effective, secure connectivity Advanced computing and analytical methods

Leveraging decades of digital automation expertise, Emerson introduces the expanded Plantweb digital ecosystem, a scalable portfolio of standards-based hardware, software, intelligent devices and services for securely implementing the Industrial Internet of Things (IoT) with measurable business performance improvement. Plantweb becomes the most comprehensive and integrated Industrial IoT portfolio in the industry.

@EMR_Auto_Latam @EmersonAutomationLatam

IIoT, the key to achieve a Top Quartile Performance in the oil and gas industry Oil and gas companies strive to meet business and performance goals. Constantly changing market dynamics and operational challenges can make it difficult. Whether you are producing from a conventional or unconventional field, key challenges like reducing operating costs, minimizing HSE risks, and maximizing production are paramount. For decades, the industry has primarily used closed, private networks to control critical plant functions, or Operational Technology (OT). But in recent years, oil and gas companies have been among the first to explore Internet of Things (IoT) applications that enable more widespread and cost-effective monitoring and control of facilities, along with reduced costs and increased flexibility. Companies are dramatically improving the speed and accuracy of decision-making based on having the right information in the hands of the right expert, no matter where they sit. The Industrial Internet of Things (IIoT) is ushering in a digital transformation that enables companies to exploit technology and expertise better than ever before, but only if the right scalable technology strategy is matched to your business goals. The digital era is a reality for oil and gas leaders like Pemex, where state-of-the-art technology will bring about important operating improvements and increase productivity throughout the company’s value chain. Digital transformation has become a fundamental tool to bring about a change that will lead the company towards modernity and that will help Pemex face the challenges of the new Mexican energy model. This digital transformation will add value to production, reduce the overall costs of production processes, and optimize and streamline logistics, in addition to increasing the operating security of the company. This is why Emerson introduces the extended the extended Plantweb Digital Ecosystem, a scalable portfolio of standardsbased hardware, software, intelligent devices and services for securely implementing the Industrial Internet of Things (IIoT) with measurable business performance improvement. Plantweb Digital Ecosystem harnesses the power of Industrial IoT to expand digital intelligence to the entire manufacturing enterprise, while also providing an architecture for on-premise applications. Plantweb provides a comprehensive framework to help manufacturers achieve Top Quartile performance in the areas of safety, reliability, production and energy. Top Quartile is defined as achieving operations and capital performance in the top 25 percent of peer companies. In addition to highly secure process control, safety and asset management systems, Plantweb supports enterprise-wide operations with an expanded portfolio of Pervasive Sensing field instruments, the Secure First Mile family of software, gateways, security devices and services, the Plantweb Insight™ and Plantweb Advisor™ scalable suite of software applications, the Plantweb Optics™ Platform, and Microsoftenabled, cloud-based remote expert Connected Services.

Pervasive Sensing expands the industry’s largest portfolio of measurement and analytical technologies. Secure First Mile is a security architecture that allows customers to selectively connect highly secure data from protected control and operation systems (OT) to operational performance applications in the cloud environment (IT). Plantweb Insight Software provides a comprehensive, lightweight portfolio of IT-friendly applications with analytics for monitoring asset health which can run independently of existing business systems and distributed control systems (DCS) and provide a simple and powerful entry point to Industrial IoT. Plantweb Advisor Software is a robust suite of integrated analytical expert applications for asset health, performance modeling and facility-wide energy optimization. The widely adopted OSIsoft PI System’s highly scalable open data infrastructure is used as a platform for these applications. Plantweb Optics is a mobile-ready collaboration software platform that provides cross-functional collaboration and decisionmaking to help plants operate safely and profitably. Lastly, Connected Services is an Industrial IoT-enabled cloud services offering for real-time monitoring of important assets’ health, energy consumption and other operational applications. But the Industrial IoT is not only transforming the way information is conducted across the company to improve decision making. Industry is at a critical inflection point where efficiency-focused operational improvement programs have reached a point of diminishing returns, and personnel are being strained to achieve more with less than ever before. In the next era of manufacturing, Top Quartile performers will embrace digital transformation through the Industrial Internet of Things (IIoT) to accelerate, institutionalize, and sustain best-in-class behaviors across their workforces. The Emerson Digital Workforce Experience, is an immersive experiential environment that transforms, via Industrial IoT, the nature of work and improves workers’ lives through real-life work scenarios in five key industrial areas: project engineering, commissioning, control and simulation, maintenance, and reliability. The Digital Workforce Experience empowers workers to transform traditional behaviors and deliver value in fundamentally new ways by adopting innovative approaches enabled by Emerson’s Plantweb digital ecosystem. In summary, the potential of the Industrial Internet of Things (IIoT) is bound only by the limits of our creativity. But its realization will forever be tied to security. This trend is already playing out among early Industrial IoT adopters in the oil and gas industry, where there is tremendous motivation to adopt networked technologies and smart sensors. Many oil and gas facilities, especially offshore platforms, are located in dirty, distant, dull and dangerous environments. In these harsh areas, automation and remote management can increase efficiency, improve performance, and enhance profitability. But most importantly, they keep people out of harm’s way. TO LEARN MORE ABOUT EMERSON’S PLANTWEB DIGITAL ECOSYSTEM GO TO EMERSON.COM

PEMEX

138

Mizuno hopes to cut 800 line of busi-

gas expertise for more than 50 years,

ness applications down to 200–

Becerra Mizuno explains how this ven-

250, which even by his admission

ture has evolved to provide all important

is still high.

flexibility to Pemex.

Accenture is another company help-

“We have established a new partner-

ing Pemex to develop a digital ecosys-

ship with them, where it’s not only them

tem based on mutual benefit, while

charging for their licenses or their service,

Microsoft and Emerson Work Services

but it’s also on a pay-as-you-use scheme

are helping deliver important work

on some of their modules, especially the

regarding migration of applications

oil and gas modules. Before, we had to pay

and processes to the cloud.

for these no matter what, but we can now

Longstanding partnerships have also been redefined, such as the one with SAP. Having utilised SAP’s oil and AUGUST 2019

take into account peaks and troughs.” Becerra Mizuno further highlights an increasing number of pilot projects be-

139

ing initiated with suppliers in a bid to un-

The idea is that we can create savings,

cover the next game-changing solution.

which will increase the value of the part-

Typically lasting eight to 12 weeks across

nership to both parties. We’re not just

all business units, these programmes are

buying sensors from them or their soft-

helping convert vendors and suppliers

ware, we’re doing things in a mutually

into true partners which build solutions

beneficial way.”

tailored to Pemex’s priorities. “I’ll give you a small example,” Becerra

CULTURE CATCHES UP

Mizuno says. “In the refining process,

Pemex is not just embracing innovation

one of the things that affects us the

with its partners. Internally, something

most is unprogrammed outages, be-

of a cultural revolution is underway.

cause of the resultant maintenance. So,

This is no minor undertaking for

we’re working with Baker Hughes, part

Becerra Mizuno, who is responsible

of GE, to create a pilot around these.

for around 3,000 employees spanning w w w.e ne rgydi gi ta l. com

engineers, consultants and decision makers, many of whom are from an older generation and more cautious about new technologies. “How do I get an aging work force to adopt new things?” he asks. “That’s usually very difficult. We have to see that becoming digital was largely about a new mindset. It’s a radical change in the way we do things – we’ve

“ HOW DO I GET AN AGING WORK FORCE TO ADOPT NEW THINGS? THAT’S USUALLY VERY DIFFICULT. WE HAVE TO SEE THAT BECOMING DIGITAL WAS LARGELY ABOUT A NEW MINDSET” — Rodrigo Becerra Mizuno, Corporate Director and CIO, Pemex

run a tonne of programmes to get people who have not used technology

university to develop interest in oil and

to embrace it.”

gas IT careers.

An initiative which has fostered

He cites his own example of leaving

innovation internally is Idea Lab, which

a private technology giant for a public-

allows employees at all levels to submit

Technology oil and gas firm. “When

pitches in a venture capital style, pro-

I was at Microsoft, it was an extremely

gressing through various rounds until a

optimised company, so the things that

winner is chosen and their idea funded.

I was able to do were very narrow. They

Harnessing innovation by attracting new talent is altogether a different

were perfect, but they were narrow. “At Pemex, there’s so much to do, and

challenge, especially when it comes

we need so much help. If you’re some-

to luring younger, tech-savvy recruits

one that is ambitious, that is young and

into oil and gas.

can see the silver lining coming to work

Partnerships with educational insti-

for us, it’s the perfect place. That story

tutions like Mexico City’s Tec de Mon-

has not been told or communicated yet

terrey will help to bridge this gap.

– we’re seen as a monolithic company

Pemex Drive was hosted on one of its

and what we’re trying to show is a

campuses, and Becerra Mizuno says

different kind of Pemex. We’re open,

Pemex is working closely with the

we’re looking for talent, we’re looking w w w.e ne rgydi gi ta l. com

141

PEMEX

for young people, and we’re going to give them the opportunity to develop their skills.”

THE ROAD AHEAD Both from a cultural and implementation point of view, Pemex is beginning to make strides, evidenced by the fact that Becerra Mizuno has been recognised as a top 100 CIO in Mexico and a HITEC-50 2018 Award winner. “I think success is something that you share,” he says. “It’s something 142

that you can’t do alone. I’m very fortunate to have the people that I have around me. The most important thing for me has been the support of the two CEOs that I’ve had the pleasure to work with. The current CEO Carlos Trevino is so open, so dynamic and so supportive of what we do. He is really the transformation CEO for us.” But what about the path in front of Pemex and Becerra Mizuno? For the CIO, three important targets and ambitions remain. “The first thing is to deliver the things that we said we would deliver. To make sure that we overdeliver what we have promised and that we meet the expecAUGUST 2019

tations that we have set for the team and for the technology department of Pemex. “The second thing for us is, as you know, we have a big transition coming with a new administration coming in December. I would love to see a lot of the building blocks and the strategies that we have implemented become lasting. Pemex is going in the right direction, which has been validated by many experts. “The third big piece is to make sure the people in the team continue to believe that there are good things coming ahead, that they continue to be motivated, so the momentum continues whether I’m here or not. That’s the most important thing for me.”

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143

AN ENERGY

144

BOOST FOR DYNEGY Managing Director of Dynegy’s supply chain, Shaun Anderson, describes the company’s sensational growth and to what it attributes its increasing success NELL WALKER PRODUCED BY DENITRA PRICE WRITTEN BY

AUGUST 2019

145

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DYNEGY

he Houston-based independent power producer (IPP) has 50 generating facilities in 12 states throughout the Northeast, Mid-Atlantic, Midwest

and Texas. Dynegy has transformed from a coal-heavy portfolio of plants largely dependent on one power market, to one that is geographically diverse, generating more than 31,000 megawatts (MW) that are predominately natural gas-fueled – capable of producing enough energy to power the homes of 25 million U.S. families.

146

Managing the supply needs of a group of this size can be a challenge. Shaun Anderson, Dynegy’s Managing Director of Supply Chain, explains how altering some of the most basic processes proved critical to driving down operational costs. “When I started two years ago, there was no supply chain organization,” he says. “Instead, a procurement group used a transaction-based process where a group of buyers would support the needs of each site individually. Recognizing there was an opportunity to put a purchasing strategy in place, we first established a true supply chain organization with three value streams of Strategic Sourcing, Supply Chain Services and Procurement.” Instead of setting up a centralized group to dictate to the rest of the company how things work, Dynegy’s

AUGUST 2019

147

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Digitalization is one of the biggest buzz-words in business today, and for Siemens, it is far simpler and more efficient a concept than many believe.

“What you see in the market – the presentations, the articles, the talks about trading values, terms like ‘game change’, ‘new paradigm’, ‘transformative’, ‘disruptive’ – so much of that is hyperbole,” says Stefan Bungart, Head of Digitalization in the Power Generation Services Department of Siemens. “All these big words don’t translate into real outcomes or meaningful action for customers. The real pain points they are asking about aren’t to do with understanding the transformative effects of digitalization. They want to know, for example how they can keep up with industry standards, how to create a more fuel-efficient fleet, and how to keep data safe. Those are just some of the issues we’re addressing. There’s a lot of noise around digitalization, and we’re working to cut through that noise and get to the core benefits.”

performance. Really, what we’re trying to do is help our customers understand how they can use digitalization strategically.”

Power generation customers look to the company for simplified, focused, and tailored solutions. Siemens delivers a wide range of data-driven products and services to meet changing industry requirements, bringing technology together with customer challenges to generate real and meaningful value. Generally the focus lies within three focus areas – profitability, mitigating risk, th and improving performance – and Siemens supports customers to drive these goals.

“All of our services sit on a secure IoT operating system that Siemens has developed called MindSphere,” says Bungart. “The end-to-end security element we’ve built into it makes it incomparable; it’s a secure environment from the sensor to cloud, for which we developed specific hardware and software, ensuring plug-and-play capability. pl

“With digitalization, it’s a matter of applying it to problems in your organization in a positive way,” Bungart continues. “We help people get to the real value that digital services can provide rather than spending a lot of time talking about potential opportunities. We’ve been building a large set of experiences with customers and engaging in many projects to optimize our eng

End-to-end cyber security is of paramount importance to Siemens, and that emphasis is what sets it apart from many competitors. It boasts a suite of services based on data and analytics targeted to a range of needs, including data protection, to ensure information and infrastructure are fully protected.

"While some see data as gold, simply collecting data for data's sake is no remedy. It requires the best possible technology to protect it and the best possible minds to interpret and realize its full value. It's not a question of waiting 10 years for digitalization to develop - it's here now and Siemens is at the forefront.

www.siemens.com/digital-services-energy

DYNEGY

approach is center-led. The team ac-

apart from others in the industry,

tively gathers input from members of

Anderson has a ‘source-to-pay’ (S2P)

the operations group to meet collec-

process in place, rather than the stand-

tive goals with standardized processes

ard ‘procure-to-pay’ (P2P) approach.

across the business. It focuses on lever-

“I intentionally named it ‘source-to-

aging and optimizing spending across

pay’ to build in strategic thinking about

the company, instead of just address-

sourcing as an early part of the pro-

ing opportunities on a site level.

cess,” says Anderson. “The added step

Dynegy’s supply chain group tailors the way it operates to meet specific

at the beginning gets our supply chain group involved even earlier to add even

business needs. Setting the company

150

“ I intentionally named it ‘SOURCE-TO-PAY’ to build in strategic thinking” — Shaun Anderson, Managing Director of Supply Chain, Dynegy

AUGUST 2019

more value across the organization.

quarter of this year, Anderson expects

Also, we initially had multiple systems

the S2P process to deliver significant

within systems as part of the P2P work-

efficiencies throughout the entire work

flow. Now we use one common system,

flow, including operational site-level

Maximo, to streamline activities.â&#x20AC;?

needs, inventory, work order creation,

The S2P process has been a key challenge to implement, but also a significant source of improvement to

requisitions and purchase orders. Dynegy has grown through a number of strategic acquisitions in the last sev-

Dynegy as an organization. By the third

151

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Lhoist North America (LNA) has a strong presence in most industries, including: iron and steel, chemical production, water and flue gas treatment, agriculture, pulp & paper, glass, building materials and civil engineering. LNA also produces ball clay and other specialty clay products cl via its Spinks Clay and IMV divisions. Our reputation has been built on reliable customer support, stringent product quality standards and our unsurpassed level of technical service. We differentiate our business by being close to our customers, understanding their needs and providing them with the high-quality products their activities require.

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eral years. As might be expected, some

A key element of the company’s

initial push-back was present early

drive towards integration is the ‘voice

on as cultures came together from

of the customer’ program, which

different companies. To help manage

ensures customer needs are heard

the change involved with shifting to a

and addressed to become part of

different way of doing business, cross-

the process.

functional teams were developed

“The VoC program is where we have

to enable strategic sourcing, regular

monthly meetings with the key adminis-

meetings with key administrators,

trator of each site,” explains Anderson.

policy changes and other activities.

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157

trying to do differently and changes

from their perspectives, Anderson and

we’re implementing, but we also get

his team can gather an accurate read-

feedback from them as our internal

ing of how the company is performing.

customers on what’s working and what

Similarly, there is now a center of excel-

isn’t. We’ve had tremendous feed-

lence team which goes beyond the

back in terms of the recent company

supply chain, where operational mem-

changes.”

bers can makes alterations on a policy

In sitting down with Dynegy’s cross-

level. “We utilize this team as a sound-

functional team members across the

ing board not only to get feedback on

operations group and asking for advice

change, but also to help communiw w w.e ne rgydi gi ta l. com

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“ Inspired Energy ensures how people do things is as important as what they do and is based on Dynegy’s organizational values” — Shaun Anderson, Managing Director of Supply Chain, Dynegy cate and drive that change forward,”

create a culture. The initiative is a

Anderson says.

system of shared language and con-

“Opposing cultures is an inherent

cepts to build an environment allow-

challenge of company change,” he

ing employees to be at their best. The

adds. “Dynegy is unique in that we

program sets a tone to enable people

have put things in place to address

to build camaraderie and focus on the

this from the first day an employee

task at hand. It helps them realize they

joins the company.”

each have a part in the company’s

For a company to be successful, it needs to win the hearts and minds of its people. ‘Inspired Energy’ is Dynegy’s program designed to consciously

success and that their individual contributions matter. “Inspired Energy ensures how people do things is as important as what w w w.e ne rgydi gi ta l. com

159

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they do and is based on Dynegy’s

Despite of the growing pains com-

organizational values,” he says. “Every

mon with the kind of expansion Dynegy

employee goes through an initial

has experienced, the company is

Inspired Energy orientation, followed

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by a training several months later. The

success. With a strong, strategic focus

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processes, systems and tools while

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tional level is definitely an asset as

supply chain organization works on

we move forward.”

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161

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that emphasizes total cost of owner-

the company. Dynegy prides itself

ship, and the integration of critical sup-

on being a lean organization that suc-

pliers into business solutions for a lean,

ceeds because we have the ability to

agile and responsive process.

get more out of less. We work smart

“We’re making sure we have the right systems in place that align with

and take full advantage of the technology we have at our disposal.”

the business,” says Anderson. “Just like Dynegy as a whole, the supply chain organization has gone through a transformation. We are intentionally integrated focus on aligning business needs with corporate objectives while providing added value, efficient processes and cost-saving throughout w w w.e ne rgydi gi ta l. com

163

P E T R O N A S L U B R I C A N T S I N T E R N AT I O N A L

PETRONAS LUBRICANTS

164

REDEFINING THE SUPPLY CHAIN, SHAPING THE FUTURE Through an aggressive supply chain transformation, Petronas Lubricants International gears up for continued growth of its lubricants business WRITTEN BY

DALE BENTON PRODUCED BY

CHARLOTTE CLARKE

AUGUST 2019

165

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P E T R O N A S L U B R I C A N T S I N T E R N AT I O N A L

n any business, when stripped

suppliers of lubricants, the company

down to its core, the concept

has ambitions to continue to grow.

is simple – it’s a case of making

a product and being able to deliver

how it can achieve this vision by gen-

that product to the customer. This

erating greater efficiencies and

makes the supply chain function of

looked specifically at redefining its

a business a key component, and over

supply chain.

recent years it has become a function

“We’re spending close to 82% of

that is spearheading the future growth

our total outlay as a business on the

in many organisations.

supply chain,” says Phil James,

This is most certainly the case for Petronas Lubricants International 166

To do so, PLI looked internally at

Head of Global Supply Chain. “It’s a great responsibil-

(PLI), manufacturers of a range of

ity to have so we have to

high-quality automotive and industrial

be careful how we

lubricants products in over 100 mar-

spend and more im-

kets worldwide.

portantly, how effi-

Currently within the top 10 leading

ciently we spend.”

“ WE WANT TO BE SEEN EVEN MORE AS A TECHNOLOGY DRIVEN COMPANY BECAUSE THAT’S THE DIFFERENTIATOR” — Phil James, Head of Global Supply Chain, Petronas AUGUST 2019

With a background in chemical engineering, James has worked extensively in refineries and chemicals plants as well as in the corporate centre. James first entered the lubricants supply chain world with BP Lubricants and got a real taste for it. “It’s a business that can really get under your skin” he says. After 7 years with BP Castrol James left to return to refining with BP. “It just wasn’t the same,” he shared. “I found myself missing the lubricants business terribly. So, when after a few years I was asked to head up PLI’s supply chain function I had to check myself not to bite their hand off!” Now he can call upon

w w w.e ne rgydi gi ta l. com

167

P E T R O N A S L U B R I C A N T S I N T E R N AT I O N A L

his extensive experience of working within a large multinational company and, crucially, how the supply chain can support and guide and impact the success of PLI’s vision. “Having worked for BP, it really opened my eyes to how a multinational company operates. It gave me firsthand experience in seeing the procurement of raw materials right through the entire supply chain to customer delivery,” he says. “What I believe is an important learn170

ing is the need for a company of the size and scale of PLI to be just as fast and nimble as other bigger players. That’s what drives us here at PLI.” As the company looks to generate efficiencies across its supply chain to operate more effectively, James believes that there needs to be the basics of efficient and effective supply chain, and awareness of other opportunities to add value to the relationships that are being built. This, James feels, is key to the supply chain transformation so that, “customers get what they want, when they want it, when they ask for it,” he says. As among the 10 top lubricants proAUGUST 2019

171

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viders in the world, James believes that

must also do more to get to where it

the future of PLI will consist of supplier

wants to be.

relationships that are no longer defined

This is where the idea of thinking dif-

by sale and purchase, but relationships

ferently comes into play – not only is

that are much more collaborative.

the company approaching the very na-

“We’re looking beyond the bases of

ture of supply chain differently, it is ask-

traditional relationships,” he says and

ing its suppliers and even

are looking at areas for mutually ben-

its internal staff to look at supply chain

eficial collaborations that need not

in a newer and different dimension.

necessarily be centred around raw material or service. As with any journey or any transfor-

This, James feels, is the only way in which the company can truly grow and prosper. “Changing the supply chain

mation, there is a goal. For PLI, it is to

wasn’t enough,” he says. “It’s about

grow and become among the Tier Two

challenging the status quo and drive in-

lubricants player globally. James ad-

novation. And in so doing, changing

mits that transforming the supply chain

how others, such as suppliers, custom-

is only one of many pathways towards

ers and the like, see us.”

achieving this and that the company

This change starts internally. James

w w w.e ne rgydi gi ta l. com

175

P E T R O N A S L U B R I C A N T S I N T E R N AT I O N A L

176

“ TECHNOLOGY FORCES US TO TAKE SOME RISKS AND WORK WITH SOME SMALLER COMPANIES WHERE TECHNOLOGY MIGHT NOT YET BE PROVEN. IT’S AN IMPORTANT RISK FOR US TO TAKE BECAUSE WE’RE NOT GOING TO FIND THE SOLUTIONS ON OUR OWN” — Phil James, Head of Global Supply Chain, Petronas

AUGUST 2019

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179 is striving to create a much more col-

“It’s been one of the major changes

laborative ecosystem, connecting the

so far in this journey,” says James.

buyers and the sellers and the technol-

“What it has done is enable a far great-

ogy people with the business to drive

er mix of conversation. It has helped us

that innovation.

create better ideas and greater

This collaboration is almost a no brainer as the technology teams within

possibilities as a company.” PLI embarked on this journey of

PLI are often in contact with suppliers

change some years ago and the com-

in the same way that the procurement

pany can already point to areas in

and supply chain teams are.

which this vision is starting to bear fruit.

Couple that with the fact that the sales

Through the changing of that buyer-

team are in constant contact with the

seller relationship, PLI has been able to

technology and procurement teams, it

restructure the way that contracts are

makes sense to create a unified collab-

formulated with some suppliers, thus

orative dialogue.

highlighting PLI’s commitment to its w w w.e ne rgydi gi ta l. com

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“ WHAT I BELIEVE IS AN IMPORTANT LEARNING IS THE NEED FOR A COMPANY OF THE SIZE AND SCALE OF PLI TO BE JUST AS FAST AND NIMBLE AS OTHER BIGGER PLAYERS. THAT’S WHAT DRIVES US HERE AT PLI” — Phil James, Head of Global Supply Chain, Petronas

w w w.e ne rgydi gi ta l. com

181

P E T R O N A S L U B R I C A N T S I N T E R N AT I O N A L

growth ambition, which in turn encour-

en success is in the collaborative rela-

ages a change mindset in its suppliers.

tionship with technology. Technology

Another example is the

continues to redefine industry sectors

close collaboration with a PETRONAS

all over the world and James share,

refinery in Melaka, which resulted in

2018 is the Year of Technology for PLI.

the “decommoditising” of its high-qual-

“We want to be seen even more as

ity base oil production Etro, into a high-

a technology driven company because

er specification Etro Plus. This has en-

that’s the differentiator,” he says.

couraged a mindset of continually

“Technology forces us to take some

redefining the capability of Petronas’s

risks and work with some smaller com-

base oil production to support the evo-

panies where technology might not yet

lution of the high quality lubricants

be proven. It's an important risk for us

space demanded by the OEMs.

to take because we're not going to find

Another area in which the supply 182

chain transformation has shown prov-

AUGUST 2019

the solutions on our own.” This sentiment is highlighted in the

construction of a new Research and

says. “But there will always be more to

Technology centre in Turin, which adds

do as the bar continues to get higher.”

to the company’s existing satellite R&D

“The future is going to be defined by

centre portfolio across Brazil, China

digital space and data. It’s going to be

and Malaysia, for example.

less about looking back on what data

These centres represent Petronas’

has told us but more about what in-

commitment to technology and attract

sights and foresights we can gain

technology companies to work with PLI

about our business.

to innovate or create new products. As PLI continues its transformational

“For us, it’s about being agile and leveraging technology to connect our

journey, James admits that it is a jour-

supply chains. We have to be ready to-

ney that will never truly end. As the in-

day, for what tomorrow will bring.”

dustry evolves, so will PLI. “As at now, we are 85% on the route to efficiency and effectiveness,” he

183

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GROWTH DURING THE DOWNTURN WRITTEN BY NYE LONGMAN PRODUCED BY KYMBERLEY PAGE

184

AUGUST 2019

MOORE

185

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HALLIBURTON

WHILE MANY OIL AND GAS PROVIDERS ARE FOCUSING ON SURVIVAL, HALLIBURTON’S CANADIAN OUTFIT IS USING THE DOWNTURN AS AN OPPORTUNITY TO MAXIMIZE ITS MARKET SHARE

“

e see Canada as a leading indicator of potential downturns on North American lands,” recounts John Gorman, Halliburton’s VP for Canada,

who is optimistic about the future of his industry and the contribution his company can make to the future energy

186

mix. “We started streamlining our efficiencies ahead of the curve, so at the time the downturn really hit, we were already on our path to creating structural differences within our organization to become a lower cost provider.” Like all companies facing the oil price downturn Halliburton faces a number of challenges, but the way it has gone about addressing them is unique. Coupling the latest technological advances in the industry with a competitive shift in the way it manages its supply chain, Halliburton has set the wheels in motion to make solid market and operational gains. “I think it’s really served us well, especially seeing as we are now coming into the second anniversary of the downturn,” Gorman adds. “Even before the downturn, our mantra had been to be the lowest cost per barrel provider in North America – Jim Brown is our Western Hemisphere President and he really focused on that as our primary driver. AUGUST 2019

187

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189 “From our high tech directional drill-

in order to thrive during the downturn.

ing and bit combinations to “Frac of

It is achieving this using superior prod-

the Future” technologies, we are drill-

ucts, materials and equipment, staffed

ing wells faster and producing more oil

by some of the most developed and ex-

and gas per well to really improve our

perienced personnel in the industry.

customers’ returns. At a time with

Halliburton’s operations in Canada

economic challenges, this reduces

cover both conventional and uncon-

the cost of services per barrel to the

ventional oil and natural gas services.

point where drilling and completion

All told, the company’s Canadian busi-

activities are justifiable.”

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OPERATIONS

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Utilizing nearly a century of expertise,

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the company is seeking to extract the

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offshore services and operations. Halliburton Canada’s operations are spread across Western and Atlantic Canada from Fort Nelson, BC to St John’s Newfoundland. The company has been present in Western Canada since 1926 when Erle P Halliburton sent his two brothers, George and Paul to Turner Valley AB to start the

“ WE FOCUSED ON TRYING TO ENSURE THAT WE HAVE ALL OF OUR TECHNOLOGY RESOURCES AVAILABLE TO MAKE SURE THAT OUR CUSTOMERS HAVE THE BEST TECHNOLOGY TO IMPROVE THEIR PRODUCTION WHILE KEEPING THEIR COSTS AT A REASONABLE LEVEL”

Today, Halliburton is one of the largest

— John Gorman, VP for Canada, Halliburton

oilfield services companies operating

operations and drill down on becom-

in western Canada providing excellent

ing a lean organization. A hitherto less

reliability and engineering to numerous

explored activity that the downturn

customers from hydraulic fracturing

has necessitated is repurposing old oil

to drilling.

wells which, as Gorman explains, has

spread of Halliburton into an oifiled services company with global reach.

Halliburton has been present in

been an unexpected source of growth:

Atlantic Canada since the 1970’s when

“We believe we are going to grow out

offshore exploration activities around

of the downturn. We have actually had

the Hibernia offshore oilfield were first

a better adoption of some new technol-

kicking off. Nowadays, the company is

ogies like refracturing wells. One of our

looking forward to the Hebron platform

key strategies is coming back into wells

work starting as they are well posi-

and giving them a new life – very often

tioned with multiple services involved

back to production and very often with

to make a big impact on that project.

a lower decline curve.

Gorman adds that alongside be-

“If you can go into a well that’s al-

coming the lowest cost provider, the

ready been drilled and recompleted –

oil price fall provided Halliburton with

you can do it for half the price or less of

a chance to revamp a number of its

a new drill and very often get close to w w w.e ne rgydi gi ta l. com

191

HALLIBURTON

the original production out of it. That is

SUPPLY CHAIN

being brought into the business which

As one of the largest players in its

really wasn’t there at all a couple of

field, Halliburton recognizes the

years ago.”

potential positive impacts of making

From a strategic perspective, Hal-

its supply chain more efficient. Gor-

liburton’s presence in Canada presents

man explains: “Halliburton is a very

the company with an opportunity to

large organization and from a strong

competitively grow its market share

logistics base. So when we focused

to make long term gains in a key terri-

on being the lowest cost per barrel

tory. “Most of the strategies would be

provider we focused on the recovery

around market share growth. Given the

factor of what we were getting out

depth and breadth of the downturn,

of the ground.

growth in revenue or profitability is not 192

“For example, we buy more sand

a priority but we have been very suc-

than anyone else in North America –

cessful at what we are aiming to do.”

including construction companies.

AUGUST 2019

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GEAR CUTTING

195 You can obviously create some strong

“If you look through a lot of our pipe-

relationships with our vendors to be

lines that are very product or manufac-

a very low-cost provider given the

turing dependent, the more you can

volumes we go through.”

have a high turnover of equipment, you

Remote technology also plays a role.

can accelerate your cash generation

From its real-time logistics center in

from making a very efficient supply

Houston, Texas, Halliburton is not only

chain organisation.”

able to track every truck and rail car in

The company has looked at ways of

North America, it is also able to report

increasing its production performance

on any delays or issues its cargo might

without reneging on its goal to be the

be experiencing – in real time.

lowest cost per barrel provider. A bal-

“That also minimizes our trucking

ance had to be struck. “We focused

and rail costs and makes sure that we

on trying to ensure that we have all of

getting that product delivered when

our technology resources available to

we need it,” Gorman adds.

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best technology to improve their production while keeping their costs at a reasonable level,â&#x20AC;? Gorman adds. Through Halliburtonâ&#x20AC;&#x2122;s Guiding Principles for Sustainability, the company continuously seeks to build on its role as an accident-free, environmentally responsible company. It achieves this using a six-point strategy that covers financial performance, health, safety and the environment, global citizen-

1919

Year founded

50,000+

Approximate number of employees

competitive during the downturn. With upwards of 20 training facilities

ship, transparency and collaboration

across the world, the company pro-

with suppliers. As a member of the

vides technical, operational and lead-

Dow Jones Sustainability Indices,

ership training. Complementing myriad

Halliburton endeavours to integrate

development programs, the company

the above principles into a business

provides a number of fast-track career

model that manages social and envi-

development opportunities.

ronmental risks as part and parcel of delivering long-term shareholder value.

Keen to provide broader and more immersive access to its educational initiatives, the company set up Halliburton

TALENT MANAGEMENT

University â&#x20AC;&#x201C; an online learning system

With over a century of experience in

that enables employees to document

the industry, Halliburton knows how

career achievements while learning

to develop a skilled workforce across

for role-based competencies, com-

its field operations, manufacturing

petency assessments, and technical

and professional roles. Its current tal-

training. It also provides a wealth of on-

ent management strategy is focused

line courses. The company is also keen

on maintaining its career and man-

to foster the next generation of talent;

agement programmes while making

it offers positions within its operations

necessary adjustments to remain

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197

HALLIBURTON

those still to complete their studies. Gorman adds: “From a career progression perspective, we develop high potential employees and we have a partnership with the Mays School of Business at Texas A&M University where we provide financial and business leadership training. While there has been a need to cut costs in other areas, we have kept the Texas A&M training as part of our core leadership training initiatives. Through the President’s Leadership 198

Excellence Program, Halliburton selects 30 of its most capable candidates and, after vetting from the CEO, trains them to fill top management positions within the company. “We train them to become the next leaders of the company. Very often in organizational announcements, you will see ‘graduate of 2000 and whatever year of class’. This is something we are very proud of; we have a great partnership with Texas A&M,” Gorman says. Given the cyclical nature of the oil and gas industry, attracting, developing and retaining the best talent comes with a number of challenges. Gorman and his HR teams have overcome this, AUGUST 2019

“ THROUGH THE PRESIDENT’S LEADERSHIP EXCELLENCE PROGRAM, HALLIBURTON SELECTS 30 OF ITS MOST CAPABLE CANDIDATES AND TRAINS THEM TO FILL TOP MANAGEMENT POSITIONS” — John Gorman, VP for Canada, Halliburton

however. Given the downturn, the company has had to look very hard at which staff it keeps on its books. Gorman explains: “We are in a very cyclic industry and have to balance the current needs of the business with its future needs. It’s always a challenge to determine how long a cycle will last and what sort of structural changes we can make to the business in order to improve our own economics. It’s a challenge for the entire industry.” Having refined an already highly effective business into an even more efficient operation, Halliburton’s Canadian operations are set to play a crucial role in the country’s energy mix for years to come. Gorman concludes: “I truly believe that Canada does the best job of being a very responsible environmental citizen and is embracing some of the most environmentally friendly produced oil and gas in the world. “As Obama recently said during a meeting with Prime Minister Trudeau – the world needs more Canada and I think the world needs more Canadian oil and gas.”

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