Company maturity models: Application to supplier development program in oil&gas sector

Journal of Industrial Engineering and Management JIEM, 2018 – 11(2): 187-195 – Online ISSN: 2013-0953 – Print ISSN: 2013-8423 https://doi.org/10.3926/jiem.2500 Company Maturity Models: Application to Supplier Development Program in Oil & Gas Sector Jabier Retegi Albisua 1,2 , Juan Ignacio Igartua López 1 1 2 Mondragon Unibertsitatea (spain) Orkestra - Basque Institute of Competitiveness (Spain) , Received: November 2017 Accepted: February 2018 Abstract: Purpose: In order to achieve excellence, outsourced maintenance contractors in Oil&Gas sector play a key role due to the important impact of their task on security, availability and energy consumption. This paper presents the process followed in order to implement a Supplier Development Program in a refinery using Company Maturity Model (CoMM) and the results obtained in three cases validating the method to obtain a strategic improvement project medium term grid. Design/methodology/approach: The methodology followed consists of constructing a CoMM capturing the knowledge existing in the refinery and applying it with three supplier improvement teams. Findings and conclusions have arised through an observation of the three processes and extracting common conclusions. Findings: The resulting CoMM has been used for self-assessment by three suppliers and has demonstrated its potential to define a medium-term improvement project road map validated by the customer. Furthermore, during the design and application processes, the contribution of CoMMs to the SECI process of knowledge management has been observed. Practical implications: The use of CoMMs in a service contractor context can be applied in other sectors. It contributes to alignment of targets between the supplier and customer companies and to knowledge sharing inside both firms. Originality/value: Maturity models in many transversal fields (CMMI, EFQM, BPMM, PEMM, etc.) have been thoroughly studied in the literature. Less effort has been made analysing the case of using maturity models constructed and implemented by a company for its specific purposes. In this paper, the process followed by a company to establish a Supplier Development Process using CoMMs is described. Keywords: maturity, knowledge, oil, supplier, refinery, KM 1. Introduction European refineries are going through a challenging period during the last years because of international competition and the rising effects of progressive low carbon economy. Global installed capacity is increasing while refinery number is decreasing. New refineries have more capacity and newer and more efficient technologies. Even more, energy and manpower costs are lower in other regions of the world than in Europe. From 2008 to 2015, 54 refineries were closed in OECD countries and 19 in West Europe countries. -187- Journal of Industrial Engineering and Management – https://doi.org/10.3926/jiem.2500 This situation forces European refineries to intensely search for competitiveness. In spite of oil price and margin evolution, that means the need of new technologies installation that allows a better refinery configuration and the search of improvements in efficiency, particularly availability-utilization performance and energy efficiency. The need of excellence in refinery performance must be part of the culture of people working in the refinery. Irrespective of the affiliation of people, the need of being part of a unique task of transforming the site in a world class business must be shared by all workers. This requirement of competitivity affects contractors executing maintenance activities which are directly involved in availability and utilization targets. Contractors should improve their service to allow the refinery to reach its targets and this evolution must be coherent with the changes happening inside the site. That’s why a Supplier Development process aiming to define a 3-year improvement project framework for the contractor is a necessary step to reach the targets. Of course, the definition of the projects to be developed must be made carefully to ensure the support to the efforts made inside the refinery in the transformation of the industrial culture and performance. The aim of this article is to explain the project of applying CoMM methodology as a deployment of strategic targets and establishment of a supplier development process in line with it. The process was implemented in close cooperation with management staff of the refinery. Furthermore, during the design and application processes of the CoMM, the contribution of CoMMs to the SECI process of knowledge management in an intercompany context has been observed. 2. Literature Review Supplier development programs are usual in many sectors. Automotive companies started implementing those programs decades ago. In spite of several methodologies, the main intervention processes are well known. This is not the case in Oil&Gas sector. Supplier development programs implemented by big companies are not so common and are mainly oriented to regional development or social responsibility view and not so much to the specific target of competitive improvement. Moreover, the special context of service suppliers needs a specific approach for the design of the supplier development program. The authors considered that Company Maturity Models could be a suitable method to implement an improvement process for the suppliers. The maturity model method has been used during the last decades in order “to define directions, prioritize improvement opportunities and guide cultural changes” (Becker, Niehaves, Pöppelbuß & Alexander, 2010). Maturity models have covered several aspects of the organizations as quality systems, maintenance, production management, human resources management and others. Maturity can be defined as “a measure to evaluate the capabilities of an organization in regards to a certain discipline” as presented by Rosemann and De Bruin (2005). In Crosby (1979), a quality management maturity model establishing five stages in an organization’s maturity and six measurement categories is proposed. In Maier, Moultrie and Clarkson (2012), a taxonomy of maturity grids is presented and a review of the main maturity models is listed specifying their description, process area and maturity levels. Nevertheless, as Mettler (2011) indicates, the use of maturity models are criticized by some authors mainly because of their assumption that excellence can be directly achieved by the execution of the identified actions in each one of the maturity factors, or the overemphasis on the process perspective keeping aside employees’ capabilities. Some authors as Biberoglu and Haddad (2002) estimate that maturity models are not sufficiently based on theoretical basis and that they rest on experiences that have demonstrated favorable results. Pérez-Mergarejo, Pérez-Vergara and Rodríguez-Ruiz (2014) note that PEMM (Process and Enterprise Maturity Model) of Hammer (2007) could be the (...truncated)