At a Glance
The client was facing unacceptable monthly gains and losses in product volume which resulted in large settlements with customers. It was also under-delivering products to customers, incurring the associated risk of default. As such, it engaged Renoir to standardize and document processes for greater efficiency and to identify root causes of its existing issues.Â
Background
The client is a petroleum pipeline company in North America, owning and operating one of the largest independent petroleum products pipeline networks and supplying refiners, wholesalers, marketers, airlines, railroads and other commercial end users. It also operates pipelines under contract with major oil and petrochemical companies. In addition to pipeline transportation, the client provides terminaling, storage and refined product distribution services.
The Challenge
The client was facing unacceptable monthly gains and losses in product volume which resulted in large settlements with customers. At the same time, they were under-delivering products to some customers and incurring the associated risk of default. As well as the financial impacts, these problems were impacting its reputation.
Renoir was invited to undertake an analysis of the issues raised. During a two-week period, a series of observational and data studies were undertaken to allow a better understanding of the root causes of the issues. Weaknesses were identified that related to management control systems around various business processes such as non-custody ticketing, gauging, and reconciliation of volumes moved.
Studies were undertaken across several of the client’s pipeline systems to quantify the overall impact of the issues on the organization’s closing and financial reporting processes. The outcomes of the analysis included the roadmap and the business case based on financial and reputational criteria.
Having reviewed the findings, conclusions and business case, the client subsequently engaged Renoir in the implementation project.
What We Did
The Volume Balancing and Ticketing Reconciliation Project lasted 32 weeks with a full-time Task Force of 4 client staff, one Renoir project manager and two senior Renoir consultants. The project followed the Renoir Focus Process® approach.
The analysis identified three work streams for the project:
- The Planning & Scheduling work stream’s scope was to establish responsibilities and standards for the scheduling function with the primary focus on ticketing accuracy, accountability and transitioning in order to develop a proactive, rather than reactive approach, to ticketing reconciliation.
- The Field Control work stream focused on installing process standards, metrics and Management Control systems across the Eastern Systems to improve ticket accuracy and reconciliation of product movements. Here too the project focused on moving to a proactive approach.
- The Report & Action work stream led the effort to integrate the client’s Volume Accounting function with its Scheduling function to ensure consistency and clarity in terms of billing.
Streamline your processes for operational excellence.
Implementation
Implementation commenced with training of the client members of the Task Force. In addition, three Management Action Teams (MATs) were set up to cover the work streams described above. Each MAT was led part-time by an individual with responsibility and accountability for a particular area. They had the authority to implement the changes required. In essence, the Task Force supported the MAT Leaders in developing and installing changes that would deliver the results.
The client took an active role in data generation and management and installed knowledgeable full-time Task Force members who took over the project to address ongoing opportunities.
A successful transition process was put in place for the client to become a metrics driven organization with full accountability. They have moved from no metrics and no review to weekly management reviews and discussions on the key metrics identified.
Processes have been standardized and documented, thus eliminating the variability across the company with the attendant inaccuracies in activity tracking.Â
The Results
Over the course of the project with Renoir, the client saw the following results:
Reduced over/short, thus reducing risk exposure and product holding positions.
Reduced month end processing of ticket data allowing for increased value add analysis and discovery.
Improved month-end processing improved order to cash performance.
Improved customer service through reduction in late and incorrect tickets.
Improve business process efficiency for streamlined workflows.
