Sample on Production and Operations Management
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Mission: The main mission of the company is to safely as well as profitably refine and supply hydrocarbon fuel around national and International level in a significant manner (Chase, 2006). In addition to this, it enhances contribution of firm in national development through supply feedstock and fuel in stipulated time (Annual report of Takreer, 2014).
Vision: Takreer's vision is to establish itself as a world class diversified refining company through increasing motivation level of their staff-members and performing operations in the safest manner.
Values: The organization has devised ambitious plan that reflect its experience and future perspective (Ghadimi, Kara and Kosssrnfeld, 2015). To become a world class refinery company, it has taken initiative and collaborated with other local and national institutes and researcher centres for taking advantages of technology transfer and human resource development (Annual report of Takreer, 2014). By concentrating on improving operation management strategies and following quality assurance and environmental protection, enterprise tried to capture wide segment in an appropriate manner.
Strengths: It is a vertically integrated national oil and gas group and it shows its presence in maritime transportation and refined products and distribution (Gibson, 2006). It has large distribution network in both national and international level. At international level it covers the Middle East, Africa, Far East, Australia and Europe countries (Liu, Han and Zhou, 2015). The organization is using HSEMS system to perform long-term operations, supporting business continuity and protecting the environment. These characteristics of the firm enable it to stand against their competitors in the oil and refinery industry (Annual report of Takreer, 2014).
The organization performed high standard and efficient refining operations in an appropriate manner through considering sound health, safety and environment practices in the workplace (Kundu and et. al., 2015). Enterprise has high investment on its maintenance and operations departments for achieving maintenance excellence through setting benchmark in the industry (Thompson , 2014).
TAKREER has been involved itself responsibly in serving all its customers by effective management of its operation and production management activities in a proper way.
Operation management department of the company has to follow different procedure for functional technical and site to effectively implement policies and grasp business opportunities against other refinery of country (Mahadevan, 2010).
To enhance the communication with the consumers, it has used e-business and internet strategies to boost up the efficiency of operation management activities in a significant way (Thompson, 2014).
For safe and sustainable long-term operations, Technical departments of the company emphasized on maximum reliability and availability of plant and equipment at optimum maintenance in a proper way (Annual report of Takreer, 2014). Organization has been involved in almost all stages of value chain of petroleum and provides to all the customers throughout UAE with petroleum products.
Refinery Company applied control systems and field instrumentation for establishing and implementing the monitoring programs in the workplace that lead firm against others.
Decreasing oil price and changes come in economic trends are creating challenges for the company to maintain its current position and better compete against other oil refinery companies of country (Murthy, 2005). Approx 51% of the economy of the country depends on the hydrocarbon and increases price creates problem for company |(Jadallah, 2015).
The opportunities available for Takreer petrochemical industry are enhancement of competitive advantage of the company in world market (Robert McCrie, 2011). In addition to that, company can unlock their potential in front of world market for their growth enhancement. Saudi Arabian government is planning to invest 91% dollar in petrochemical industry (Panneerselvam, 2012). This opportunity will make the company to expand their business in world market. Moreover Gulf Cooperation council are allowing the private sector companies to invest in petrochemical sector. This will make the company to get energy at affordable price and low cost raw materials for their production operations.
Declining in the price of naphthalene is the challenge for the Saudi based petrochemical production. Fall in the price of ethane in international market results in fall in crude oil price. These will results in reduced cost of selling product in international market (Slack, Chambers and Johnston, 2007). Moreover decrease in economic performance of Gulf country in world market also affects the performance and growth of the company in world market.
Takreer, is the Oil and gas company of United Arab Emirates. It is providing crude oil, oil products, natural gas and petrochemicals to the global market. It is a government owned company which comes under UAE government (Gou and et. al., 2003). The strategic decision related to the goods and services designs are determining costs, quality and human resources of the company (Held, 2003). Moreover it is also concerned with the finding of lower limits of costs and upper limits of the quality to provide petrochemical products at lower cost and higher quality.
If the emission process of the company “Takreer” is concerned, there is need to reduce the implementation of technological strategies and operational strategies in the company for enhancing the quality of the petroleum product (Moghaddam, Seifi and Niknam, 2012). This strategy for enhancing the quality of petroleum is increasing in the octane number of their composition. For increasing the octane number NexOCTANE process is used. It is related with the modification of production process by changing the catalyst used in the nuclear reactor (Bai and Huang, 2012).
“Takreer refinery” is producing petroleum and their basic products by adopting high technology and machines in their plant (Jadallah, 2015). In market, the demand of high quality product is increasing day by day. This will results the company to use highly advanced technology for machines and plant layout. The strategic decision related to process and capacity of the company is concerned with the new technology used for production process. It is also dependent upon the basic cost structure of the firm for selling their product. This is a public owned company and decision related to cost structure is in the hands of government. The company can enhance the technology which used in the plant (Chunshu and et. al., 2011).
There are various methods that are developed in the field of petrochemical industry to enhance the production capacity of the plant (Christopher, 2012). It is the world's leading company for the production of petrochemical products. The technological advancement is:
On line inspection is concerned with the inspection method which is related with the ongoing inspection of production process for petroleum (Subramanian and Ramanathan, 2012).
Petrochemical plant is entirely machine based plant which is needed to be maintained for minimizing the accidents and leakage problem (Brown, Bessant and Lamming, 2013). Total productive maintenance is used to maintain the machines and functioning of the company.
Fuel conversion efficiency is improved by proper maintenance of the machines and functions of the production plant (Alexander, 2013).
This is the technology which is used for replacing the vacuum distillation with a more productive column to remove the traditional distillation methods for refining the petrochemical products. The petrol and other petrochemical products are produced by hydro-cracking in distillation vacuum (Ageron, Gunasekaran and Spalanzani, 2012). Now it is replaced by a CNC lift which is controlled by a programmed computer. This will enhance the quality of products generated after distillation and play an important role for saving the environment pollution.
Quality of the petrochemical products produced by the company “Takreer” depends upon the quality of functions in the plant and techniques used for quality maintenance of the product (Murthy, 2005). The strategic decisions which are concerned with the quality of final products are customer's expectation from the firm and techniques used by the company for quality maintenance. “Takreer” refinery is among the biggest companies of the world. The company is very specific about the quality and methods adopted by them. The quality standard for petrol and diesel are fixed by the government of UAE. The company are restricted to follow the quality standard for their products (Slack, Chambers and Johnston, 2007).
Quality management system helps the company to achieve the standard for the quality for their petroleum products and gasoline (Gou, H. and et. al., 2003). It is related with the maintenance of quality of materials, equipment and offshore structure for the petroleum plant.
This is the quality standards which are decided for the petrochemical and gas industry after many numbers of audit by the team (Held, 2003). This is the revised form of the quality standard which was decided in 2003. 2010 is the third edition of it after 2007.
This is related with the quality management system requirement for the petrochemical products. It is concerned with the design, development, production and installation of the petrochemical industry (Moghaddam, Seifi and Niknam, 2012). The company have to follow this standard for maintaining the quality of their products.
Human resource management is concerned with management of people in the company. “Takreer Refinery” company is the world's leading company in production of petrochemical products (Kundu and et. al., 2015). They require a highly skilled labour and skilled people in the firm. Human resource management team of the company will help in the recruitment of right people at right place. There are various strategies related with recruitment of right people in the company.
Human resource management is the critical function of the organization. It not only controls the internal functions but it also the reason for success of the firm. In UAE average age of the person who is having specialization in working with petroleum industry are 52. It means that skilled people are getting retired from the company when they become efficient for the organization (Robert McCrie, 2011). The rate of engineers which are joining petrochemical industry is growing day by day. The minimum experience required for joining the petrochemical industry is 25 years in same field. The company are planning for making very tough eligibility criteria for the engineers due to the high availability of required skills. Retention of people which are experienced in the company is equally important for the firm. Human resource management are emphasising on the motivational factors given by Herzberg to retain the best employees in the company.
The strategic decision related to maintenance management is reliability and stability of machines and tools for longer period of time (Slack, Chambers and Johnston, 2007). Finding the estimated time for the performance of machines and tools also comes in the category for maintenance management. There are so many techniques which are used by the companies for enhancing the life period of the machines (Gibson, 2006). “Takreer Refinery” is using Total Productive maintenance (TPM) for maintaining the long life time of the firm machinery.
This is the initiative step for maintaining the refineries. The wider scope of total productive maintenance rather than auto-mobiles industries are chemical industries and refineries (Panneerselvam, 2012). These industries are dependent upon the philosophy of zero breakdowns in the company on their plant to minimize the accidents over there. Any breakdown on the plan may cause major loss of the company. TPM is the mindset of the management team for zero breakdowns, zero defects and zero accidents on the plant.
Refinery function is the continuous process. In case if the situation for breakdown or any defect is detected, than the company have to shut down whole of the production process. Thus this is sometimes becomes limitations in refinery industry (Chase, 2006). Refinery is a highly inflammable functional industry. Any wrong step or error may cause loss to the life of human being as safety of human being is the first concern for any industry.
Company can adopt the advanced level of maintenance techniques such as preventive maintenance and predictive maintenance (Bai and Huang, 2012). These activities will help in maintaining part of the machinery in refinery. The strategies which company can use for maintenance management are equipment preservation, training and development strategy and outsourcing strategy.
The strategic decision related with maintenance management is production scheduling and demands of facilities requirement by the company. For scheduling purpose “Takreer Refinery” is using optimization models for doing better planning in the company for their operations (Jadallah, 2015). This is economically efficient plan for balancing the functions of the company. It basically coordinates with the supply and demand side of the plant. It will manage the logistics and supply chain management of the enterprise. The software which is used for managing the scheduling functions of the company is project management software.
The process of scheduling in the company can be divided in number of tasks. (Chunshu and et. al., 2011). These tasks are managed in table according to their priority. Operations in refinery are divided as vessel arrivals, dock operations, pipeline transport, feedstock tank, plant operations, product tank movement and product shipment. These tasks are managed by the priority level and optimal operating plan is prepared.
These tasks are divided on the basis of high operation variability, day to day re-scheduling and poor operation control (Christopher, 2012). The activities which come under these criteria are Vessel arrival at the port, dock operation for unloading the materials from the ship, pipeline transport from one place to another and feedstock tanks for feeding the raw materials in the tank. Plant operations are classified on the basis of low operations variability, stable scheduling and good operation control (Subramanian and Ramanathan, 2012). Lastly, the operations which comes under the category of high operation variability, instant rescheduling and poor operation controls are product tank yard movement, product pipeline and product shipment.
The production plan is prepared by scheduling these tasks on the basis of requirement for the plant (Brown, Bessant and Lamming, 2013). Whole arrangement and layout of the plant is managed and based on the scheduling of the tasks. This will enable the company to manage their operations in a systematic way.
The decision related to the layout designing in the company is based on the material flow in the company, capacity needs of the firm and personnel levels of the structure. Technology and inventory requirement is also depending upon the layout of the company (Alexander, 2013). Layout of “Takreer Refinery” is based on the traditional method. Modification in layout in such a large scale is not an easy task. On the basis of human resources team requirement, structure of the people working over there could be changed. The structure of the company is changed from the vertical structure to the horizontal structure for managing the information flow on the functional level of the company.
The refinery is having complex integrated structure and accessing a pipeline network system. Layout optimization is necessary for the plant but it cannot be totally modified because of the complex structure (Ageron, Gunasekaran and Spalanzani, 2012). Extension of the plant on the basis of area covered is possible in the plant. Continuous functioning is required for the company as it is the largest petrochemical industry in the world. Optimization of the layout designing can be done by linear programming methods (Alexander, 2013). It always depends upon the capacity of the company for designing layout of the plant. Financial aspects are also considered for the design specification of plant.
Decision regarding location selection is based on the organization's success and efficiency. “Takreer refinery” is a Saudi Arabian Company and Saudi Arabia is the global producer of petrochemical products (Panneerselvam, 2012). The growth strategy which is required for selection of location for the production plant is diversification, Joint ventures and cooperation of private limited companies in the expansion. These are some of the strategy which is to be kept in mind, when the company is planning for their expansion on location basis. Diversification is related with the entrance of the company for production of more products which are produced as by-product at the time of distillation of petrol (Chase, 200). In that situation company can plan their expansion to more area on the basis of location.
The other case is the joint venture of the company to other firm for their expansion. Joint venture is the most significant method for expansion of the company on the basis of market as well as the location. Lastly Cooperation of private sector in the petrochemical business will make the company to think about their expansion and growth on location basis (Murthy, 2005). These are the location strategy which the company can select for their expansion to other country. Takreer Refinery is affected by the strategies and policies of World trade organisation on their business. Although this company is the public sector company but before taking any step for expansion they have to take consideration of policies mentioned in WTO.
The modern age authors have identified innovation in three different stages - substitution, scale and structural effect. The emphasise is laid on restructuring effect that aims to states that companies must identify opportunities in the structural field in respect with their supply chain and deploy the same in operations (Mahadevan, 2010). The substitution and scale effect must not be considered sufficient and gaining the advantage on supply chain management.
Supply chain management has gained significance in the last three decade while also providing main sources of competitive advantages. The management of supply chain is always referred as complex and challenging task in the ever changing trend of business environment such as globalisation, outsourcing, short product life cycle, and expansion in product varieties and continuous advancement in information technology (Murthy, 2005). The most important among this is technological development which is growing at a never ending pace. The internet is thus the main contributor to both increasing need and opportunities to improve the supply chain management.
If the oil refining company plans for organisational restructuring, it may have redesign its operations and management structure to address issues that may led to the situation of unrest in company. Internet connectivity enable the firm to connect the world. This will play the significant role in the growth and effectiveness of the firm (Robert McCrie, 2011). The internet services allow companies to establish connection in real time to access information and knowledge across the organisational boundaries.
Many authors suggest that structure changes in organisation results into collaborative ventures and lead to new product lines (Mahadevan, 2010). The internet services and its accessibility encourages organisation to face the challenges and avail new opportunities in mutual benefit. The oil refining company must not limit its business operation and invest in the opportunities provided by the internet era before rivals eat its market share and take the lead in the market.
The organisation will be benefited with new concepts and methods of supply chain management in the internet age (Murthy, 2005).
The successful application of supply chain management is dependent on number of factors. The oil refinery needs to follow and apply it in strategic manner to ensure success. The strategy must be customised to meet specific requirement of customers.
The product with stable demand and reliable supply source should be managed in a different approach with more focus on unpredictability (Panneerselvam, 2012).
The internet provides a powerful tool to support and enable supply chain strategies for product and services which have different demand and vulnerable to uncertainties.
The brand must not assume a one size fit all strategy because in the present era it does not guarantee success.
The effects of restructure thus can be effectively managed while assuming uncertainty aspects and devising strategy around it. It is because this will help organisation to operate in any given situation which are vulnerable to higher risk factors (Slack, Chambers and Johnston, 2007). Overall the positive effects must be realised while introducing strategic changes in the organisation structure.
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