DISSERTATION FOR THE UNIVERSITY OF LIVERPOOL

How have Halliburton and Chevron used lean management to improvetheir supply chain processes?

ByModupe O. Oyeneyin

Name Modupe OyeneyinStudent ID H00025581Date: 14/02/2014Advisor: Dimitris Folinas

Abstract

The concept of lean management seeks to synchronize the output of

a process with customers’ demand with the aim of giving

satisfaction through waste elimination, process simplification,

ensuring quality output of product or services to meet demand

while continuous improvement is kept in focus.

Lean Sigma on the other hand is a structured methodology that

drives continuous improvement of products, processes and services

to either meet or exceed customer requirements by achieving as

much as possible using a structured approach.

When these two concepts are integrated we have Lean Six Sigma or

Lean Sigma a concept achieved using best practice tools with a

lot of dependence on data collection, data analysis in a

structured manner to address issues identified.

These claims were researched with the question, ‘How

have Halliburton and Chevron used lean management to improveii

their supply chain processes?’ with the aim of confirming if Lean

Six Sigma is a successful or unsuccessful concept by asking three

investigative questions:

a. What were your supply chain processes like before the lean

sigma implementation?

b. Why did your company decide to implement Lean Six Sigma

(LSS) and what improvement has been recorded in the supply

chain process?

c. How long did it take to achieve the first breakthrough?

Following the responses of interviewee to these questions and the

application of certain tools and techniques of Lean Six Sigma to

their business and supply chain processes, the research went

further to confirm the validity and reliability of these tools by

applying same to the business processes of an organisation called

Oando Energy Resources operating in the same oil and gas industry

as Halliburton in the Europe and Sub-Sahara region, ESSA and

Chevron in Nigeria, West Africa.

Upon confirmation of the validity and reliability of the tools

and techniques of Lean Six Sigma, the rationale behind the

investigative questions were then discussed with the aim ofiii

understanding the reasons for asking these questions upon which

conclusions are drawn and recommendations made to any

organisation that seeks to achieve success through process

improvement and standardization and continuously improving same

with the deployment of the proven tools and techniques of Lean

Six Sigma, (LSS).

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Acknowledgements

Immense recognition goes to my Maker, Saviour and Creator first

and foremost, for giving me life, strength, good health and

financial capability amongst many other things to get to this

stage of my career and especially completing this dissertation

successfully. I am forever grateful to You.

A great ‘thank you’ to all my module instructors since I started

this Masters programme in 2012. It has been challenging,

exciting, educative and this journey has indeed improved me as a

person in all ramifications.

Special thanks to my husband for supporting and encouraging me on

this journey, considering the financial commitment and time spent

from inception to date. I appreciate my daughters who understood

‘mummy has to study’ when I could not be as available as I used

to especially on weekends.

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To Laureate Education and University of Liverpool for setting up

this 100% online programme that has given someone like me the

opportunity to learn and bag a Master’s degree in Operations and

Supply Chain Management without having to leave my job. Thank you

so much.

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Table of Contents

ContentsAbstract............................................................iiAcknowledgements....................................................ivTable of Contents....................................................vList of Figures....................................................viiList of Tables....................................................viiiList of Memos.......................................................ix1 Introduction......................................................x1.1 Introduction...................................................x1.2 Background Information........................................xi1.3 Aim.........................................................xvii1.4 Research Questions.........................................xviii1.5 Research Objectives..........................................xix1.6 Feasibility of the study......................................xx1.7 Justification of the Topic...................................xxi

2 Literature Review.............................................xxiii2.1 Chapter Overview...........................................xxiii2.2 Value Stream Mapping........................................xxvi2.3 Parallel Incremental Transformation Strategy (PITS).......xxviii2.4 Attitude....................................................xxxi2.5 Waste Elimination.........................................xxxiii2.6 Lean and Six Sigma Framework...............................xxxvi2.7 Conclusion.................................................xxxix

3.0 Research Methodology..........................................xli3.1 Research Design and Approach.................................xli3.2 Justification for using Constructivist Approach and Qualitative Methodology..........................................xliv

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3.3 Validity and Reliability of Research Method..................xlv3.4 Data Collection Methods....................................xlvii3.5 Application of Interview for Primary Data Collection...........l3.6 Conclusion...................................................lii

4. Survey Result, Data Analysis and Interpretation................liii4.1 Chapter Overview............................................liii4.2 Data Collection.............................................liii4.2.1 Investigative Question One:..............................liv4.2.2 Investigative Question Two...............................lvi4.2.3 Investigative Question Three....................................lxi

4.3 Application to Oando Energy Resources.......................lxii4.3.1 OER Supply Chain Processes – Pre Lean Six Sigma Implementation................................................lxiii4.3.2 How long did it take to achieve the first breakthrough in OER?...........lxvi4.3.3 Why implement Lean Six Sigma (LSS) in OER and what improvement has been recorded in the supply chain process?..................................lxvii4.3.4 Process Standardization - The DMAIC tool was deployed to OER processes: lxviii

4.4 Success Criteria...........................................lxxii4.5 Summary...................................................lxxiii

5.0 General Conclusion and Recommendations......................lxxvi5.1 Chapter Overview...........................................lxxvi5.2 Implications of Investigative Questions....................lxxvi

5.2.1 What were your supply chain processes like before the lean sigma implementation?.................................................lxxvii5.2.2 How long did it take to achieve the first breakthrough?...............lxxix5.2.3 Why did your company decide to implement Lean Six Sigma (LSS) and what improvement has been recorded in the supply chain process?..................lxxx

5.3 Research Summary..........................................lxxxiiReferences......................................................lxxxiv

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List of Figures

Fig. 1 – The Toyota Production System House

Fig. 2 – ‘How to Lean’

Fig. 3 – Cycle Time Reduction

Fig. 4 – Five year Lean Vision developed from Process Activity

Map data

Fig 5 – Break up of cost saving at each stage of production

Fig 6 – Percentage Reduction in Processing Time

Fig 7 – Multi-Team Governance Structure

Fig 8– Summary of DMAIC Application

Fig 9 –Three steps to execute Focused Lean Six Sigma

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List of Tables

Table 1 – Activity Map Result for Assembly Plant

Table 2 – Problem Solving and Improvement Action

Table 3 – Qualitative, Quantitative and Mixed Methodologies

approaches to Research Practices

Table 4 – Halliburton Research Questions and Responses

Table 5 – Chevron’s Research Questions and Responses

Table 6 – DMAIC Application to Process Standardization at

Halliburton and Chevron.

Table 7 – VSM of OER supply chain processes - Stage 1

Table 8– VSM of OER supply chain processes - Stage 2

Table 9 – VSM of OER supply chain processes - Review of

Requisition Rights

Table 10 – VSM of OER supply chain processes - Solution

Proposition.

Table 11 - Process Changes and Effect on OER’s Business

Table 12 – Cost Saving per project through LSS implementation

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List of Memos

Memo 1 – Communication to staff – Defining the Process

Standardization process.

Memo 2 – Communication on Continuous Improvement of Process

Change.

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1  Introduction

1.1 Introduction

This chapter will discuss in details the introductory

aspect of the topic by showcasing the background

information available on the topic, the research questions

that will be asked and answered to give an understanding of

underpinning facts about the topic. The structure of the

research will also be discussed to give clear understanding

of the aims, objectives and methodology to be applied in

discussing the topic and finding relevant solutions to

problems identified.

Globally, the oil and gas industry has two major arms,

those companies that provide services, called the ‘Oil

Servicing Companies’ and those that receive these services,

the ‘Exploration and Production Companies’. The two

companies chosen as case studies for this dissertation

operate in one of the two arms, Halliburton an oil

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servicing company and Chevron, and oil & gas explorer and

producer.

It has been observed that the entire coordination of the

processes involved in provision of services to receiving

the same, within the oil and gas industry can become so

complex and inundated with ineffective activities, hence

the need to analyze these processes and tactically

eliminate unproductive activities that result in waste of

time and money, as well as deployment of unnecessary

personnel to carrying out of these activities.

This dissertation will focus on inefficiencies that are

man-made because there are quite a few that are connected

to the term ‘Force Majeure’, where project delivery has

been hampered as a result of natural disaster and other

circumstances beyond human control.

The oil & gas supply chain usually have three, four or more

tiers of activities, which translates to hundreds of

contractors/vendors/suppliers and numerous sub-contractors,

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who individually have a minimum of 4-5 personnel

representatives on-site and off-site at different points in

the life of a project. We are talking about hundreds to

thousands of personnel interacting, hence the need to

ensure coordination is near perfect and waste is eliminated

in these activities to achieve timely delivery of the

project.

The coordination of supply chain processes and activities

through elimination of waste will be the mediation

approach, and with these understanding and realities, this

dissertation will be investigating how two companies who

are major players in the oil and gas servicing and

producing sectors have improved their supply chain

processes by implementing the methodologies of Lean

Thinking as well as Lean Six Sigma.

1.2 Background Information

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Halliburton was founded in 1919 and currently boasts of

over 75,000 employees spread across 140 different

nationalities. It has since grown to become one of the

major providers of products and services to the oil and gas

industry. There are currently 13 different product service

lines, grouped into three divisions, Drilling & Evaluation,

Completion & Production and Division Support, with

different activities being carried out at different times

by different people of diverse race and culture, all across

the globe, Halliburton, (2014).

Chevron on the other hand started in 1879 when a group of

explorers and merchants collaborated to form the company,

formerly known as Pacific Coast Oil Company at the time.

The company has grown from having its presence in just five

states within Western United States to a corporation

conducting businesses such as Exploration & Production of

oil and natural gas, manufacturing and transportation of

products, movement of products via pipelines and global

trading of finished products, all over the world. Chevron,

(2011).

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Halliburton typically provides oil & gas related services

to Chevron as seen in the award of a contract by Chevron to

Halliburton for the exploration of shale natural gas in

Poland, in an integrated services contract, Halliburton,

(2011).

Considering the diversity of these two companies, it is

obvious there will be a great need to coordinate activities

within the oil & gas servicing company, Halliburton as well

as the oil & gas exploration and production company,

Chevron. There will also be demand to ensure intercompany

activities flow seamlessly and value is delivered by the

servicing company to the producing company.

Over the years, the ability to coordinate these activities

has been greatly challenged, a challenge that is evident in

late delivery of projects such as the Chevron’s China

onshore Chuandongbei gas project, delayed from a go-live

date of 2010 to 2015, mainly because there was a lack of

understanding of the complexity of the field at the

beginning of the project, and inability to secure partner

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alignment, Platts, (2014). The project has a capacity to

produce 558,000Mcf/d at an initial cost of $4.7billion, but

this cost has ballooned to $6.4billion in 2013, with

project end date not firmed up. The project deliverable was

clear and cost known at start-up, but this plan has been

delayed, and budget has been over-run due to delays that

could have been avoided if the entire process of delivering

the project has been properly managed.

This challenge and the desire to investigate and solve the

attendant problems gave birth to the interest in this

topic, which is to research into how Halliburton and

Chevron have deployed certain principles in solving their

project related challenges.

For this dissertation, the principles to be deployed are

those of Lean Thinking, which was first implemented in

Toyota, a Japan based car manufacturing company established

in 1937 solely to manufacture and sell cars, Toyota-Global,

(2014). The implementation of lean management at Toyota was

a structured approach termed the Toyota Production System

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(TPS), that has successfully integrated PEOPLE, PROCESSES

and TECHNOLOGY, and is applicable beyond the manufacturing

industry, to service or technical processes, outside the

manufacturing industry, Liker & Morgan, (2006).

The lean management integration model critically looks at

people that drive the lean process with the aim of

standardizing it to achieve common objectives. These people

are expected to possess skill and technical competence that

will help them identify problems, analyze these problems,

develop improvement measures, communicate these measures to

the appropriate stakeholders and actually follow through to

ensure the improvement measures are implemented.

Every stage of car manufacturing in Toyota is viewed as a

process, hence workers are monitored up to the seconds of

work done with the aim of standardizing the process,

refining it, eliminating waste and continuous reduction of

lead time and cost for one program to the other, a cycle

referred to as the Continuous Improvement cycle of Plan-Do-

Check and Act (PDCA).

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Technology in Toyota is the set of tools people deploy in

process improvement. Tools like computers do not

necessarily help us work faster, they only help us execute

mastered processes, hence more attention is paid to

processes and people, with the technology only helping with

implementation. This aspect of the TPS was explained in the

Spear & Bowen, (1999) article detailing the frustration of

most business owners who have tried to copy the Toyota way

by only looking at the tools and techniques but not the

Toyota, inherent in its processes and people.

Spear & Bowen, (1999) further revealed that the success at

Toyota was mainly as a result of the deployment of the

Process Framework, which studied step by step activity of

every process involved in the manufacturing stage, leading

to the development of teaching and learning approach passed

down to workers. This framework help the workers discover

rules as a result of their problem solving approach,

ultimately imbibing the culture of lean thinking.

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Having considered the applicability of lean management to

manufacturing and other industries, it is necessary,

especially for the purpose of this project to consider how

applicable the techniques and focus of lean thinking are to

supply chain processes. Tompkins, (2004) explained that

lean thinking for the supply chain must focus on the

concepts of value creation and waste elimination.

To create value, the following must be done:

Value specification must be from the perspective

of the end customer and not provider. Many times,

service providers in the supply chain team tend to

force the end customer to accept their own

specification of value.

Value system must be determined by identification

of value creating steps, implementing value stream

mapping and challenging every step in the process,

asking ‘why’ five times.

Steps in every process must occur in quick

sequence. This is called value lining up.

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Using capable, available and adequate processes to

create flow

Material, parts, products and information pull

must be from the customer

Continuous improvement must be focused on waste

reduction and elimination.

Waste elimination on the other hand must constantly look

for ways to improve the process by:

Stopping defective products right from their

source

Flowing processing together

Elimination of excess cost or material handling

steps

Eradication of pointless process steps

Reducing time spent waiting for parts, materials,

orders, people and information.

Tompkins, (2004) further explained the various components of

the lean supply chain, information which will help

organisations focus on relevant aspects when implementing

lean thinking. These are Lean Supplier, Lean Procurement,

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Lean Manufacturing, Lean Warehousing, Lean Transportation

and Lean Customers. Successful implementation leads to

reduced inventories, speed & responsiveness to customers and

improved customer satisfaction. There must also be the

desire to bring different departments out of their

traditional silos and make them work together with focus on

waste reduction and flow creation. Proactiveness is also

important with the aim of positioning all resources within

the supply chain for effectiveness.

Meji, (n.d.) also buttressed Tompkins, (2004) concept while

drilling down into specific activities within the supply

chain that can be improved upon especially waste

elimination, improved flow and value creation. He pointed

out that basic processes within the supply chain such as

order assembly, picking, cross-docking, returns processing,

kitting and packing, if monitored closely can be improved

through elimination of waste, as identified in eight

different types of waste present in the process.

Waste occurs resulting in overproduction, unnecessary

transportation or movement between processes, excessive

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inventory, unnecessary waiting, over processing, reworking

due to poor quality or need for correction and unnecessary

motion that is not adding value. With proper monitoring,

these can be eliminated in any supply chain process.

In the course of researching for this dissertation, the

concept of lean management came up as the most commonly used

method for achieving continuous improvement and eliminating

waste in most supply chain processes, in addition to another

methodology called Six Sigma which is used mostly to improve

business processes. The common trend is that these two

methodologies have been deployed as an ‘either/ or’ strategy

but Bossert, (2003) in his research pointed out that the

fact that these two methodologies, though evolving from

separate paths, both of them address two important aspect of

process improvement in any organisation, and that is the

reason the strategy merger is a welcomed opinion.

Six Sigma was developed by Motorola according to Bossert,

(2003) and in that system, a staff is empowered to spot a

problem, raise an alarm and stop work to ask for help and

not continue the work until the problem is fixed.

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Ultimately, business processes are improved with the

deployment of statistical methods to identify and decrease

or completely eliminate the frequency of process variation,

while focusing on reducing product defect and quality,

profit improvement and employee morale.

This combination is referred to as Lean Six Sigma and has

been proven by companies such as HoneyWell, recording a

sales increase of 72% between sales in 2011 and 2002, and a

doubling of profit to $4billion, KnowledgeAcademy, (2014).

Successful Lean Six Sigma was achieved by focusing on

training of staff and product quality.

Not many organisations are aware or are able to successfully

combine and implement Lean Six Sigma, especially in the oil

and gas industry, a gap that has been identified and one

that will be the focus of this research.

1.3 Aim

The aim of this research is to evaluate the process

deployed for the implementation of Lean Six Sigma concept

at both Halliburton Energy Services and Chevron Limited

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with the aim of achieving a better and more robust process

flow within their supply chain, with emphasis on logistics

activities surrounding provision of goods and services,

including manufacturing related activities.

Globally, Halliburton started Lean Six Sigma implementation

in 2004; however their Europe and Sub-Sahara region, ESSA,

which will be my focus for this research only deployed in

2013 based on interviews conducted. The main reason for

deployment is to reduce the cycle time in their production

and supply chain processes, increase bottom-up efficiencies

and also help their strategic suppliers achieve same.

Chevron, Nigeria on the other hand started Lean Six Sigma

in year 2008 with the first project targeted at improving

the movement of materials and equipment across different

warehouses in an efficient manner. The initiative came

about as a result of the fact that the operational

activities in Chevron Nigeria involved movement of material

in, out and around three major warehouses located in three

different areas in the country.

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For this research, focus will be on Chevron Nigeria who

started broaching the idea of Lean Six Sigma since 2006 but

really took it serious in 2008. Before 2008, process

changes and improvements lasted as long as the initiator

was within the system but once the staff moves on, the

improvement process fades off. Lean Six Sigma was then

implemented with a primary objective of ensuring project

control, educating the workforce on what the changes are

and ensuring these improvements are kept in place; it was

directed specifically at process change / excellence.

1.4 Research Questions 

In light of the aim of described above, it is then

important to consider the research questions that will be

investigated and answered:

“How have Halliburton and Chevron used lean management

to improve their supply chain processes?” and

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“Which are the benefits and challenges of the

deployment of lean thinking methodologies in the

Halliburton and Chevron?”

In answering the first question, the different tools and

techniques deployed by the two companies will be researched

and discussed, while the second question will focus on the

various challenges encountered during deployment and the

benefits gained at the end of the day.

1.5 Research Objectives  

The purpose of this research is to critically analyze the

tools and techniques that were deployed by both Halliburton

and Chevron during the period of Lean Six Sigma

implementation at the various regions of the world, Europe

& Sub-Sahara for Halliburton and Africa for Chevron,

specifically Nigeria. With the success recorded, similar

tools and techniques will now be applied to the current

supply chain processes within another oil and gas

exploration and production organisation, Oando Energy

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Resources. Generally both companies have deployed the Lean

Supply Chain, Agile Supply Chain and LeAgile Supply Chain

methodologies described in the Agarwal, et. al. (2006)

research, where ‘lean manufacturing’ has focused on waste

elimination or muda and doing / achieving more with less

resources and , an agile environment showing flexibility in

response to market demand that is volatile and product

variety that is high.

Combining the two concepts, lean and agile, gives the

LeAgile paradigm in the supply chain. The lean and agile

paradigms are ‘combined within a supply chain strategy by

positioning the decoupling point so as to best suit the

need for responding to a volatile demand downstream yet

providing level scheduling upstream from the market place’,

van Hoek et. al. cited in Agarwal, (2006).

Oando Energy Resources (OER) is an indigenous oil & gas

exploration and production located in Nigeria, OER, (2012),

but with operations in Nigeria, Zambia and Sao Tome. The

concept of Lean Six Sigma has not been implemented in the

organisation hence current policies and procedures are

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inundated with stages which cause waste in time taken to

implement projects, as well as total time in securing

approvals. The findings from the success stories at both

Halliburton and Chevron will be applied to OER’s supply

chain processes. Deployment of findings in OER will be

through management engagement by sharing the success

achieved within bigger and more complicated oil and gas

business and demonstrating it is possible to achieve same

within the OER organisation.

1.6 Feasibility of the study 

A lot of work has been done in the research world on

deployment of lean six sigma to processes of various

companies spanning many industries such as, oil & gas,

consultancy, manufacturing, to mention a few. Several

materials are available online to show how these companies

have implemented this strategy successfully as seen in the

article by Sally Ulman, (2007), with a detailed showcase of

successful implementation of the Lean Six Sigma (LSS)

methodology by Chevron, Texaco, Aera Energy,

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BakerPetroilite and Halliburton with the help of a company

called Variance Reduction International (VRI).

Adaptation of LSS from other industries to the oilfield

operations has given financial benefits and made processes

safer, faster and better.

Preliminary discussions with employee at both Halliburton

and Chevron further confirm the improvements being enjoyed

through the deployment of LSS, not just in the Nigerian

offices but across the globe. These testaments give

additional comfort on the feasibility of the study.

1.7 Justification of the Topic

Before now, most oil and gas companies have not been

bothered about financial waste experienced when projects

are not delivered on time; it was considered a normal

occurrence for schedules to slip, knowing fully well that

all costs will be fully recovered once production commences

and profit made eventually. Gradually, this paradigm is

shifting because oil exploration and production is not as

‘easy’ as before as seen by reports of dwindling reserves,

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otherwise known as ‘Peak oil’, Oildecline. (n.d.) as well

the application of more rigorous methodologies to produce

the shale oil and gas, being the new reserves discoverable

now.

Stocker, (2014), points out that the most efficient

deployment of Leas Six Sigma in the oil and gas industry is

mainly with respect to process improvement, such that

whether you are a Completions Engineer or a CEO, you are

constantly challenging your processes and procedures by

asking the following questions:

What do want to happen (what is the target condition)?

What actually happened (what is the gap between actual

and target)?

What is causing the gap?

What will you do to close/reduce the gap – and how

will you test it to be certain what you plan to do

will work?

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What is the new gap and/or target condition as you

continually strive for the ideal condition?

Stocker, (2014)

Conscious effort to answer these questions truthfully and

honestly while applying the Lean Six Sigma methodologies

will help reduce overall project cost and time, improve the

bottom-line of the organisation and ultimately inform

declaration of larger profits, at this point, LSS would

have been successfully implement.

 

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2 Literature Review

2.1 Chapter Overview

This chapter will discuss various companies that have

implemented the concept of lean management and Six

Sigma to improve their business processes by studying

the methodologies they have deployed. This section will

also study and confirm that the lean and six sigma

concepts are not restricted to a particular industry

because they are applicable to production of goods or

delivery of services primarily because they focus on

process improvement, hence their applicability to

almost all business processes.

A lot of organisations operating in various industries

spanning oil & gas, manufacturing, healthcare,

consulting, education, retail, construction, financial

institution, defense departments and so on have applied

the tools, techniques and methodologies of lean

thinking to their operation with resounding success.

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These concepts as seen from various researches are

embedded in the various elements of the Toyota

Production System (TPS) house, having two main pillars,

JUST-IN-TIME and JIDOKA, HEIJUNKA and STANDARD

PROCESSES as the foundation upon which the two pillars

stand, and at the center of these are PEOPLE/TEAMWORK,

CONTINUOUS IMPROVEMENT and WASTE REDUCTION, as shown in

the diagram below, Liker & Morgan, (2006).

Fig. 1 – The Toyota Production System House

JUST-IN-TIME, the most popular aspect of the house

ensures materials flow through the manufacturing

process very fast and if applied to service based

process, it will mean the flow of information quickly

such that it gets to the right place at the right time,

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and put to efficient use. JIDOKA, on the other hand is

not as popular and at the same time more complex in

concept because it represents a machine with human

intelligence in that, it detects, stops the process,

raises an alarm, signals for help which must come

within seconds to proffer solutions, once a deviation

from standard practice is detected. This is the

catalyst for continuous improvement.

HEIJUNKA means leveling of order stream and work load

which helps to ultimately provide overall stability for

the pillars, while STANDARD PROCESSES are essential for

ensuring production is not stopped and inventory level

maintained.

As seen from the diagram above, the TPS is centered on

PEOPLE, PROCESS and TOOLS and this goes to buttress the

fact that these frameworks can be applied to any

process based activity regardless of their area of

operation or industry, which is why researchers believe

and have proven its applicability beyond manufacturing

to technical as well as service based processes.

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Spear, & Bowen, (1999), confirmed this in their

research by showing that the PROCESS framework of the

TPS Management Philosophy (TPSMP) examines the step by

step activity of any process, and trains the personnel

enough to be able to spot a problem and correct it,

leading to continuous improvement. What this suggests

is that, once these tools are applied to any process,

there will always be a constant output, successful

deployment of lean thinking, which goes to confirm that

the ‘Right Process Will Yield the Right Results’

This entire concept is so robust that it can be applied

to the supply chain processes of not just a singular

organisation but to all the key business processes of

other organisations within the same network, Croxton,

et. al. (2001). This is implemented by streamlining

cross-company processes to reduce cost, enhancing

quality and speeding-up operations. One key action is

also the integration of key business processes from the

end user through to original product / service/

information supplier that add value to customer and

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other stakeholders. This in its entirety is referred to

as Supplier Relationship Management (SRM), a way by

which an organisation interacts with its strategic

suppliers, Spear, & Bowen, (1999).

The following articles further confirms the various

tools and techniques organisations have deployed in

their implementation of lean, six sigma and total

quality management principles, all in the bid to

improve their supply chain processes, further

confirming the authenticity of the Lean Six Sigma

principles.

2.2 Value Stream Mapping

Melton, (2005) demonstrated the benefits of

implementing a lean supply chain in the process

industry; the chemical and pharmaceuticals sectors

specifically. The research aimed at reducing a multi-

product manufacturing process lead-time, from

introduction of raw materials to completion of final

product from 10 to 6-weeks in other to satisfy the37

customers’ order placement to receipt of goods request.

To achieve this, the company went through a five stage

process as follows:

The first stage of data collection involved critical

observation of their current process by looking for

wastes and any stage of the process that is not adding

value. This action is referred to Value Stream Mapping;

(VSM) which helped the organisation achieve a 50%

reduction in their entire supply chain cycle time, a

25% customer order accuracy in terms of delivery and

quality and a 30% reduction in inventory. Figure 3

below shows the details:

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Collect Data

Analyze Data

Design the

Change

Make the Change

Measure Benefits

Fig. 2 – ‘How to Lean’

The tool deployed at the start of Lean Supply Chain

implementation is the Value Stream Mapping (VSM), which

according to Hines & Rich, (1997) is the art of mapping

out only value-adding stages of the entire process.

VSM is achieved by categorizing the production stages

into:

a. Non-value adding (NVA);

b. Necessary but non-value adding (NNVA); and

c. Value-adding (VA).

Once categorization is completed, all NVA stages are

immediately eliminated, as they constitute pure waste,

manifesting as overproduction, unnecessary transport &

waiting, inappropriate processing, unnecessary motion,

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Fig. 3 – Cycle TimeReduction

unnecessary inventory and defects in final product.

NNVA are wasteful but necessary actions needed under

the current procedure but once identified are studied

and eliminated by devising means of improving the

operating procedure before they are removed. Lastly, VA

are stages that improve processing of raw materials and

production of products.

2.3 Parallel Incremental Transformation Strategy (PITS)

The concept of implementing lean management through

focus on improvement of an organization’s competitive

position and ultimately its supply chain performance

was researched by Taylor, (1999) with the development

of the Parallel Incremental Transformation Strategy

(PITS). PITS is applicable after VSM has been

successfully implemented as it aims at triggering and

sustaining the supply chain improvement process already

achieved. The case studies were a footwear

manufacturing company (supplier) providing materials

for a shoe construction company (customer) based in the40

United Kingdom. Distribution is achieved through

foreign distributors who deal directly with the UK

customer and the aim of implementing lean thinking is

to improve their competitive market position by

enhancing their supply chain performance.

The PITS in achieving the desired lean supply chain,

recognized four dimensions of both company’s supply

chain, an approach that is different from the

traditional business improvement sequential approach of

Data Collection, Data Analysis, Strategy Formulation

and Operational Improvements, Wass & Wells, (1994)

cited in Taylor, (1999). PITS went higher to addressing

supply chain barriers that directly impact and

complicate planning and improvement tasks; Time Lags,

Functional Silos, Hierarchical Structure and Limited

Appreciation.

To overcome these barriers, six initiatives are

deployed in the transformation process:

Initiative One: Education and Awareness

41

The entire workforce is coached so they are aware of

the scope of supply chain management, its

objectives, the lean thinking principles and how to

manage value streaming. By the end of this stage

awareness is great and the following five

initiatives are implemented without much challenge.

Initiative Two: Waste Analysis

Initiative Three: Creating an appropriate

organizational structure

Initiative Four: Value Stream Mapping

Initiative Five: Incremental Improvement

Initiative Six: Evolutionary Development

of Supply Chain Strategy

Full deployment of PITS at the suppliers manufacturing

plant helped in overcoming the identified barriers,

42

thereby creating a self-sustaining and incremental

improvement as shown in diagram below.

Improvement was planned over a five year period with

the following result in the Assembly plant amongst

other stages of the production; Coil receipt, Blank,

Press, Paint and Final assembly & dispatch.

Assembly CurrentSituation

Year 3Situation

Year 5Situation

Stock 16hrs 12hrs 8hrsTime 40mins 30mins 30minsDistance 100m 80m 70mPeople 40 38 36

43

Current Situation

Fig. 4 – Five year Lean Vision developed from Process Activity Map data

This methodology will be applicable to Halliburton and

Chevron who both have suppliers and have not only

implemented the Lean Six Sigma intra company-wide but

also intercompany wide, with their suppliers. Within

the oil and gas industry, this process excellence is

not optional because failure to do so have serious

monetary and sometimes loss of human lives implication.

Bonacorsi, (2014) in an article reported energy

companies, such as Chevron, Halliburton, Shell etc who

have successfully established Lean Six Sigma and are

now looking for ways to deploy the same tools to

addressing new challenges within and outside their

organisation.

2.4 Attitude

There is a saying that, ‘A bad attitude is like a flat

tire, you can’t go anywhere till you change it’, KPS,

(2012). It is the way we think and behave and as

44

Table 1 – Activity Map Result for Assembly Plant

succinctly put by Eagly & Chaiken, (1993) cited in

Balle, (2005), “tendencies to evaluate an entity with

some degree of favour or disfavour ordinarily expressed

in cognitive, affective and behavioural responses”.

This is so true about the successful implementation of

lean in any organisation regardless of their industry

of play because lean thinking has two part, the

cognitive aspect that deploy tools and techniques and

the affective & behavioural aspect, which embraces the

concept and is positive in the deployment approach.

One of the things training, an important aspect of lean

implementation, does is to ultimately change the

mindset and attitude of the workforce. Organisations

that have successfully implemented had to put a lot of

effort in convincing, mentoring and tutoring the entire

staff, Balle, (2005) to desist from the ‘law of least

mental effort’ which makes people respond to issues

with solutions that first come to mind, rather than

applying methodological and rigorous problem solving

approach.

45

Lean attitude can be achieved as documented in the

Balle, (2005) research by putting in place:

a. Reward feedback to the individual through

reinforcement of verbal expression. This model

frowns at outspoken criticism and ensures answers

are given within the shift and resultant actions are

implemented within the week.

b. Behaviour modelling which is a strong lever for

attitude change. A competent role model,

knowledgeable in lean deployment interacts with the

staff recurrently, impacting the right knowledge

which ultimately leads to positive attitude, with

personnel embracing the lean concept.

c. Power of social comparison, is a strong factor in

attitude forming achieved by having the staff

surrounded by a good number of people with the

desired attitude who can then influence them to

develop the right attitude.

These ideals were implemented at Wiremold, a cable

management company and from the account of their former

46

Finance and Administration VP, this success was

possible because the concept was driven as a strategy

rather than a tactic, with senior management leading

the culture change and mandating the workforce to adopt

lean as a way of operating and also creating an

environment that supports achievement. He advised

walking the talk, and feeling the walk.

It has been pointed out that once an organisation

believes they are better than others in their lean

thinking deployment, it is a sign of bad attitude and

for such companies, success is far-fetched. Oil and gas

operators have the tendency to ignore wastes because of

huge profits made but once this attitude is changed,

more effort will be put into successful deployment of

lean and reaping the benefit of huge profit.

Other researchers such as Kumar, et. al. (2007)

investigated the possibility of combining the lean and

six sigma concepts, which is the deployment strategy

this dissertation hinges on for Halliburton and

47

Chevron. Their results show that it is possible to

integrate these two concepts into a powerful and

effective hybrid, by addressing the weaknesses of each

but retaining the strengths of each strategy.

2.5 Waste Elimination

From the case studies considered above, it is obvious

that waste removal is a key aspect of Lean Sigma

implementation, as discussed in one form or the other

by the different researchers. Bencini and Pautz, (2010)

were not left behind in this matter, as they

highlighted the seven wastes that must be removed

before proper implementation of lean sigma can be

achieved in an organisation. The seven wastes were

summarized with the acronym: DOTWIMP:

D: Defect identified by customer in the output

O: Overproduction of goods and services before they

are required by the customer

T: Transportation excess resulting from unnecessary

movement as a result of poor facility layout48

W: Waiting because an assembly or subassembly part

is not moving

I: Inventory excess with capital tied in unnecessary

raw material, finished goods and work-in-progress

M: Motion excess from less than ideal employee

ergonomics

P: Over processing as a result of inefficient

processes with more than required

Interestingly, the Bencini and Pautz, (2010) research

applied these seven wastes to a transactional and

manufacturing process, and recorded an improvement at the

end of the day.

Deployment started with a series of questions:

Are process activities done correctly and

consistently?

Are intra and inter departmental interfaces defined?

Where does each process lead?

What are the root causes of defects?

Are reworks done to correct defects part of the

process?

49

Are decisions making criteria clear and well

understood?

Attempting to answer each of these critical questions was

found to result in process improvement. The questions

reveal eight process problems, which once answered and

solved will automatically result in waste removal and

ultimately improvement of the process:

Process Problem Improvement Actions

Activity done incorrectlyand inconsistently

Process mapping was done andbest solution identified andimplemented, reducing staffrequirement from 14 to 6.

Company to providestandards, workinstructions and guidancesuch that people are heldaccountable once trained /informed.

Activity done out of A Failure Mode & Effects

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Table 2 – Problem Solving and Improvement Action

sequence Analysis (FMEA) document waslaunched to ensure sales teamask the customer all possiblequestion relating to thetransaction, thereby avoidingembarrassment, appearing intune with customer need anddelivering on-time solution tocustomers.

Introduction of a processstep with positive impacton upstream process andoutcomes.

Change sequence ofactivity to suit currentrealities

Excessive cycle time toprocess applications

Process mapping revealed a25day processing of loanapplication with the documentstravelling 6,000feet. This wasreduced to 2days and 200feetwithout any technologicalchange but a simple co-locatingof the loan application groupmembers.

Elimination of non-valueadding steps of theprocess.

Inoperable interface Unnecessary printing ofdocuments already in anelectronic format rather thanjust sending to the userdepartment increased cost ofprinting and company’s carbonfootprint.

Interface definitionbetween functions withownership andaccountability assigned.

51

Decisions made improperly Once decision making is notproperly defined, it becomessubjective and left to thedifferent interpretation ofdifferent employee. This isapplicable to different thingssuch as audit, loan approvals /decline etc

Establish operationaldefinitions, train staffand conduct post decisionreview.

Process leaders nowhere Current process needs to bechallenged to confirm they arestill required, otherwise therewill be no value added to theentire process steps, e.g.multiple approvals required forexpense report.

Eliminate non- valueadding step.

Institutionalized rework Successful deployment ofsolution to this processproblem requires a culturalchange where employee begin totake ownership of the qualityof products produced by them,be it a memo, report orpurchase requisition:

Identification of upstreamcauses, taking correctiveactions and sustainingsuch.

52

2.6 Lean and Six Sigma Framework

In the Kumar, et. al. (2007) research, this concept of Lean

Sigma was applied to the die-casting process of an

automobile accessories producing company simply by

integrating their lean tools (map of their current state,

the 5S- Seiri (sort), Seiton (set in order), Seiso (shine),

Seiketsu (standardize), Shitsuka (sustain) and the Total

Productive Maintenance (TPM)), with Six Sigma DMAIC

methodology (Define – Measure –Analyze –Improve –

Confirmatory test). The combined approached helped the

company achieve a significant savings on every stage of

their production; from die casting, trimming, drilling, de-

burning, chamfering and cleaning & polishing. This goes to

buttress the fact that Lean Six Sigma is a doable concept

that has been achieved by companies in the past.

53

The benefits to this die-casting company are:

Establishment of performance benchmark that future

performance enhancement programmes can be based

Optimally setting their process parameters and

achieving a 12% improvement in the die casting

process

Improvement of key performance metrics, such as

process capability, first time yield, DPU etc were

observed within the organisation.

Annual savings of $140,000 was recorded,

Cultural change was achieved with a systemic

implementation of this integrated approach.

Detty & Yingling, (2010) in their own research, looked at

the concept of improving an already improved environment

54

Fig 5 – Break up of cost saving at each stage of production

by deploying the concept of lean management. They

analyzed the manufacturing system of an assembly process

for production of electronic product and their initial

assessment of the current process showed some forms of

lean concepts were already deployed, such as:

Demand fluctuation are met with existence of

multiple assembly to provide flexible capacity

Standardized work charts are used at each

workstation

5S and visual control applied to parts stored in

assembly cells and exchange area

One piece flow with limited work-in-progress

inventory between work stations

Parts supplied to suppliers through a pull-system

Ensuring all items are in product container by

using the Poka-Yoke scanning operation.

But there was still room for further improvement and

consolidation of existing process by:

55

Instead of a multiple assembly point strategy,

flow improvement was achieved by integrating pre-

assembly and kitting into the assembly cells

The current system conducted quality inspection at

the final stage of production but this was

replaced by the lean principle of building quality

inspection into the product from source

Shorter model changeover was made possible as a

result of further reduction in cell parts

inventories and utilization of flow racks.

Reduction in system floor space, inventory and

transportation requirement. This was achieved by

increasing delivery frequency by suppliers and

production scheduling reduced to small lot.

This research shows the improvement that can be achieved

in a seemingly perfect environment when the principles of

lean management are applied.

To further demonstrate the authenticity of the techniques

of Lean and Six Sigma, Furterer & Elshennawy, (2005)

56

applied the tools to the operations of a local government

and recorded good success in areas of services rendered,

especially the Finance department, through streamlining

of the processes and reducing processing time of

financial processes, like payroll, accounts receivables,

month-end reconciliation, accounts payable, accounts

receivables, purchasing etc.

The inefficiencies in area of payroll and child-support

processing, pension payments, remittance of income tax to

tax agencies, reporting etc, where a few issues

identified which necessitated the implementation of Lean

Sigma and all of which were solved when deployment was

complete as shown in table below:

57

Fig 6 – Percentage Reduction in Processing Time

2.7 Conclusion 

Various literatures reviewed above and many more

spanned various industries, manufacturing, government /

public sector, oil & gas companies, service companies

to mention a few. For each of these sectors, successes

lean implementation have been achieved and these go to

buttress the fact that the concept, tools and

methodologies of Lean and Six Sigma are applicable to

any and every industry.

Once the individual tools are applied the way they

should be to a system, whether waste elimination or

value stream mapping, the results are bound to be

positive.

Furterer & Elshennawy, (2005) recorded more success in

the private industry with their account of Lean Six

Sigma successfully implemented by an aircraft-engine-

control firm, BAE Systems Controls in Fort Wayne

Indiana, Maytag Corporation implementing Lean Sigma in

1999 by designing a new production line, and Lockheed

Martin Aeronautical Systems, able to improve their

58

competitiveness, customer satisfaction, reduced cost &

first time quality, all thanks to the tools and

techniques of Lean Six Sigma.

In the public sector, Lean Sigma deployment bagged the

City of Coral Springs, Florida the Florida’s Governor’s

Sterling Award in 1997 and in 2003, an award based on

the Malcolm Bridge criteria recognized for

organizational excellence. The City of Kingsport

Tennessee having achieved success in Lean Sigma

implementation received a grant to improve the

reliability of trash collection services.

All of these go to prove that LEAN SIX SIGMA INDEED IS

A POSSIBLE AND DOABLE concept

59

3.0 Research Methodology

3.1 Research Design and Approach

A research design links data collection and result to

the research question and as researched by Easterby-

Smith, et. al. (2012), a research design has four main

features; an ontology, epistemology, methodology and

methods & research.

The ontological feature takes the basic assumption

stance and according to Lincoln & Guba, (2003) cited in

O’Byrne, (2007), it does not give room for questions

but forces the researcher to take what is before him, a

kind of naïve realism. The researcher is plainly

described as a camera taking a picture and accepting

what has been presented before it.

The epistemological stance on the other hand deals more

on inquiring into what has been presented to the

researcher. It is objective and does not just accept

what has been presented, but accepts it as truth and as

60

a foundation upon which further knowledge will be

based, while applying the facts that have been

presented. Easterby-Smith et. al. (2012) further shows

that the epistemological perspective in a research

helps to ask question about knowledge acquired, how

that knowledge has been acquired, its clarity and the

possibility of implementing knowledge acquired. This

level of scrutiny is required if a researcher must make

discoveries with the possibility of proffering lasting

solution.

This epistemological stance has various approaches,

which could be that of a:

a. Positivist, this being the primary approach that

pursues generalization with the purpose of

establishing laws or principles that will govern its

object of research. For a discipline that is

practitioner oriented, this approach will be most

appropriate, however for project management research

that frequently investigates concepts and models

61

from other disciplines the positivist approach poses

a serious dilemma and may not be most appropriate,

Smith & Morris, (2007)

Empiricist approach is closely aligned with the

positivist approach being that both explain events

on the basis of linear thinking – Humean law of

causality,

b. Or a Constructivist approach, which according to

Finnemore & Sikkink, (2001) is thriving in

international affairs studies and is applicable in

almost all issues that are of interest to scholars.

This approach has exploded over the past decade and

has created fruitful connections that are new and

potentially fruitful, having interest in comparative

politics and being compatible with research methods

that are currently used in political and social

science related fields. This approach is very

similar to rational choice, offering a framework

that allows the researcher to think, rationalize and

62

make a choice at the end of the day. This way, the

researcher is able to focus on knowledge, culture

and role of ideas.

Apart from the approach of the epistemological

stance, there is also the need to consider the

research methodology to be adopted, which has been

researched by Creswell, (2003) to be:

Qualitative methodologies where the researchers

use open-ended questions that allow participants

express their own view of questions being

asked, giving also the researchers the opportunity

to generate interpretations that are shaped by

their own experiences and their backgrounds from

analysis of data collected. This methodology takes

the constructivist approach enabling the

researcher develop a theory or pattern

63

Quantitative methodologies where researchers used

closed-ended questions to develop knowledge using

a positivist approach. Inquiry strategies such as

surveys and experiments are deployed to collect

data using certain instruments which help to

develop statistical data.

Mixed methodologies employ inquiry strategy of

sequential or simultaneous data collection to

understand the research problems. It combines the

strategies of qualitative and quantitative

methodologies which helps the researcher base

knowledge claims on rational grounds.

To summarize these methodologies, below is a

table, Fig. 10 by Creswell, (2003) summarizing the

philosophical assumptions of each methodology, the

methods employed and research practices:

64

Tend to orTypically

Qualitativeapproaches

Quantitativeapproaches

Mixed methodapproaches

Use thesephilosophicalassumptions.Employ thesestrategies ofinquiry

Constructivist /Advocacy/Participatory knowledgeclaims.Phenomenology, groundedtheory,ethnography,case studyandnarrative

Postpositivistknowledgeclaims.Surveys andexperiments

Pragmaticknowledge claim.Sequential,concurrent andtransformative

Employ thesemethods

Open-endedquestions,emergingapproaches,text orimage data

Closed-endedquestions,predeterminedapproaches,numeric data

Both open andclose endedquestions, bothemergingpredeterminedapproaches andboth quantitativeand qualitativedata and analysis

Use thesepractices ofresearch onthe researcher

Positionshimself orherself.Collectsparticipantsmeanings.Focuses on asingleconcept orphenomenon.Brings

Tests orverifiestheories orexplanations.Identifiesvariationsto study.Relatesvariables inquestions or

Collects bothquantitative andqualitative data.Develops arationale formixing.Integrates thedata at differentstages of inquiry.Presents visualpicture of the

65

Table 3 – Qualitative, Quantitative and Mixed Methodologies approaches to

personalvalues intothe study.Studies thecontext orsetting ofparticipants.Validatesthe accuracyof findings.Makesinterpretation of thedata.Creates anagenda forchange orreform.Collaborateswith theparticipants.

hypothesis.Usesstandards ofvalidity andreliability.Observes andmeasuresinformationnumerically.Usesunbiasedapproaches.Employsstatisticalprocedures.

procedures in thestudy.Employs thepractices of bothqualitative andquantitativeresearch.

pp: 19, Creswell, (2003)

3.2 Justification for using Constructivist Approach and

Qualitative Methodology

Having understood the features of a research design and

what is achievable with each position, this research

will be adopting an epistemological stance while

66

deploying a constructivist approach with a qualitative

methodology for data collection.

Halliburton and Chevron have used the concept of Lean

Six Sigma (LSS) to improve their supply chain processes

and with the constructivist approach deploying

qualitative data collection methodology, this research

will be focusing on how these companies have carried

out various tasks, how they have implemented some

processes, the challenges they faced before LSS was

implemented, how they went about implementing their

findings and their state, post LSS implementation.

The application of what has been learnt with

Halliburton and Chevron will be applied to the supply

chain processes of Oando Energy Resources, making this

choice the best especially the fact that the researcher

has the flexibility to deduce facts from data gathered

and establish a new discovery.

67

It is imperative that for every research conducted, the

three elements identified for a successful research

work have synergy. These three elements are the

epistemological stance, the research methodology and

data collection & analysis method.

3.3 Validity and Reliability of Research Method

It is important at this point to discuss the validity

and reliability of the methods to be deployed for this

research work, which according to Golafshani, (2003) is

mostly done for quantitative approach research work.

Validity has its root in the positivist approach, which

has been defined by ‘systemic theory of validity’

according to the Golafshani, (2003) pp. 599 research.

In quantitative research, validity measures the

truthfulness of the research result to determine

whether the research actually measures what it say it68

will measure, with questions asked, but results are

looked for in other research works. Validity here is

also constructed in the initial concepts, the

questions, notions and hypothesis which determine the

‘which; and ‘how’ of data gathering.

Reliability speaks to the consistency of results

obtained from a research work over time and the

accuracy of the representation of same result if a

study were to be reproduced using a similar

methodology.

Words like, replicability or repeatability are

commonplace when the concept of reliability is being

discussed, and according to Kirk and Miller, (1986),

cited in Golafshani, (2003), quantitative research

refers to three types of reliability;

a. The ability of a measurement given repeatedly over

time, to remain the same

b. The stability of this same measurement over a

period of time, and

69

c. Given a period of time, there is a similarity

between these same measurements.

The fact that there is consistency of response,

especially when questionnaire are deployed at two

different times with the same set of question, shows

the stability of the instrument being used. It is

however the responsibility of the researcher, where

there are score changes due to respondents’

characteristics leading to errors of measurement, to

demonstrate the reliability of the scores from their

tests.

For this research, the deployment of the Lean Six Sigma

methodologies to supply chain processes in Halliburton

and Chevron will be applied to the supply chain

processes of Oando Energy Resources, to test their

reliability and validity, and confirm if the same

results will be achieved.

70

3.4 Data Collection Methods

 

It is important to discuss the data collection method

for this qualitative research methodology as explained

by Sandelowski, (2000). This involves enquiring into

the ‘who, what and where’ of experiences, events, their

basic nature and basic shape. There are minimal or

moderate open-ended structured interviews of a focus

group, who are used to obtain information about the

events surrounding the research question or problem.

Other means of data collection includes observations,

examination of artifacts and or documents containing

value information and or data.

For this research, being that the case studies are

Halliburton Energy Services office in Europe & Sub-

Sahara region (Halliburton, ESSA) and Chevron office

with administrative base in Lagos, (Chevron, Nigeria)

and operational bases in Warri, Onne and Agbami, data

collection will be by telephone conversations, e-mail

exchanges, examination of documents sent via e-mail or71

on the internet, in the form of records, newsletters,

memoranda or records made available by the focus group.

Once data has been collected, the next step will be the

analysis of these data and for a qualitative

methodology, it is the analysis of visual or verbal

data to describe and establish patterns, understand

frequencies & means, and data latent content

identification.

Preliminary discussion and asking of some sample

questions gave the following output:

Question ResponseWhy did your company decideto implement lean sigma?

One of the four focus areas inLogistics at Halliburton is people. Thebusiness is aware of the complexitiesthat belong to a Logistics operation ofour size. This is especially relevantto the ESSA (Europe and Sub-Sahara)region due to the amount of countriesin our scope.In order to overcome these challengeswe needed to standardize processes andprepare our people to solve thenumerous amount of exceptional casesparticular to our business. Thestandardization of processes implieslocal teams will embrace the best

72

Table 4 – Halliburton Research Questions and Responses

practices from other countriesthroughout their processes. Our LeanProgram drives this cultural change bytraining our employees and coachingthem in the delivery of improvements.Having our employees develop a Leanmindset allows us better flexibility todrive change and prepares them toassume new challenges in the mostefficient manner.

What were your supply chainprocesses like before thelean sigma implementation?

At Logistics in Halliburton there hasalways being strive for improvement.These changes were usually driven top-down. The Lean Program is trying toincrease the bottom-up efficiencies ina structured way without losing thelink to the top-down initiatives.In this sense, the Lean program isbecoming the framework to coordinatethe different process improvementsacross the region. We are still farfrom this final objective but itreflects the scenario that we hadbefore the Lean program was introduced.

How long did it take toachieve the firstbreakthrough?

The program was lunched early 2013 butwe only completed the first significantprojects towards October/November.Subsequent projects are being deliveredwithin 3 to 4 months. Long term changesin mindset are an ongoing process buthardly measurable.

What improvement has beenrecorded in the supply chainprocess?

We have focused a lot in cycle timeimprovements through the elimination ofwaste and improvement in communication.We also made few processes more robustto ensure continuity in our compliancetargets.

73

Question ResponseWhy did your company decideto implement lean sigma?

A small group in our Californiaoperations started Lean Sigmaimplementation because ofinefficiencies noticed in variousprocesses.It started as a bottom-top approach butit really got the required publicitywhen the top-bottom approach wasimplemented with the endorsement bymanagement at that time.We decided to implement because ourprocesses were not being carried on asaccepted standards within theorganisation. It only lasted for aslong as the initiator was around andhand-holding people to follow samestandards and procedures.

What were your supply chainprocesses like before thelean sigma implementation?

Lean Sigma was deployed for processesranging from IT, HR, Operations, AssetManagement and Supply Chain.Before deployment, Supply Chainprocesses were not definite and as soonas the initiator of a process moves onin their career, things take a negativedip.Implementing Lean Sigma meant a lot ofchange management issues had to bedealt with.

How long did it take toachieve the firstbreakthrough?

It took a while to get the entireorganisation to adopt the Lean Sigmaconcept being a bottom-top approach atthe time it started in year 2000 andmoved gradually till around 2006 andthen in 2008 it gained the requiredmomentum.

What improvement has been There has been a lot of process

74

Table 5 – Chevron’s Research Questions and Responses

recorded in the supply chainprocess?

improvement in a lot of areas such asenvironmental monitoring, safety,production and cost performance. ForSupply Chain, it has been more ofimprovement in how the process ismanaged and standardized.

Further in the research, these questions will be

addressed more directly in form of questionnaire with

the project teams of each company with the view of

capturing the entire views of each team member.

These questions above are pilot sample questionnaire

which confirm from the responses that the right

questions are being asked.

3.5 Application of Interview for Primary Data Collection

 Research interviews vary in their structures; there

are structured and less structured in-depth interviews,

UOP, (2010).

75

For structured interviews, emphasis is placed on

reliability of data collected. Researcher can reach a

large sample of respondents who are able to answer

questions easily. There is the possibility of face to

face interview in the absence of electronic recording,

with respondents fully understanding the questions. The

down side for this interview type is that it forces

respondents to choose between alternative answers

presented to them, although it can be difficult

obtaining reliable data relating to opinions, values

and attitude. Being structured, interviewers do not

have the liberty to digress to more interesting

discussions outside pre-agreed questions, and data

collection consumes a lot of time

For Less structured and in-depth interviews, emphasis

is on validity of the data, with respondents being able

to give as much details as they want in answering

questions, with the informal atmosphere encouraging

them to be open and honest. Attitudes, opinions and

values are voiced and interviewer is able to adjust

76

questions and digress as the interview progress, to

more interesting and relevant areas. This flexibility

gives room for small interview sessions because each

one is in-depth with small sample size, making it

unlikely to depict the true representation of a

particular population. Time spent on data collection

and analysis is also higher.

Berry, (1999), described the less structured in-depth

interview as qualitative interviewing which has three

basic approaches namely:

o Informal conversational interview which is in form

of a chat and are useful when researchers explore

interesting topics, which are investigative,

ongoing and observatory.

o General interview guide approach or guided

interview makes use of a checklist during

discussion with respondent to ensure all relevant

topics to the research work is covered. This still

gives room for in-depth probing and questioning

77

but keeps the interviewer within the parameters of

the research subject.

o Standardized open-ended interviews are deployed

with the drafting of open-ended questions by the

researcher in other to reduce variations in

answers by respondents. If more than one

researcher is involved in data collection for a

work, this method is deployed because it provides

less flexibility, ensuring all researchers collect

data accurately.

For this research work, the less structured and in-

depth interview model; having the general guide

approach will be deployed in engaging the focal points

at Halliburton and Chevron. This approach will be used

to collect data which will then be analyzed to affirm

the applicability of the tools and techniques of Lean

Six Sigma to the supply chain processes of these two

companies. The results will then be applied to the

supply chain processes of Oando Energy Resources to

confirm their validity and reliability.

78

3.6 Conclusion 

In this chapter, the research methodology for this

project has been presented. Based on preliminary

engagements and discussion, the epistemological stance

with a constructivist approach will be deployed while

using a qualitative methodology and guided interview

model for data collection.

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4. Survey Result, Data Analysis and Interpretation

4.1 Chapter Overview

In this chapter, the data and information gathered

during the less structured, in-depth interviews via

telephone calls, e-mails exchanges and documentations

will be analyzed. Three companies are the focus for

this research, Halliburton Energy Services, Europe &

Sub-Sahara region and Chevron, Nigeria region being the

case studies, and Oando Energy Resources, the company

that will be used to test the validity and reliability

of the tools and techniques of Lean Six Sigma deployed

at Halliburton and Chevron. Data analysis differ,

depending on the type of methodology deployed, be it

quantitative or qualitative, as such in this section

the techniques of qualitative data analysis will be

deployed.

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4.2 Data Collection

Morris, et. al. (2000) in their book explained that

quantitative data analysis starts in the field when the

researcher is making observations and / or interviewing

the respondents. At this point the researcher begins to

identify problems, which when solved will create an

improvement in the area being researched, as well as

concepts that are able to help understand the

situations presented.

Respondents were asked four different questions and

each one will be discussed and analyzed below based on

responses gathered:

Due to the distance between the researcher and the

respondents, it was necessary to interview individuals

with robust knowledge of the before, during and after

of lean six sigma implementation at the two companies,

hence, information was gathered from highly

knowledgeable members of staff.

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4.2.1 Investigative Question One:

What were your supply chain processes like before the lean

sigma implementation?

At Halliburton, ESSA region, before the tools and

techniques of lean sigma were applied to the

logistics aspect of their supply chain processes,

it took a long time to clear goods imported for

various operations in the region and this led to

delayed projects as those goods were very

contingent on successful delivery of projects.

Also because of the wide region with many

countries, movement of goods in and around faced

some challenges as a result of unstandardized

processes for goods transfer and other business

processes. These challenges needed to be overcome.

In addition, the strive for improvement before

implementation of lean sigma was only top-bottom

driven, a singular approach that has its own

limitations, because though it had management

support driven by champions and longer

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sustainability in terms of alignment to corporate

strategy, it lacked the dedication of the

workforce with the right skills to implement the

projects, a factor that is extremely necessary for

the successful deployment of the principles of

Lean Six Sigma Aldous, (n.d.). This state of

affairs needed to change from just a top-bottom

approach to include a bottom-top deployment

approach as shown in the Governance structure

required for successful implementation of Lean Six

Sigma in Fig 14 below.

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Fig 7 – Multi-Team Governance Structure

Steering

Committee

Executive

Sponsor

LSS Governance

Team

LSS Black Belt coach/es.

Process Staff (Yellow / Green Belt)Team 1

Team 2

Team 3

Team 4

Figure 14 shows the collaborative effort and

interwoven relationship between all functions

handling the various aspects of the implementation

drive. The steering committee working hand in hand

with the governance team, who has interactive

engagement with the executive sponsor and all

these three teams then support the implementation

teams of process staff and coaches.

Chevron before the implementation of Lean Six

Sigma had challenges with movement of goods around

their three warehouses in Nigeria a situation that

led to increased expenditure on transportation

cost and delayed delivery of goods to operation

locations. There was also the challenge of excess

inventory because all three warehouses had to be

stocked at every point in time, even though the

operational needs could be met with inventory in

only two warehouses. There was a need for process

efficiency.

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4.2.2 Investigative Question Two

Why did your company decide to implement Lean Six Sigma

(LSS) and what improvement has been recorded in the supply

chain process?

This question aimed at understanding the reasons

behind the decision to implement Lean Six Sigma at

Halliburton and Chevron. These reasons will be

discussed under the following headings:

Process Standardization

At Halliburton, information gathered during

the interview revealed that the concept of

process standardization needed to happen

across the Europe & Sub-Sahara region, which

spanned various countries, cultures and

geographic dimensions, with the need to

implement a global process but at the same

time cater for the unique cultural

differences across the different countries.

Chevron on the other hand had issues85

surrounding process inefficiencies where

supply chain processes were not being

implemented as standard and accepted

processes and / or procedures. The moment the

initiator of the new process leaves, everyone

goes back to their old ways of supply chain

processes.

Process standardization according to Manrodt

and Vitasek, (2004) is one of the ways an

organization improves its operational

competitive advantage through identification

of organizational key process to be made

uniform. According to one of Halliburton

staff, this initiative ensures uniformity of

processes and makes them repeatable, leading

to it getting better as a result of practice.

Once this uniformity is achieved, it is very

easy to move staff around, enabling the

company leverage on the competencies of the

staff and provide good services to customers.

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At Chevron, being a crude oil exploration and

production company, process standardization

was applied to some oilfield logistics

processes such as inventory management,

movement of consumables to support operations

and warehouse management services.

One of the key stages in the framework for

effective Process standardization is the

adoption of a process view of the supply

chain management of an organisation with the

aim of identifying the most important /

critical stages of the entire process that

will give the greatest return. Once these

critical stages are selected and improved,

then the rest of the organisation adopts the

global standard, with some leeway given for

customization at the local level, Manrodt and

Vitasek, (2004).

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At Chevron, the concept of consumables

movement across the three warehouses located

in Onne, Warri and Agbami to support

operations was not uniform hence the

deployment of Lean Sigma to put in place a

great level of consistency in the movement of

inventory with the aim of improving

efficiency, reducing inventory and ultimately

reducing cost. Halliburton on the other hand

had lack of uniformity in their logistics

process especially in areas like importation

of goods, country movement tracking of items

and measurement of performance for these

activities.

To solve these logistics problems at both

companies, through process standardization

the DMAIC problem solving method was adopted,

most appropriately so based on Murray, (2014)

definition of this method as a roadmap

deployable for any project or other quality

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improvement or business improvement

initiative. This method as confirmed during

the Chevron’s interview was initially

deployed by Motorola in 1980, as a matter of

fact, Chevron Nigeria is adopting the

Motorola and General Electric (GE) strategies

for their lean sigma deployment, which is

hinged on the DMAIC methodology for solving

problems.

Below shows how Halliburton and Chevron

implemented process standardization with the

DMAIC methodology:

Stage Halliburton ChevronDefine:This stage defines theproblem or the goalsto be achieved afterthe implementation ofthe project. It isimportant to bespecific with problemdefinition as this

Import clearance timeline are too long resulting in demurrage.

Scorecards are not definitive to enable users measure activities accurately.

Business processesare not uniformacross theorganisation.

Movement of goodsbetween warehousesto locations takestime and results inhigh cost.

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Table 6 – DMAIC Application to Process Standardization at Halliburton and

increases the chancesof measuring success.Measure:This stage helps toput in placeadditional measurementcriteria to quantifyproblems defined.

Reduce import clearance cycle time for a given country

Improve in country movements tracking and compliance

Reduce demurrage expenses for shipments incoming in a specific port

Redesign business controls such as Scorecards to increase reliability and reduce time effort to calculate and create them

Improvement ofprocesses withinsupply chain team.

Improve movement ofgoods aroundwarehouses byreducing processingtime.

Reduce cost ofmoving goods around

Improve warehousemanagementprocesses.

Analyze:This looks at datacollection andanalysis with the aimof confirming thevalidity of theproblem, byascertaining if thisis random or regularoccurrence thatrequires solution.

Consistently,clearing ofimported goods havedelayed resultingin the payment ofdemurrage.

When goods arefinally cleared anddemurrage feespaid, an occurrencethat increasesoperationalexpenses, movementof goods within thecountry is then notproperly trackedsuch that users arenot awareparticular itemsare in stock andthen they reorder.

Keeping of goods inthree differentwarehouses, Onne,Warri and Agbamiresulted inincreasedoperationalexpenses.

The proximity oftwo of thewarehouses to eachother, Onne andWarri causedduplication ofrequests becauseonce there isdelivery delay fromone, operationsteam place arequest to theother warehouse.

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Improvements Recorded at Halliburton and Chevron.

Improve:Once problems havebeen measured and dataanalyzed, solutionsare then developed andtested to implementone that has beenproven.

During theinterview withHalliburtonpersonnel, it wasrevealed that theMarshmallowchallenge approachwas deployed atHalliburton. Thisapproach aims atsolving problemswith a step by stepapproach; define aproblem andimplement thesolution in a stepby step approach.The first lesson inthis challenge is:

o PrototypingMatters,

o Engagingdiverse skillsin solving theproblem bybringingtogether 30staff toundergo theLean Awarenessprogrampowered byBMGI, anexternalcompany withexperience inprocessexcellence inthe industry.

o Giving

The interviewsrevealed thedeployment of thelean sigma to thelogistics andinventorymanagementprocesses atChevron.

Data collection wasdone through theimplementation ofValue StreamMapping andinternalbenchmarkingexercise.

o Movement ofgoods fromwarehouses tooperationlocations wasreduced from 7to 4 days.

o This directlyaffectedtransportationcost with a42.86%reduction incost.

o Projectwarehouselocations werereviewed andit was decidedthat the twolocationsclose by, Onneand Warri be

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incentives tomagnifyoutcomes whilecombining itwith highskills. These30 staffbagged theGLEP Lcertificationfrom theHalliburtonUniversityafter the

Upon successfultraining, each LeanLeader is given aproject to applythe tools andtechniques of LeanSigma to. Firstproject must becompleted within6months, the second3-4mnths and thethird, 2-3months.

Implementationrevealed:

o 30% reductionin importclearancecycle time

o A 15%improvement intracking ofin-countrymovements

o Demurrageexpensessignificantlyreduced tomake a savingsof $300k per

merged intoone location.Thissignificantlyreduced costas onelocation wasshut down.Savings was inmillions ofdollars.

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quarter.o With the

discovery ofspecificissues,Scorecardswereredesignedresulting inreduction intime spent tocreate andcalculate theentries.

Control:This stage ensuresresults achieved aremaintained such thatchecks are scheduledperiodically.

At Halliburton, theresults achieved aremonitored on a monthlybasis or with everyactivity.

Chevron monitors andcontrols improvementby ensuring there isno slippage in thesuccess achieved.

4.2.3 Investigative Question Three

How long did it take to achieve the first breakthrough?

For both Halliburton and Chevron, the interview

respondents made it clear there is no final

destination in the deployment of LSS to their

business processes because of one singular factor,

Continuous Improvement, one of the centers of the

Toyota Production System (TPS) house, the

structured approach adopted by Toyota to implement

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lean management, Liker & Morgan, (2006).

Continuous improvement is a quality improvement

model hinged on four repetitive cycle known as the

Deming Cycle which ensures organisations PLAN-DO-

CHECK-ACT on a consistent basis, iSixSigma (2014).

However, for both companies, Halliburton and

Chevron, it took an average of twelve months to

see significant positive changes after the

commencement of lean six sigma implementation,

factoring the timeliness for training.

Once the workforce has be orientated and trained

to deploy this new way of operating, it takes

between days to weeks or months to start noticing

good changes. In Chevron for example, movement of

goods was reduced from 7days to 4days while the

merging of the Onne and Warri warehouses resulted

in significant economic changes that was

demonstrable over a period of 6-8months. At

Halliburton, the first significant result was

achieved about nine months after the application

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of the lean tools and techniques to their

logistics process. Subsequent application of lean

six sigma principles to projects have given

successful result within three to four months.

4.3 Application to Oando Energy Resources

Achievement of successful deployment of Lean Six Sigma

principles to supply chain processes at Halliburton and

Chevron as researched and documented above was made

possible by the application of certain techniques which

will be applied to the supply chain processes at Oando

Energy Resources (OER) to confirm their validity and

reliability:

4.3.1 OER Supply Chain Processes – Pre Lean Six Sigma Implementation

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Table 7 – VSM of OER supply chain processes - Stage 1

Procurement Stage Before Effect on OER E&P Business

Scoping of Work Sign-off / approval by HOD and TECOM not compulsory.

This led to variation of scope of work during a tendering process not necessarily because it was necessary but because there was no closure to the requestby sign-off by all stakeholders. This led to extended tendering timeline

Requisition approval Requisitions went through multiple levels of approval.

Requisitioner ------Line Manager ----- OER COO-----OER CFO ----- OER CEO -------Group CFO ---- Group Deputy CEO -----Group CEO(For purchases above $30,000).89% of spend were in this range.

Approval for requisition takes up to 7 working days insome instances due to the multiple approval hierarchy.

The challenge here is that, this is only a requisition toconfirm if the goods / services are required in linewith approved budget, as suchthe multiple approval that takes an average of 7days is a waste.

Purchase Order Approval Multiple level approval per financial hierarchy.

Buyer ------User Dept. Manager -----OER SCM-----OERCOO-----OER CFO ----- OER CEO -------Group CFO ---- Group Deputy CEO -----Group CEO

This ensures the various stakeholders within the organisation have an insight to the various contract awarded to suppliers.

Key:COO – Chief Operating OfficerCFO – Chief Finance OfficerCEO – Chief Executive Officer

Figure 15 above shows the procurement process of

OER and the three main stages therein. The main

waste identified which is the 7days required to

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raise and approve a requisition was immediately

eliminated by ending the approval with the Line

Manager. This change reduced the requisition

approval timeline from 7days to a maximum of

24hours. This is stage 1 of the Value Stream

Mapping (VSM) to confirm validity and reliability

of the concept before it is then applied to the

entire process.

Value Stream Mapping of the entire P2P (Purchase

to Pay) of OER was then conducted and the table

below shows the wastes identified which over the

years resulted in delayed approval and breach of

policies and procedures by staff in order to

circumvent the long process.

Issues (Likely) Rootcause

Impact Business Risk

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Table 8– VSM of OER supply chain processes - Stage 2

Pre-requisitionNo formal system for Items request (requests submitted via emails or verbal)

Request for additionalinformation to scope work for RFP / RFQ usually communicated late; sometimes weeks after the initial request was made.

Lack of System / Procedure

No visibility / traceability on the activities that occurin this phase

Time taken to finalise on request from need identification cannotbe accurately quantified or analyzed

Re-work in cases of unclear requests

Consequential delay in value creation forthe business

High

RequisitionAnnual Single Source justification (SSJ) required for BPAs/PPOsspanning a period crossing into another year

Policy / Procedure

Additional man-hours spent on securing SS approval

Delays in raising / approving BPA

Resulting delays in payment

High

RequisitionInability to latch onto group contracts with vendors at the entity level

Policy Additional delay due to contract drafting / approvals

Medium

PO CreationOER budget not loaded into appropriate cost centers.

Non-conformance to Budget process

PO’s failing funds check at PO creation (90% of the time)

Additional man-hours spent in moving fundsto appropriate cost center per request

Delays in PO creationdue to rework

High

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PO ApprovalLimit of NGN5M for OERCEO, in a line of business which is predominantly projects-based

Policy Significant delays insecuring top management approval

PO ReceiptingPO receipting usually delayed due to forgetfulness; and technical team not owning the receipt process (sometimes receipting is done months after invoice is submitted by vendor)

Lack of system

Pressure on Finance team to source funds in order to meet payment deadlines

Consequential delay in payment

Oando perceived as a constant debtor due to payment delays

High cost of doing business due to vendors factoring time value of money within normal rates

High

PO ReceiptingNo central point of receiving invoices / job ticketing

Lack of system

Notable difference between Invoice submission date as tracked by vendor andFinance team in caseswhere receiver forgets to submit to Finance on time

High

PO ReceiptingSystem not auto-populating basic information captured at requisition stage e.g. PO number

System Consequential delays due to manual inputs (data entry/processing timefor 1 invoice can take up to 30mins)

Medium

PO ReceiptingPO receipting & Breach on internal Medium

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payment is done by thesame personnel

controls

TenderingDue to current policy,Single source justification requiredfor financial institutions and law firms which have been approved from Group tobe sole sourced on certain services

Notable man-hours spent on single sourcing approvals

Issues identified above inundated the system but

the application of the tools and technologies of

lean six sigma will help eliminate these wastes

and improve the current business processes within

the organisation.

4.3.2 How long did it take to achieve the first breakthrough in OER?

Stage 1 of Value Stream Mapping highlighted the

waste of time in requisition approval. To change

this, the challenges encountered by prolonged

approval timeline were presented to Management,

with its consequences and effect on the business

document. It was also discovered that a lot of100

requisition rights were not being used and this

was costing the organisation a lot. Below shows

the issues identified also:

Key considerations were segregation of

duties and cost of ERP access rights

provided to staff

All access rights not used in the last 180

days were recommended for removal

Where two members of the same team in the

same location had the same right, one of

them was recommended for removal

Where a person had two rights that

performed the same function, the more

limited responsibility was recommended for

removal.

Where finance staff directly involved with

invoicing or with the ability to

significantly influence transaction

records had the responsibility, the

responsibility was recommended for removal

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and reassigned to another member of the

team

This exercise showed the following result

with over 50% of waste eliminated:

The first breakthrough took a total period of

4months from identification of waste, to

securing management approval and to the final

implementation championed by the Supply chain

team in conjunction with the Information

Technology (IT) department.

Effecting these changes was a system

initiative in the organization’s ERP system

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Table 9 – VSM of OER supply chain processes - Review of RequisitionRights

Requisition and move order responsibility

Count %

Total Requisition right GroupWide 357  100%Requisition rights recommended for removal

157 44%

Requisition rights to be retained 200 56%Final Output 200 56%

and this required the support of the IT

department, which was easy to do because

Management gave approval to implement the

changes.

4.3.3 Why implement Lean Six Sigma (LSS) in OER and what

improvement has been recorded in the supply chain

process?

With the supply chain process constantly

being inundated by the challenges highlighted

above, money was lost, man-hours wasted,

sanctions applied on non-compliant staff and

a lot of time was wasted, it was necessary to

review the current process and then propose

changes applying the tools and techniques

deployed by both Halliburton and Chevron,

with the hope of achieving the same results.

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4.3.4 Process Standardization - The DMAIC tool was deployed

to OER processes:

a. Define

The problems encountered and goals to be

achieved upon successful implementation of

LSS were clearly communicated across the

organisation, as shown in an e-mail excerpt

sent by the steering committee lead.

“Hello Ladies/Gentlemen,

As we strive on our journey to become a world class company whereby speed, agility and quality isthe norm, it is imperative that we continuously review our processes and the governingmanagement system which manages these processes.

The Operations Integrity Team is embarking on a journey to identify the Top 5 end to end BusinessProcesses, which are currently hampering our business delivery objectives and innovation to deliverto specification consistently.

Once we identify these 5 processes, the team will now take a structured approach in re-engineeringthese processes by:

Identifying the issues with the existing activities, for each of the processes. Conducting a detail analysis on the failure rate / defects on each of the processes using

quantitative defect analysis. Engaging key stakeholders on the key issues using factual data, to demystifying individual

perceptions. Re-engineering the process to ensure its fit for purpose in our complex business

environment.

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GOALS DEFINED

Memo 1 – Communication to staff – Defining the Process Standardization process.

Finally, installing a measuring management system, demonstrating the improvement gainsusing factual based data.

Therefore we will like you to send 1 - 2 key processes which is currently eroding business value,based on the following areas - Revenue, Cost, and Time.

We will also like you to clearly state the problem situation with each process and provide an initialstab of the benefit gained.”

b. MeasureOther measurement criteria were then put

in place to adequately quantify problems

defined and goals to be achieved. These

include:

Reduction in approval timelines with

respect to approval hierarchy and

documentations required.

Communication and measurement of Key

Performance Indicator (KPI) for each stage

of the process

Elimination of processes eroding

organisational revenue and project

delivery cost

Increased willingness of work force to

embrace the proposed change and actually

be the agent of change.

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c. Analyze

Data collection and analysis of the

challenges being faced across the

organisation was conducted. Problems that

were one-offs were eliminated and those

that were of regular occurrence identified

for application of the lean six sigma

tools.

This stage revealed the following:

A lot of time wasted on finalization of

scope of services to be rendered by

suppliers. This took an average of 6

weeks, a process that could have taken

less than a week as seen with expedited

requests.

Tendering process from definition of scope

of work to contract execution and award

took an average of five to six months.

This ordinarily should not be as it has

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been proved to be doable in less than

three months if expedited.

Supporting documents required for approval

were too many; some individual memo could

be combined in a single document.

These issues resulted in variations in

contract award and ultimately increased

project cost. Once scope is firmed and

agreed by all stakeholders, it was

difficult for variations to occur except

those absolutely necessary to improve

delivery and not those borne out of

oversight or poor delivery.

d. Improve

This stage was deployed by developing

solutions which are then tested before

implemented company wide.

Issues Proposed Solution

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Table 10 – VSM of OER supply chain processes - Solution Proposition.

Pre-requisition Single point of contact that liaise with all entities on contracts prior to execution especially on group wide projects

Physical or e-mail sign-off by allstakeholders on SoW before issuingto Supply Chain team to start the tendering process.

Develop and enforce SLA on every stage of pre-requisition.

Requisition Adjustment of policy, to extend validity of BPA/PPO for a contract

Shorten the process cycle if it’s a renewal

Blanket revalidation of existing contract

Liaise with Risk & Control on the need for this yearly SS approval and with IT to implement.

Requisition Amendment to policy, permitting entities to leverage same documentations from a Group contract

PO Creation Follow up with Finance Manager to ensure budgets are uploaded in details

Enforcement of this process to load budget in different account strings

Explore possibility of creating a template that can be uploaded at once

PO Approval Investigate delays seen at the manager’s level

Analyze % age of PO that is over $30k in OER business, this being the CEO’s limit and all others requiring Group CFO’s approval andabove.

Adjust policy for single source approval at GLC to NGN 20 million

PO Receipting Change the receipting of invoices to become user department’s responsibility, with one point of contact in Administration team.

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Train key contact person and communicate the change in process.

Activate the central portal for invoice submission by suppliers and communicate / train them to use this medium. (E-Invoicing portal)

Check features on i-supplier and i-sourcing for standard goods and services, and implement its usage.

Implement the e-invoicing module in the P2P in OER

PO Receipting Add to the job description of the Administrative Department.

PO Receipting – Issue 1 IT to implement the retrieval of vital information entered at PO approval when invoices are being processed for payment. This will reduce man-hour for data re-entry.

PO Receipting – Issue 2 Implement the e-invoicing module Enforce compliance by departments

in OER Communication to all staff/user

departmentsOthers

Failing funds Liaise with IT Apps on reasons whyreserve button was deactivated

Supply Chain and IT to develop SLAtimelines for different options.

e. Control

This stage helped OER ensure that

improvements made are maintained by

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periodically checking level of improvement

and punishing non-compliance noticed.

4.4 Success Criteria

A few things helped OER achieve the successful

implementation of Lean Six Sigma:

Dedicated team members worked on the project to

ensure dedication.

LSS implementation was not done as an academic

exercise but every step of the way, results were

measured and communicated.

Continuous improvement was key during the

implementation period and after. Document

templates, processes, policies and procedures were

reviewed and several meetings help

The implementation team was trained to teach the

workforce and manage the change that is to come

The goals for LSS were clear right from the

beginning of the project as seen in Fig…… These

goals were linked to the organizational strategy110

Below is a summary of the DMAIC deployment:

4.5 Summary

With the application of the same tools deployed by

Halliburton and Chevron to the OER business processes,

great results were achieved and business processes were

improved and also continually improved.

Below is a summary of process changes made and effect

on the supply chain and business processes:

S/N

Business Process Change Effect

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Fig 8– Summary of DMAIC Application

Table 11 - Process Changes and Effect on OER’s Business

1. Sign-off on Scope of Work document. Sow was firmed before tendering commenced. Gave the business more bargaining power with the supplierunlike the previous occurrence where cost increase occurs as a result of scope variation. Cost savings of about $300k was made within the first 3months.

Tendering process was quicker because of concise and agreed SoW.Timelines reduced from a prolonged45 -90days to less than 30days, insome cases, 14days.

2. Reduction in requisition approval timeline

Requisition approval reduced from 7days to 24hours and approval hierarchy from up to 7levels to only 1 level.

4. Review of policy and procedure to increase approval limits to the Tender Board, enabling more approvals to be secured faster rather than having to convene a meeting all the time

Before LSS deployment, all contract award recommendation was presented to the Tenders Board. This approval is usually done witha meeting convened and presentations made. A lot of time was wasted especially when there was no quorum.

Approval limits were then reviewed, such that only contractsin excess of $60k required TB approval. This improved and reduced contracting timelines further by another 30%.

7. Automating Tender Board approvals ratherthan hand carrying documents for physical sign-off

Approval by TB was usually hand carried for physical signature butthis caused delays especially if asignatory is out of office. Process change was done and approvals are now requested for and secured via e-mail with the ‘Tracking and Approval’ function of Microsoft Outlook.

3. Amendment of approval documents to consolidate processes that were done in isolation

The non-Tender Board approval memofor awards less than $60k was designed and communicated across the organisation.

Usage showed the need for continuous improvement to avoid being in breach of other policies

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like single source award justification. The forms were thenre-designed as seen in the e-mail communication in Figure 21 to communicate with the workforce andalso manage the change.

5. Review of policy and procedure to approve personnel related transactions /payments on the basis of the recruitmentprocess only

Personnel related transaction before now go through two approvalprocess; the Human Resource recruitment process and the whole procurement process.

VSM of these processes identified wastes in time; hence a proposal was made to Management to limit all personnel related transactionsto only the HR process. Once concluded, purchase orders are raised with the supporting documents from HR only.

This reduced the process by 40% with respect to time spent to go through two different processes instead of one that was sufficientin itself.

6. Implementation of e-Invoicing module on the ERP system to facilitate invoice submission and suppliers and expedite payment process

When services or goods are delivered, the user department normally takes delivery as such they should be responsible for invoice receipting.

This had not been the case becausereceipting was done by Finance. Itwas highlighted that this situation was an audit risk hence it needed to be changed.

This has not been implemented because it requires activation of the e-Invoicing module on the ERP system and training of the personnel who will carry out theseactivities.

8. Transfer of service delivery / confirmation rights for invoice receipting from Finance department to users.

The invoice receipting rights transfer to user has been agreed by management but implementation is still in the works.

9. Increasing the CEO’s approval limit During the process reengineering deliberations, one of the suggestions was the need to

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increase the approval limit of theCEO to $120k.

This has not been implemented. Still under review by top management.

Hello all,

To make our approval processes more efficient, the SC team has modified the non-Tender Board (award below N10M or its equivalent)  award recommendation procedure.

Before now, two separate documents were required if a non-TB award recommendation has also been single sourced, but going forward, both requests are now captured in a single document.

Find attached:

a.     Non-TB memo for award after a competitive tenderb.     Non-TB memo for award single sourced, but below N5M – final approver is the

CEOc.     Non-TB memo for award single sourced, but between N5M & N10M – final

approver is the DGCEO

Please note implementation is with immediate effect.

Regards

It was easy to effect some changes, others took a lot

of people management through training, persuasion and

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Memo 2 – Communication on Continuous Improvement of Process Change.

sometimes sanction, while a few have not been

implemented because approval of top management is

required.

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5.0 General Conclusion and Recommendations

5.1 Chapter Overview  

During concept formulation of this project, the

objectives was to study the concept of lean management

as well as Lean Six Sigma and investigate how two

companies in the oil and gas industry, Halliburton and

Chevron have improved their supply chain processes

through the deployment of the tools and techniques of

the lean six sigma concept.

The validity and reliability of these tools and

techniques are then tested by deploying same to the

supply chain processes of another oil and gas company,

Oando Energy Resources (OER).

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5.2 Implications of Investigative Questions

Three investigative questions were asked and answered

in course of this dissertation in other to understand

how supply chain processes respond to lean six sigma

deployment, why it is necessary to deploy these tools

and the outcome or results achieved. The following

discussion will look at each investigative question

asked and the aim behind asking those questions.

5.2.1 What were your supply chain processes like before the lean

sigma implementation?

This first question aimed at understanding the

‘organizational health’ in terms of what the

processes were like before lean six sigma tools

were deployed, the challenges encountered at this

stage, for example, before deployment at OER,

requisition to purchase order approval could take

up to fourteen days at the minimum. This created a

bottleneck that made the staff directly involved

to ask the question, ‘what can we do differently’.117

This leads to the conclusion that, the decision to

implement LSS is not an academic exercise for

companies that have made a success of it, it is

borne out of necessity, which could span from the

need to reduce timelines, save money or improve

efficiency.

Based on this investigative question, my

recommendations to any and every organization are:

a. There must be a need – this includes desire to

improve customer service, both internal and

external, desire to do business better, achieve

results quicker and improve their current

processes.

b. There must be willingness by the entire

workforce to implement LSS - this cannot be

overemphasized as a lack thereof marks the

beginning of failure, and this is not

negotiable.

The saying, ‘if it isn’t broke, don’t fix it’

is an important reasoning to apply to a system

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in other to determine if there is a need for

the deployment of LSS, otherwise the workforce

will only go through a motion to implement and

immediately dump the learnings once the

champion leaves the system. This was the

situation in Chevron, Europe as relayed in an

interview with the General Manager, Eric Sirgo

who explained that willingness must occur

company wide and not just with an individual or

champion who is the process owner. What was

noticed in his organisation was that, once this

process owner leaves that environment the

entire process relapses, hence they made

conscious effort to educate the staff to see

why LSS must be implemented and once this

happened, everyone became an advocate for the

deployment of the tools and techniques of lean

six sigma, PEX, (2011).

c. There must be great desire / passion to

continuously improve current ways of doing

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things in the business. This desire will be

borne out of wastes, variations and defects

identification which then lead to plans to

eliminate the wastes, reduce the variations and

correct the defects, as explained in a podcast

by Smith & Hayes, (2014), who also highlighted

the fact that a company that is not practicing

LSS is only heading for disaster as just one

customer dissatisfaction which can bring them

down considering the power of the social media

and the way news travel across the globe. The

best of the best in their field of business

make use of the tools of LSS and that is why

they are tagged the best. Having said this,

that need must be embraced to achieve success.

5.2.2 How long did it take to achieve the first breakthrough?

The second question was asked in other to

understand how quickly positive changes can be

realized once LSS deployment starts. This was120

necessary as it will encourage a company that is

new to this concept to know that positive change

is assured as long as tools are deployed properly,

ranging from few days to months depending on the

criticality of the stage under scrutiny. In OER

for example, the decision to limit requisition

approval to one stage was taken by the Supply

Chain and Risks & Control teams, hence it was easy

and quick, however the approval to increase

approval limits of the CEO has been presented and

still being reviewed for the past six months. It

is important to understand the possible timelines;

it can be quick, long or even prolonged depending

on its criticality within the business and impact

if not achieved.

My recommendation will be that once the processes

to be improved are identified, the quick fixes

should be implemented first to serve as a form of

encouragement to the team, driving home the fact

that indeed the tools and techniques do work. Once

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these initial breakthroughs are seen, enthusiasm

builds up and it will be much easier to get

cooperation from the staff and of course

management to go on. It is also important to

demonstrate the financial gains being made with

these improvements because every organisation is

big on profit-making, and once that can be

demonstrated, support is guaranteed. Figure below

shows cost savings made in OER with the deployment

of the tools and techniques of LSS per project:

Asset Cost Savings

General (ORPSL) $27,839.58

OML 13 - Qua Ibo $180,000.00

OML 90 (Akepo) $47,600.00

Conocco Phillips Acquisition $262,215.57

General (Group) $275,449.10

Total $793,104.25

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Table 12 … – Cost Saving per project through LSS implementation

5.2.3 Why did your company decide to implement Lean Six Sigma

(LSS) and what improvement has been recorded in the supply

chain process?

Every organisation is peculiar even if they

operate within the same industry. This diversity

informed the need to ask this question. From the

result analysis of interviews with Halliburton,

Chevron and OER, it is clear there are different

reasons but all are geared towards improvement and

standardization of existing business processes.

It is important to ask this particular question so

that deployment is focused and targeted at a

particular goal, such that once achieved, it is

clear to all that success has been accomplished.

This approached has been called Focused Lean Six

Sigma (FLSS) by Davis, (2010) a partner at A.T.

Kearney company, recommending that this focus can

be achieved by aligning the LSS initiatives to the

broad strategic goal of the organisation in three

quick steps below:

123

This has been proven true in OER because one of

the goals of the organisation in the LSS

deployment year was cost reduction. Immediately

management realized this was being achieved, the

required support was given without much ado.

The other part of the question which referred to

recording success achieved is important for record

keeping such that when the time for improvement

comes, which must be continuous, that aspect will

be concise and there will be no questions asked to

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Fig 9 –Three steps to execute Focused Lean Six Sigma

challenge the relevance of the continuous

improvement process.

5.3 Research Summary

Organisations have tried to improve how they render

services to their customers and deliver value to their

stakeholders, both within and outside their

organisation. In doing this over the years, various

tools, techniques and methodologies have been deployed

by various companies operating in diverse industries.

For example Phillips Electronics deployed the Business

Excellence through Speed and Teamwork (BEST) model for

their quality management and improvement initiative, a

model that mirrored the ethics of the European

Foundation for Quality Management (EFQM). Oakland,

(2003)

Others have sought brand management and customer

satisfaction through seeking ISO certifications of

various levels, a process that focuses on self-

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assessment as a means to achieving the sought after

improvement.

According to Brun, (2008) the limitation of these total

quality methodologies is the fact that they focus just

on improving the current situation to achieve a final

result and providing quality management guidelines, but

do not really focus on the peculiar Lean Six Sigma

success factors, being:

a. Error or waste prevention and variability

reduction

b. Prescription of specific / precise improvement

methodologies applicable to existing processes;

e.g. DMAIC, PDCA which then allows for performance

measurement

c. Top-down management involvement and bottom-top

employee driven implementation strategy, backed-up

by training

d. Most importantly, the concept of continuous

improvement

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These four factors as seen in the deployment of Lean

Six Sigma tools and techniques at Halliburton, Chevron

and then validated at Oando Energy Resources are the

peculiar success factor to LSS.

The tools have been proven and tested with two

companies in the oil servicing and production sectors

of the oil and gas industries, leading to ascertaining

their reliability and confirming their validity with

another company in the same industry.

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