Terminal Benchmarking Whitepaper - · PDF fileEXECUTIVE SUMMARY This paper showcases...

WIPRO TECHNOLOGIES

By Goutam Mangaraj

Terminal BenchmarkingWipro Thought Leadership

EXECUTIVE SUMMARY

This paper showcases Wipro’s thought leadership around the enterprise-wide fuel Terminal Benchmarking

area, which is an industry trend that has emerged over the past few years. The paper articulates Wipro’s

point of view around the business drivers for benchmarking, the process for benchmarking, some important

KPIs and finally an IT solution to enable this process. The IT solution that Wipro proposes is detailed in one of 1our earlier papers, i-Terminals

TABLE OF CONTENTS

1.0 Introduction to Benchmarking................................................................................4

2.0 Benchmarking of Fuel Terminals – Business Drivers...............................................4

3.0 How to benchmark fuel terminals across the enterprise?......................................5

3.1 Benchmarking Process...................................................................................................5

Tools & Systems...........................................................................................................6

Roles & Responsibilities..................................................................................................7

Benchmarking Components (Indicative List)............................................................................8

Sample Graphs..........................................................................................................11

Critical Factors for a Successful Benchmarking.....................................................1 2

References...................................................................................................................13

3.2

3.3

3.4

3.5

4.0

About the Author.........................................................................................................13

ABOUT WIPRO TECHNOLOGIES...................................................................................14

WIPRO TECHNOLOGIES

1.0 Introduction to BenchmarkingBenchmarking is the process of comparing one's business processes and performance metrics to industry bests and/or

best practices from other industries. Benchmarking involves management identifying the best firms in their industry, or

any other industry where similar processes exist, and comparing the results and processes of those studied (the

"targets") to one's own results and processes to learn how well the targets perform and, more importantly, how they do

it.

The concept of "best practice benchmarking" or "process benchmarking” helps organizations to evaluate various

aspects of their processes in relation to best practice companies' processes, usually within a peer group defined for the

purposes of comparison. This then allows organizations to develop plans on how to make improvements or adapt

specific best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off

event, but is often treated as a continuous process in which organizations continually seek to improve their practices and

help them achieve business excellence.

The benchmarking process for storage terminals has been there since a long time but it lacked a systematic approach.

With the advancement in IT tools and technologies, now the benchmarking efforts can be more cohesive, more aligned

towards vision and mission of oil storage and distribution companies. There are several challenges, which are faced

during benchmarking exercise, viz. disparate data sources resulting from silo IT implementations, more efforts spent on

collecting and compiling data rather than on validating and analyzing them, no standardization of existing processes

across corporation, data quality issues, lot of time consuming manual efforts, no standard process for opportunity

capture and follow through, etc.

2.0 Benchmarking of Fuel Terminals – Business Drivers


• Current Scenario Snapshot – The benchmarking process will help the companies to find out their current standing i.e. what is their performance at this point of time vis-à-vis desired level

• Improve Terminal Performance – Once a target is set for certain KPIs, then over the period of time those indicators could be closely monitored against set targets and subsequent steps can be taken to enable them meet those targets hence resulting in improvement in terminal performance

• Savings in terms of Money & Efforts - Once a centralized benchmarking effort is done, then it results in lot of cost savings as there would be no need to carryout separate localized efforts on benchmarking process. Further, it would result in lot of savings in manpower efforts to generate inter terminal comparison reports

• Drives Knowledge Management – Energy industry has a perennial issue of ageing workforce but once benchmarking is done, then the various efforts which are taken to improve the performance metrics would be captured and the same can be referred in future on need basis.

• Efforts aligned to Company Strategic Goals – Benchmarking will channel the performance improvement efforts towards target companies vision/strategic goals such as “incident free work place” or “maximize shareholders returns on investments (profit maximization) etc.

• Framework for Comparing Apples-to-Apples – Benchmarking efforts provide a platform to compare performance of different assets in different location on similar platform, i.e. it allows users to bring all terminals to common comparison platform by correcting the different data sets with respect to corresponding applicable inflation rate, exchange rate and purchasing power as per applicable country scenarios.

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Identify Processes

Perform Actions Determine KPIs

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3.0 How to benchmark fuel terminals across the enterprise?

Identify Processes: The first step in benchmarking is to identify various processes (functions), which ought to be

included in the benchmarking process. All the processes which, when monitored on a continuous basis, can result in big

fat payouts or quick gains on a sustainable basis should be included. An effort cum returns matrix can be prepared to

arrive at the best-case scenarios that should be picked under benchmarking efforts. For example – continuous

monitoring of maintenance function can lead to prudent maintenance strategies resulting from optimum spare parts

inventory, similarly continuous monitoring of operations function can lead to identification of over capacities of

inventory space thereby leading to rationalization of tank storage space.

Determine KPI’s: Next step involves identifying the key performance indicators that capture the major performance

outputs of the selected functions/processes. Generally, Pareto rule (80-20) is applicable to most of the industries. 20% of

the KPIs could be responsible for 80% performance output of the processes; hence those 20% KPIs must be included for

monitoring purposes. For example – Gate to Gate time, Maintenance cost per m3 of fuel handled, FTE cost per m3 of fuel

handled, etc.

Configure Alerts/Warnings: Proper alerts (High-High, High, Low, Low-Low) should be configured so that the deviations

of KPIs from the target benchmarking efforts could be captured before they become potential threats for bottom line

erosion. For example – The tank level-monitoring alert can be fixed at 95%(High-High), 90%(High), 20%(Low), 5% (Low-

Low)

Measure KPI’s: Next step involves monitoring of KPIs at frequent interval of time to identify opportunities to enhance

operational efficiency. Different set of KPIs require different set of data fetching rates, e.g. some KPIs can be monitored

on minute-minute basis, some hourly basis, others on weekly or monthly basis.

Perform Actions: On observing any deviations from predetermined targets, assigned users should perform remedial

actions as well as document their learning for future reference by other colleagues in similar scenarios. The objective is

to have optimum number of terminals to perform in first quartile. This can be achieved by equipping employees with

tools and technologies which will allow them to operate in concurrence with best standards, procedures and controls,

follow good maintenance practices to achieve high asset integrity, excellent HSSE performance, and outstanding

customer service, in synchronization with stable financial performance.

These processes will result in sustained improvement of business performance over a period of time. Monitoring and

improvement of the KPIs is a continuous process that has to be carried on till there is a need to drastically change the

existing benchmarking processes in order to match current changed business scenarios that make existing processes

irrelevant.


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3.1 Benchmarking Process

Configure AlertsMeasure KPIs

ImprovePerformance

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1Our earlier paper (i-Terminals) had emphasized on the importance of terminal benchmarking for achieving overall

improvement in performance of terminal operations. Further, using the solution (i-Terminals), the data can be captured

from different IT systems like Operations data (Terminal Automation System), Inventory data (Tank Farm Management

System), Quality data (Analyzers/LIMS), Maintenance & HSSE data (in-house Oracle/SQL based systems), and Sales, HR

& Finance data (ERP Systems) and then converted into valuable information in form of dashboards, KPIs, alerts, etc.


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3.2 Tools & Systems

Dashboards Lost opportunity Gap Analysis

Charts Alerts Trends

Monthly Reports Daily Reports Analytics

i-Terminals

WIPRO TECHNOLOGIES


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3.3 Roles & Responsibilities

• Arrange training sessions

• Decide consistent KPIs to monitor organization wide performance status

• Identity Best & Worst scenarios in various terminal operations

• Share findings with Terminal & Geo - level managers

• Plan issue focused projects to identify and eliminate inefficiencies

• Compare published results for respective terminals in that geo

• Indentify areas of inefficiencies

• Drill down to causes of inefficiencies

• Take steps to remove / reduce those efficiencies

• Understand use of tool and train appropriate resources

• Validate terminals related data with various functional departments (Assess data quality, correct inconsistencies)

• Allow results to be published

Head Quarter Level Manager

Geography Level Manager

Terminal Level Manager

WIPRO TECHNOLOGIES


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3.4 Benchmarking Components (Indicative List)

HSE

Quality

Energy

Operations

Finance

Benchmarking KPIs - Data Sources Relationship Diagram

Gate to GateTime

HSEEnergy

Consumption

TerminalAutomation

System

Oracle/SQL Server

ERP/Oracle/

SQL Server

(Indicative Diagram)

• Incident free working hours• Number of Recordable Injuries• Amount of Spill Volume

• Number of Off specs• Quality Giveaway• Quality Loss

• Electricity Consumption Quantity• Water Consumption Quantity• Other Utilities Cost

• Opening Versus Closing Stock• Capacity Utilization Ratio• Mode Wise Volume receipt

• Labour costs, Contractor Costs• M&R Cost, Salary & Overtime Costs• Depreciation

WIPRO TECHNOLOGIES

Let us consider the benchmarking of terminals based on gate-to-gate timings for each terminal. For this purpose, we

have divided the entire gate-to-gate time into distinct activities and sub-activities that take up a truck’s time at a

terminal.


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1. Entry queue

2. Entry Process

3. Staging Process

4. Parking & Waiting

5. Loading Process

6. Post Loading

7. Exit

Sr. No Activity Sub-activity KPI Calculation Remarks

1 Entry Queue Entry Queue Periodic Survey (Average value)

Manually input into a form

2 Entry Process Truck / Driver Validation

Time in minutes waiting to enter terminal gate

Time in minutes to validate truck / driver

Formula: {Start time of activity no. 5 - 4 - 3 -Start time of activity no. 2}

Start time of activity no. 2 = Card swipe time in TAS at entry gate readerStart time of activity no. 5 = Card swipe time in TAS at staging reader

3 Entry Process Reach Staging Area

Periodic Survey (Average Value)

Manually input into a formDriving time to staging area

4 Entry Process Stage Queue Time

Time waiting before start of staging process

Formula: {Start time of activity no. 5 - 3 - Start time of activity no. 2}

Start time of activity no. 2 = Card swipe time in TAS at entry gate readerStart time of activity no. 5 = Card swipe time in TAS at staging reader

5 Staging

Process

Stage Load Card out time - Card in Time at staging reader

Available in TASTime taken to stage a load

6 Parking &

Waiting

Drive to Parking Area


Manually input into a formTime taken to reach parking lot

7 Parking &

Waiting

Wait at Parking Area

Waiting time

WIPRO TECHNOLOGIES


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Sr. No Activity Sub-activity KPI Calculation Remarks

8 Loading Process

Drive to Loading Bay


Manually input into a formTime taken to reach loading bay

11 Loading Process

Load Product Product flow stop time - Product start time

Time taken to load product

9 Loading Process

Connect Truck Periodic Survey (Average Value)

Manually input into a formTime taken to prepare vehicle for loading

10 Loading Process

Enter Load Details

Product flow start time - Card-in time at bay

Available in TASTime taken to enter load details

12

13

Loading Process

Post Loading

Disconnect and Leave Bay

Drive to Document Printing Station

Card-out time - Product flow stop time

Card-in time at document printing station - Card-out time at loading bay

Time taken to disconnect truck and leave

Time taken to drive to document printing station

Available in TAS

Available in TAS

Available in TAS

14 Post Loading Collect Documentation

Card-out time at document printing station - Card-in time at document printing station

Time taken to collect document

Available in TAS

15 Exit Exit Terminal Gate

Card-in time at exit gate - Card-out time at document printing station

Time taken to exit terminal

Available in TAS

The above KPIs would then need to be normalised to account for differences in vehicles sizes, average number of

products loaded per load, average number of compartments loaded per load, average quantity loaded per load, etc.

WIPRO TECHNOLOGIES


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3.5 Sample Graphs

Maintenance & Repair Costs / Throughout Terminal Opex/Throughput

Investment Analysis

Opportunity Loss Terminal Maturity Scorecard

Terminal Capex/Throughput

WIPRO TECHNOLOGIES

4.0 Critical Factors for a Successful BenchmarkingAssign responsibility at every level (Terminals, Geo, HQ): This is the basic activity that will lay a foundation of a

successful benchmarking effort. Please refer section 3.3 for further details of what kind of responsibilities can be

assigned at different levels.

Open information sharing culture between different functional departments: Every Company must focus on having an

open culture of information sharing between various departments. In the initial period, the employees may be little

hesitant as now their colleagues in other department would know how they are performing on day to day basis but once

they realize it’s importance in company’s future growth then they will be more than willing to do henceforth.

Right IT tools (I terminal solution): It is very important to have right IT tools, which will help the organization in

benchmarking activities. IT tools like ‘I Terminal’ solution can address most of the loopholes existing within a company

with respect to information sharing and benchmarking efforts. Further, these tools are deployed easily and quickly, with

attractive RoI proposition.

Identification of valuable KPIs for each functions: After identifying the functions which, when monitored continuously,

can result in big payouts or quick wins (as per the adopted strategy) then all the associated important KPIs which

facilitate to do so must be identified. Monitoring of wrong KPIs may result in unsuccessful benchmarking efforts in the

long run.

Stable feedback mechanism: The IT tools must facilitate feedback mechanism so that the performance indicators can be

evaluated on a regular basis. All the KPIs should be crosschecked in regular interval to find out whether they are still

relevant with respect to current business scenarios or they need to be changed with respect to changing business needs.

Near real time availability of information: Availability of information is quite important to understand the current

business state but the duration of availability can play a spoil factor in the sense that if a current piece of information

could have been made available to the business before 2 hours then accordingly some decisions could have been taken

to avoid a huge business loss which currently seems inevitable. Thus benchmarking should be done in such a way that

information is available stakeholders on near real time basis such that it facilitates decision making within opportunity

window.


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•• Interviews with Oil and Gas Professionals• Wipro Industry Research • http://en.wikipedia.org

1• i-Terminals: Wipro Thought Leadership - http://www.wipro.com/industries/energy/energywp.aspx

Interviews with Wipro Industry Experts

References

About the Author

Goutam Mangaraj

Goutam has over 6 years of experience in the IT services industry, with dedicated focus on solutions for the Oil & Gas

industry. He has comprehensive knowledge of business processes involved across Oil & Gas downstream value chain viz.

refinery operations, terminal & depot operations, downstream supply chain and retail operations. He has worked in

several technology projects in various capacities for Oil Retailing Giant, Global Petroleum Super Major, World Class

Refinery, Large Integrated Petrochemical Major etc. He is currently working as a Consultant within Wipro's Smart

Solutions Competency Centre. He is qualified software professional and holds a M.B.A in Oil & Gas Management.

For more information on this paper, please contact Goutam Mangaraj at [email protected] Visit Wipro at www.wipro.com

14 | www.wipro.comWIPRO TECHNOLOGIES

Wipro is the first PCMM Level 5 and SEI CMMi Level 5 certified IT Services Company globally. Wipro provides comprehensive IT solutions and services (including systems integration, IS outsourcing, package implementation, software application development and maintenance) and Research & Development services (hardware and software design, development and implementation) to corporations globally. Wipro's unique value proposition is further delivered through our pioneering Offshore Outsourcing Model and stringent Quality Processes of SEI and Six Sigma.

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