KPI Metrics that Matter SPM SRM Oil Gas industry
Supplier KPI Scorecards for Oil & Gas Industry
One of the major problems in designing, development, and roll-out of Supplier Key Performance Indicators KPI Scorecards for Oil & Gas Industry is the actual content of the scorecard. Scorecards are made up of questions (data inputs) that are gathered in respect of things that matter in terms of what is being measured.
Key Questions you should ask yourself:
Are the scorecard questions (data inputs) relevant to the category or service line I am measuring the suppliers performance?
Are the questions relevant to the Supplier ?
Will the questions help me devise KPI metrics that i can use to compare performance by supplier, by region, by category line?
Do i need to include some global or corporate mandated KPI’s in my Scorecard?
Can the supplier company actually give me the data that I need in a timely fashion and with little difficulty?
Can I get the data by integrating with other internal or external data sources?
Can I validate the data provided by the supplier?
Lets look at some best practices in relation to the above questions.
Global V Category Line Specific KPI’s / Metrics / Domain Expertise
Its important you do not fall into the trap of thinking that a global set of metrics will drive success. Standardizing on just a Global set of KPI’s will provide only limited opportunities for managing performance improvement and you wont get the full buy in from the Category Line managers that need Job or Service specific Metrics to manage supplier performance. Yes do have a top down Global perspective but the category line specific scorecards also need their content driven from the bottom up. So in summary get the category line metrics devised in addition to the Global Ones, Don’t let the time taken to reach agreement on Global KPis for SPM add years of complexity and cost to your SPM initiative.
Your Category Line Managers or external Subject Matter Experts with Domain Expertise in that Category are best placed to advise you on appropriate KPIs and associated Targets.
Supplier Engagement / Scorecard Data Availability
If you think you can simply rollout an SPM / SRM system without involving your suppliers upfront you will hit one or both of these issues.
a) Metrics that Matter
Simply rolling out a one sided scorecard that only looks at KPI Metrics that focus on the suppliers performance on quantitative measures will work in the short term but without 360degree metrics the supplier will see it for what it is an SSS ( Shitty Stick Scorecard). You need to work with the supplier to include other Metrics that also help foster improvements in Supplier Relations such as tracking Days Sales Outstanding (DSO) Value, Over due Invoices (Value and Number) and also Innovation and Behavioral Metrics that help drive and reward Innovation.
b) Scorecard Data Availability:
During the planning stage of your Initiative you should always share draft versions of the relevant proposed scorecard with your suppliers early on to ensure that they can provide the data that you require at the right level. The last thing you want is to have metrics where the data can be supplied by one Supplier but Not another. Or data that can be supplied by one supplier in only 3 out of their 6 regions but not all six as some of their regional systems don’t have that data. So have a think about data availability from your suppliers before you include that question on your scorecard.
c)Scorecard Questions / Data Validation
It is also important that you can validate the data you collect so don’t fall into the trap of asking for, or accepting calculated values, ie where the supplier puts in a percentage value for say On Time Delivery example 98%. You need to track the components (Number of Orders Delivered On Time / Number of Orders Delivered ), and let the system work out the Percentage itself otherwise you will struggle to validate the data, and what cant be validated leads to the inability to question or action the values.
d) Rolled up Values – Data Drilldown Unavailable to Determine Root Cause.
Often suppliers offer to give you rolled up numbers for say corporate wide Total Recordable Incident Rate (TRIR) or TRIR at a particular region. That will not suffice. While you should accept their Corporate or Regional TRIR value, you still need the Value for TRIR at the Local or Category Line level. One way to do this is to gather Number of Recordable Incidents and Man Hours Worked at the local well site, rig or base level for your operations and compare it to Corporate or Regional Values, That will give you the deviance from their corporate TRIR and all allow you to foster discussions around improvement.
So make sure that your Scorecard questions are relevant to the asset level that the work relates to. You need to be able to view the data and manage supplier performance at the lowest level possible, the asset (Well, Rig, Plant etc)
Data Integration / Hierarchy and Asset Data-source Integration
Last year I had the opportunity to work with one of our Operator clients in integrating a range of existing data sources to populate any Master Data associated with the SPM SYSTEM such as Hierarchy, Wells Listing, Well Header data. This now means that as the Operators Master Data files change, the SPM system is always upto date (in sync). If an asset (Well, Rig, Refinery, Vessel, Aircraft, etc ) or even the Business Unit or operations Hierarchy change the system is automatically updated. Even system assess rights by integrating with Employee Listings and Single Sign on. Its also possible to pre-populate scorecard data from existing data sources. I am talking here about integration with systems like WellView, OpenWells, SAP, DnB, RigView etc, where much of the data being double keyed already exists.
Where possible integrate, especially if the volumes of data or their change frequency are high otherwise manually updating these can mean a full time job for a few extra people and adds cost, complexity and risks of re-keying errors.
Scorecard Overload / Supplier Data Integration
One of the biggest challenges is often the time and effort that the Supplier spend filling out scorecards. Often the supplier has such data already in a structured data format in various systems or databases they operate. The brick wall effect comes into play where there are a lot of scorecards to be completed. Imagine a supplier that works providing a service on hundreds of Onshore wells where the average job lasts a few days. If this data is available in Well View or Openwells you should have the feature that facilitates easily importing such data into your SPM system, or better still a direct link / live feed. I’ve seen the huge advantages and cost savings that brings in reducing supplier scorecard overload.
Fore more best practices on scorecard development, SPM and SRM see our Best Practices Blog which contains numerous articles that will help you in successfully implementing a value add SRM Initiative.
Key Performance Indicators by Category Line
Outperform Subject Matter Experts, Advisors and Consultants are experienced in designing and implementing Supplier Scorecards and Key Performance Indicator (KPIs) in over 300 Oil & Gas Industry specific product, category and service lines. A sample of the business lines that we have previously developed scorecards and KPIs for are listed below and broken out into Upstream, Downstream and Midstream.
Upstream Oil & Gas – Scorecard / KPI Experience
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Downstream Oil & Gas – Scorecard / KPI Experience
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Midstream Oil & Gas – Scorecard / KPI Experience
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