By: Sam Miller
Submitted: 2008-06-02 02:48:50 | Word Count: 638
There are key performance indicators (KPIs) to use that can help spotlight the benchmarks being reviewed. A system for easily monitoring KPIs on a real time basis helps gas and oil executives make the kinds of informed decisions that enhance productivity and cut costs.
Real time, accurate, comprehensive, at a glance access to this information provides the edge that is needed to stay competitive.
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Lifting costs. Lifting costs per barrel of liquid gas equivalent is one of the fundamental performances, demonstrating the extent to which a company is controlling operating costs. Annual lifting costs divided by annual production in barrel of liquid gas equivalent is the basic formula for calculating lifting costs.
Furthermore, it can reveal how efficient a company is at getting product out of the ground. Lifting cost is also considered a metric used in peer comparisons.
Every gas and oil company measure themselves to some degree. These measurements are always based on historical information. While there is certainly a value in historical analysis, it is a fundamental principle of Key Performance Indicators (KPI) to be current or forward looking metrics. Additionally, it is also critical that KPIs be closely aligned to strategic company goals and implemented in such a way as to support positive change.
Key Performance Indicators (KPI) in gas production can be highly effective for exposing, quantifying and visualizing muda (the japanese lean term for waste). The essence of Japanese lean manufacturing and the central theme of the Toyota Production System (TPS) is to eliminate waste in other words, to eliminate all activities that do not add value for the customer. Effective KPIs in quantify waste of gas production; provide an early warning system for processes operating outside the norm, and offer significant hints as to where improvement efforts should be focused.
Key Performance Indicators in gas production are also highly effective motivators. Motivation theory (i.e. work or organizational behavior) is a complex field with many diverse opinions; however, there is big agreement that a central key to effective motivation is setting challenging but attainable goals (e.g. SMART goals, which are Specific, Measurable, Achievable, Realistic, and Time Specific). SMART goals are excellent ingredients for KPIs.
Effective KPIs in gas production can energize the plant floor unleashing competitive spirit and promoting kaizen (the Japanese lean term for continuous improvement). This can be achieved by providing both a “will” and a “way”.
Key performance indicator in gas production must also provide meaningful, reliable, and accurate information. Thus, it is important to carefully document and define the methodology of measurement before implementing a given KPI. Desires and goals are often vague, whereas Key Performance Indicators are very specific. Since KPIs are indicators of progress and performance in gas production, it is vital that everyone that uses them be able to trust in their accuracy.
How Can Key Performance Indicators Help My Company? Can you imagine driving your car without a fuel gauge or at least a speedometer? Driving solely based on your rear view mirror without side view mirrors? This is exactly the current situation that exists on most plant floors today. Effective KPIs enable directors, managers, and operators to keep their fingers on the pulse of the plant floor or the drilling field.
Here are five steps to creating and maintaining effective Key Performance Indicators for your gas production plant:
Study all strategic goals of your company.
Carefully sort, select, define, and document KPIs that will drive the desired behavior.
Create the “will” and the “way” as I described above (e.g. educate, echoe train, and listen).
Begin using the KPIs to drive improved performance of both managers and employees.
Do it again. Lean (Kaizen) is a continuous improvement process. That means your KPIs should evolve as needed to best match the current strategic goals of the company, even in the future plans.
