PIDX Supplier KPI Project Update May 28th 2014

Michael Washington, ConocophillipsDaryl Fullerton, Actian / PIDX

© PIDX, Inc. 2012

© PIDX, Inc. 2012

Supplier KPI Project Overview

Overview The PIDX Supplier KPI Projects main focus is to develop a Supplier KPI Dictionary (Phase 1) ending in Q4 2014 followed by the development and automation of Supplier KPI data transfer between Suppliers and Oil & Gas Operators (Phase 2) beginning in 2015.

Phase 1 project objectives are to compile an Industry Data Dictionary for Standardization of KPI terminology and definitions, e.g. NPT, TRIR etc

Focus: Upstream / Downstream Commenced: 2011 Participants : c80 Contact: Daryl Fullerton dfullerton@pidx.org Mike Washington michael.washington@conocophillips.com

Wins when Implemented• Standardization on KPI Terminology• Industry Recognized and endorsed Supplier KPI Data Dictionary.• Significantly better QPR’s• Cost savings for Service Companies• More Accurate Data for Operators •Standard for Supplier KPI Data Transfer

Key Drivers – Why we Need• Industry Wide KPI Definition Chaos between different Operator KPI Definitions and the Supply Chain Supplier Base• Scorecard Overload• Cost Savings Time = Money• Better Data Accuracy• Improved Data QA/QC• Scorecard impact on working conditions.

Industry – Current State of SPM• Many Operators have SPM Initiatives in operation or

underway.• Often Contract Awards for a new Supplier based on WOM or

past performance but KPI Terminology / Definitions may differ. – Big Problem Area

• Many KPI initiatives are Regionally Focused or Category Line Focused with no Global Company Wide KPI role up.

• Very few provide Visibility on KPIs on Real Time to Suppliers• Often no way of telling whether A team or B team until things

go wrong – Likeness to Political Campaigns / Elections• No way of facilitating regional Specific KPIs that Matter.• Huge Drive to Standardise KPI terminology. Apples with

Apples and Like with Like. • Automated of KPI data gathering extremely low.

Confidential © 2012 Actian Corporation 3

Supplier KPI Data Dictionary Update (May 2014)

© PIDX, Inc. 2011

1. Template for Data Collection Agreed.

2. 5 Performance Areas Defined and Agreed.

3. Over 450 KPI’s recieved and in progress of being added to Master Data Dictionary

4. KPI’s Submitted by 15 Companies

5. Planning for Conversion of KPI Dictionary Spreadsheet to from Excel to Data Base underway.

Accomplishments to Date

•5

Performance Areas (Level 1) Framework Agreed –Sept 14th 2012

•19/04/23 Classification: Internal

•

• QUALITYS

UP

PLI

ER

• DELIVERY

• COST

• BEHAVIOUR

• HSE

Level 1

Work Group Meeting Outcomes Houson May 14th

© PIDX, Inc. 2011

ConocoPhillips , Houston Texas

5 Hour Meeting

30 Attendees / Participants

Outcomes

1. Review Progress

2. 65 Similar KPIs

3. Operator Challenges on Standardization

4. Supplier Challenges on Standardization

5. Business Case for Operators

6. Business Case for Suppliers

7. Proposed KPI Standardization Sheet (Version 2)

Takeaway Template Discussed

Challenges for Operators and SuppliersOutcomes Workgroup Meeting working secession May 14, 2014

• Internally many different definitions for Same KPI• Time Taken to Approve and Validate Data.• Lack of System Integration lacking• Executive sponsorship –Busines Case Needed• Internal agreement within our BU’s and globally on

KPI Naming Conventions.• Internal alignment between supply chain and

operation groups• Compelling business case to drive KPI

standardization• Supplier engagement - How do we get our suppliers

on board?• KPI data capture - How do we easily capture this

data?• I may not be the right person to drive this globally

within my organization• Effort involved in Managing suppliers Performance

and Validating the data• Legal impacts of Supplier KPI Standardization

Operators Challenges Supplier Challenges

• Different Operators use different Naming Conventions

• Operator places burdon on Suppliers to complete scorecards.

• Not all Operators providing visibility on data gathered.

• Many Operators don’t do 360 Degree KPIs and Surveys

• Data Duplication – Data already exists in Operator Systems – HSE Systems , Well View , Open Wells

• Suppliers Not always engaged at start of Operators SPM program.

Work Group Meeting Outcomes London May 27th

© PIDX, Inc. 2011

GE , Houston Texas

5 Hour Meeting

30 Attendees / Participants

Outcomes

1. Review Progress

2. Operator Challenges on Standardization

3. Supplier Challenges on Standardization

4. Business Case for Operators

5. Business Case for Suppliers

6. Identified 19 Global Common KPIs

7. Proposed KPI Standardization Sheet (Version 2)

KPIs to StandardizeKPI Name KPI Definition

Total Recordable Incident Rate (TRIR) = Recordable Cases * 200,000 / Hours Worked

OSHA Severity Rate OSHA SR = (Lost Workdays + Restricted Workdays) * 200,000 / Hours Worked

Lost Workday Case Incidence Rate LWIR = Lost Workday Cases * 200,000 / Hours Worked

OSHA Incidence Rate(OSHA IR) = (Lost Workday Cases + Restricted Workday Cases) * 200,000 / Hours

Worked

Actual Costs Vs Planned Cost Days(Actual Cost of Services/Actual Operating Time (days))/(Planned Cost of Services/Planned

Operating Time (days) )

NPC % OF ACTUAL COST (Total non productive Cost NPC/Actual Cost of Services)*100.0

Days per 10k (Total number of drilling days / Total feet drilled)*10,000

NPT in % of operating time (Product Line Related Total Non-Productive Time NPT (days)/Actual Operating Time (days))*100.0

Operating Efficiency % Operating Efficiency = (Operating Time-Agreed NPT)/Operating Time x 100

Days Away from Work Injury Freq. (Days Away From Work Injuries/Total Manhours)*200000.0

Stop Cards Issue Rate Number of Stop Cards recorded for the supplier per 200,000 man hours

Recordable Injuries and Illnesses Frequency (No. of Recordable Injury and Illnesses*200000.0)/No.of Man-hours worked

% Objectives Met (number of objectives met / number of objectives defined) * 100

On Time Delivery Rate On Time Delivery in Full to Specification / Total Deliveries Received

Right First Time Invoicing Rate Invoices received Right First Time / Total Invoices Received *100

Days Sales Outstanding Ratio DSO ratio = accounts receivable / (annual sales / 365 days)

Days Payment Outstanding Ratio DPO ratio = accounts payable / (annual sales / 365 days)

Common Global KPIs - Ver 1 (May 27th)

Next Meetings / Key Dates

Houston 10th Sept - Baker HughesCalgary – September 24th 2014

Paris – October 2014

October 2014 – Standardized KPIs

Standardized KPIs – November / December 2014

Why Become Involved?

© PIDX, Inc. 2011

1. KPI Dictionary Access – Exposure to More KPIs

2. Your KPI’s are Part of a Standardized Industry wide Accepted KPI Portfolio

3. Access to Quarterly Release of Supplier KPI Dictionary

4. Network with Industry Peers on best practices and Lessons Learned on SRM

5. Get Guidance on Establishing Supplier KPI’s

6. Operator / Supplier Presentations

Q & A

Contact:dfullerton@pidx.org

michael.washington@conocophillips.com

www.pidx.org

Linkedin Group: Supplier Performance Relationship

Management Group (Oil & Gas)

© PIDX, Inc. 2011