The Operation Management System of BP Plc Company - Research Paper Example

Operations Management System: BP Unit Contents Introduction 3 BP Plc Background 3 BP’s Goal 4 Setting Clear Priorities 5 Quality Portfolio 6 Distinctive Capabilities 6 BP’s Operation Management System 7 People 8 Plant 8 Process 9 Performance 9 Analysis of BP’s OMS 10 Advantages of BP’s OMS 10 Weaknesses of BP’s OMS 11 Towards a Better BP’s OMS 13 Implementing an Improved OMS for BP 14 Conclusion 15 References 16 Introduction Operations form the heart of an organization and hence require proper management in order to have a sustainable organization. Operation management serves the role of ensuring that the business operations are running efficiently and in a sustainable manner. The efficiency entails adequate utilization of resources while ensuring that customer satisfaction is given a top priority. This is the reason why organizations require having a feasible and implementable operation management system. The operation management system (OMS) plays a very critical role in an organization. It facilitates the setting of priorities, ensures that operations are maintained, assesses performance, involves the people, and ensures that the organization forecasts on the future (Sanyal 2012). An OMS acts as the framework that facilitates the execution of an organization’s processes and procedures in order to ensure that an organization is capable of meeting its objectives sustainably. In the 21st century, many businesses have adopted an OMS that is geared towards ensuring that the business is able to generate stakeholder value. In this paper, a focus on the OMS developed by BP Company will be put into perspective together with a consideration of the potential areas that the company can work on to improve the OMS. BP Plc Background BP plc is one of the largest multinational companies in the energy sector in the world today. It deals with oil, gas, petrochemicals, and renewables. In order to execute its global objectives, BP had developed an OMS. The company has integrated functionality in the industry having operations in the exploration and production of petroleum, oil refining, distribution of petroleum products, renewable energy production, trading, generation of power and petrochemicals. Dealing with petroleum and its affiliate products is a lucrative yet precarious business (Portougal & Janczewski 1998). In the past, BP has spent heavily due to unprecedented occurrences such as oil spills. The company lost its oil besides having to pay huge fines in the 2010 Deepwater Horizon oil spill. To prevent such occurrences, the company has developed an OMS that is geared towards dealing with its operations in a manner that promotes sustainability and efficiency. The company’s OMS has been very influential towards the milestones that have been made so far by the company. BP’s Goal BP has a clear strategy that it endeavors to accomplish. This is captured in the company’s goal that is “to be a focused oil and gas company that delivers value over volume” (BP Website 2014). In order to be able to achieve this goal, the company has three main drivers of facilitating this achievement. The main aspects that drive the goals of BP Plc are illustrated below: Setting Clear Priorities The first thing is the setting of clear priorities. The company’s priorities are well spelled through their strategy, the top priority is to promote compliance, reliability and safety of the company operations. These are geared towards ensuring that the efficiency of operations is upheld while ensuring that safety performance is given a consideration. Another aspect that is highly prioritized by the company is the efficient delivery of projects based on timeliness and conformity with the set budget. This ensures that the company upholds disciplined financial choices. Quality Portfolio The second driver that promotes the realization of BP’s goal is the management of a quality portfolio. Three pertinent issues are addressed in the portfolio management. Firstly, the company endeavors to boost its capacity to explore more opportunities in the areas of strength, this targets mainly the exploration of energy sources. The second aspect is a focus on high-value upstream assets. This entails places such as deepwaters, gas value chains, and giant fields. The third aspects is the endeavor by the company to leverage on building high-quality downstream businesses. In this case, the company’s goal of generating value instead of volumes is emphasized. Through these portfolios, there is a particular emphasis on the quality. Distinctive Capabilities The third and final driver is the advancement of distinctive capabilities that places them ahead of competition. The distinction is the main platform upon which the rest of the drivers of the company’s goals are based. The first approach that the company targets to achieve a distinction is through adopting technologies that are more advanced. The company endeavors to apply the use of technology across the value chain so that to ensure that efficiency and customer satisfaction are upheld. Another approach is the reliance on the expertise from the company’s capable workforce to deliver quality work across all the disciplines that are represented in the company. The last distinctive approach would be achieved through developing networks and lasting relationships withal relevant stakeholders, including customers, the government, partners and civil society among others. Having analyzed the goal of BP as well as the set drivers that steer this goal, let shift gears and address the company’s operation management system. BP’s Operation Management System BP Plc is has an existing OMS that forms the basis for a strong and vibrant company. BP embraces this OMS throughout its global branches in an endeavor to provide a centralized system of dealing with operational management. It also promotes the handling of the company operations in an organized and systematic fashion. The OMS captures the diverse scope of the company while integrating all the components of the organization. According to the company website, the OMS integrates health issues, environmental, security, safety, operational reliability, and social responsibility among other issues within the scope of the company (Schniederjans, Cao & Ching Gu 2012). To set out clear the company’s operationalization, BP has set eight key areas of operation that facilitates the execution of its operations. These eight elements have been categorized into four broad categories, that is, people, plant, processes, and performance. Through these, the company is capable of focusing on its goal. Having addressed the basics of BPs OMS, a further keen consideration of each of these eight elements that are captured will be addressed. In addition, each of them will be given a critical analysis to ensure that its role in advancing the operations of the company is clearly spelt out. The OMS at BP is geared towards developing a common operational management plan that can be applied across all the operations of BP. The individual components of the eight-element BP’s OMS are demonstrated in the chart below under the four main categories: People People are very important to BP, and that is why they form a key part of the organization’s management system (BP 2014). BP acknowledges that the organization cannot operate without expertise and adequate leadership; this is the reason why people feature prominently in their system. Under the people, there are two elements of consideration; the organization in general and the leadership. BP believes in having competent leadership with leaders that are visible, are systematic, and have a clear purpose. In addition, the leaders are respectable individuals throughout their organization. On the other hand, the organizational element, the company advocates for an agile and fit-for-purpose employees that are experts in their fields while demonstrating teamwork in their jobs. Plant The second component of the OMS is the plant (BP 2014). This captures the various operations that are based on the assets owned by the company. Two elements addressed here are optimization and assets. The principle underlying the company’s assets is that all the available facilities in the plant serve the operations in which they are designated with a high degree of efficiency. Throughout the life cycle of a given operation, the OMS provides that both plant facilities, assets or floating systems should be capable of promoting value. Optimization of the plant is also a key element. It provides that the company’s operations should be optimized at all times to ensure that the assets are capable of delivering maximal returns as well as boosting their performance. Process The third OMS component is the Process and it bears two elements (BP 2014). The OMS in this case addresses risk and procedures. Risk is inevitable in any given organization. This is the reason why BP had to consider mitigation of risk as a major consideration. BP as a collective responsibility by its entire workforce of ensuring mitigation of risk. The risk levels are identified to be at the level of people, environment, and the competitive performance of the organization. therefore, the employees at the organizations should constantly ensure that the operations that they engage with should ensure both the company’s performance, people, and the environment are not affected negatively (Mcgraw-hill.com n.d). The other element is the procedures; in this case, the company stipulates that it is committed to adherence with procedures that assure safety, reliable operations and compliance with regulations. Performance To crown the BPs OMS is the performance component (BP 2014). What makes an organization to proceed with its activities is the ability to constantly deliver results in their stipulated mandate. Understanding the performance of an organization helps to realize the position of the company and where it is ended in terms of its productivity. Through measures of results, the organization develops an understanding of where it stands and what can be done to ensure that performance is sustained. The other element is the ‘privilege to operate’, which provides that the company is focused on providing the precise agreement with its stakeholders. In addition, it captures the aspect of addresses emerging issues that are raised by the stakeholders from the diverse areas of business. Having addressed the key elements of the OMS that is adopted by BP, we evaluate the strategy in regards to the operational capabilities. Analysis of BP’s OMS A key objective of an organization is to make profit. Performance facilitates the continued presence of a business in a globally competitive world. In this regard, BP through its OMS captures the need for performance. They advocate for having a competent team that is capable of steering the organization to greatness. A culture is created in the organization that gives priority to quality over quantity. Profitability is captured in almost every element of the organization. In one way or the other, the people play a great role in the profitability of a business because they apply their energy and creativity in the delivery of results. On the other hand, the plant is the assets that generate the products that the company sells, therefore it cannot be assumed in the OMS. Finally, the process is a key consideration because it can influence the level of profitability that the company achieves. The OMS at BP bears diverse aspects that give foresights on the company’s present profitability as well as anticipated future. Advantages of BP’s OMS Every organization has its own goals and objectives. For the case of BP, its goal is to provide value or otherwise quality. This is a very important consideration by the company. Businesses are shifting their focus from the convectional profitability mindset to a more integrated approach that takes care of the stakeholder value (Jensen 2000). This integrative approach is geared of ensuring that a business remains sustainable. It caters not only for the economic needs of the business (profitability) but also for the social needs. Most companies in the 21st centuries have come up with corporate social responsibility strategies to take care of this emerging need. BP seems to ahead of the park because its stakeholder value delivery is entrenched in its mandate. The company advocates for the stakeholder value at the expense of only performance and profitability (Sieg 2013). This promotes sustainability, which in essence will promote the company’s position. Another operational capability that the company has embraced is establishing a strong leadership team. The management of an organization is a major predictor of its current position as well as its future in terms of sustainable operationalization. In addition to acquiring the best talented management, the company is focused on developing a pool of talented workforce with high expertise in the specific areas that falls under BPs mandate. Through the BPs OMS, the role of the management as well as the rest of the staff is well defined and sets the bar for the quality of staff the company is obliged to have (BP 2014). Through the creativity of its people BP beliefs in continuous improvement of its processes and procedures. In the next paragraph, we will get to look at some of the prevailing shortcomings of BP’s OMS. Weaknesses of BP’s OMS The eight element OMS adopted by BP has worked for the company and has helped steer the company to the current global position. However, there a few areas of improvement that presents as weaknesses to this model. Firstly, the scope of corporate social responsibility of the company is not well defined. As proposed by Jensen (2000), stakeholder value is very important. In the model of OMS that BP uses, there is an overemphasis on performance while leaving out the need for stakeholder value. The four Ps (plant, process, people, and performance) are more inclined to enhancing the company’s stake. The company could endeavor to introduce another P, which could stand for the ‘planet’- meaning the environment. Other stakeholders such as the customers and suppliers have no clearly defined role in the organization’s operations. Another flaw in the OMS of the company is that it provides a global view, when it is known very well that business operations varies with prevailing culture. For example, in China Guanxi, is a very powerful cultural aspect in the Chinese business sector. This means that the OMS adopted should be allowed some flexibility in order to handle specific business issues that are region-specific. It is also unclear of who should be responsible for the specified operations. The management system is somehow open-ended; it does not designate the roles to specific individuals in the organization. In fact, it calls for a collective effort and teamwork that is impossible to be achieved when there is no clear division of roles. BP operates both upstream and downstream petroleum business operations. The two have completely different needs. The OMS provides the same type of provisions for both businesses. this is not adequately right because the two have many differences that can be handled through different management systems. This means that the prevailing OMS is constrained so that it is capable of capturing the needs of both sides of the divide. Having addressed some of the areas that can be improved on the operations management system adopted by BP, let’s consider some of the changes that can be effected to enhance BP’s operations. Towards a Better BP’s OMS BPs majority operations are quite streamlined and are able to meet the emerging needs of the business while laying ground for a promising future. Improvements on the existing OMS can enhance more efficiency in the business. The first aspect is that the OMS should be based on the country in which the business operates. There are approximately 80 countries in which BP operates, therefore having a country-customized OMS would take care of the specific needs in a particular market. On the other hand, it becomes convenient to develop OMS that are specific when the downstream and upstream operations exhibit their specific OMSs. This specialization would ensure that no important component of the organization operation is left out. It also facilitates the designation of specific individuals that would see the accomplishment of the OMS. The business goal of BP is to provide value instead of quantity. The value of an organization is based on its stakeholders. For effectiveness in promoting stakeholder value, the organization should categorically adopt a stringent OMS that adds value to all the stakeholders of the organization. When the stakeholder’s concerns are addressed, the organization is in a path to wellness; this is because they will continue to be part of the organization. Such stakeholders include the local communities, the suppliers, and the customers among others. An OMS that defines the roles of all these stakeholders would facilitate the realization of the business future. An additional “P” which stands for planet, should be introduced by the organization in its OMS. This would ensure that in their operations especially in transportation and exploration of petroleum, environmental concern should be a top priority. Destruction of the environment is likely to have detrimental effects towards the company’s future. Therefore addressing the issue through its OMS would ensure that the future of the company is somehow enhanced. The inclusion of planetary concerns would also facilitate recognition of the company by environmentalists as well as environmental organizations, which could add a good name to the company. Having established these recommendations, a focus on their implementation will be placed into perspective below. Implementing an Improved OMS for BP The approach of developing OMS based on individual countries can facilitate the realization of better running of operations. The implementation of this can be achieved through a modification of the preexisting OMS to capture country specific requirements. The country manager for each of the countries that the company has branches should choose a review team. The team should develop the OMS that will be reviewed by the global management team which will suggest any possible recommendations and approve. Alternatively, the country manager can opt to have the review being done by a consultancy company hired for the same role. Upon approval by the global management team the OMS can be adopted for the specified region of operation. The second recommendation involves the adoption of a stakeholder value component. This can be enhanced through policy development. The company can enact an environmental policy that will facilitate an adherence to the environmental regulations. In this case, the OMS should adhere to the environmental laws that exist within a specific country. The stakeholders are all individuals that play a role in any of the operations of the business. The OMS should be able to capture all the stakeholders especially the customers, suppliers and the local community. This will ensure that every individual that in one way or the other is affected by the company gets to derive benefits from it. The customers can be provided with discounts and also be provided with promotions. On the other hand the suppliers should get appreciations from the company and also be made part of company’s major events among other stakeholder undertakings. Conclusion In conclusion, Organizational management system is a very important component of any organization. the system adopted by BP had steered it a better performance position while helping the company focus on current and future performance. BPs OMS captures four main areas; performance, process, plant and people which are made up of eight elements. Despite the view this OMS captures most of the aspects that BP requires for its sustainability an additional ‘P’ for the planet is required. References Bly, M (n.d), managing safety and operational risk in BP. Retrieved from http://www.bp.com/content/dam/bp/pdf/investors/Managing_safety_operational_risk.pdf BP (2014), How we operate. Retrieved from http://www.bp.com/en/global/corporate/sustainability/bp-and-sustainability/how-we-operate.html BP (2014), Independent assurance statement. Retrieved from http://www.bp.com/en/global/corporate/sustainability/about-our-reporting/assurance/Independent-assurance-statement.html BP (2014), Our strategy. Retrieved from http://www.bp.com/en/global/corporate/about-bp/our-strategy.html BP (2014), Sustainability review 2013. Retrieved from http://www.bp.com/content/dam/bp/pdf/sustainability/group-reports/BP_Sustainability_Review_2013.pdf Jensen, M. C (2000), Value maximization and stakeholder theory, Harvard Business School. Retrieved from http://hbswk.hbs.edu/item/1609.html Mcgraw-hill.com (n.d), Introduction to operations management. Retrieved from http://highered.mcgraw-hill.com/sites/dl/free/0073525251/886181/stevenson11_sample_ch01.pdf Portougal, V., & Janczewski, L. J (1998) An information system for operations management: Co-ordination and integration.Industrial Management + Data Systems, 98(8), 356-361. 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