Where to focus optimization efforts in times of crisis?

The first reaction of any organization to a crisis is to cut activities and they are not always the best ideas; the only thing that is being done is to expose the organization and postpone expenses that sooner or later will have to be done. In many cases, they even lead to investments that could have been avoided if the decision to cut had not been made. The analysis of cost reduction must obey judicious exercises in the value chain and, secondly, questions must be answered that usually nobody wants to ask for fear of the executives in charge and that are not the subject of this document.

I would not recommend, for example, stop doing maintenance to the equipment, instead I would recommend developing judicious exercises of Maintenance Plan Optimization, identification of bad actors, identification of the specifications of the spare parts, so that you can have alternative suppliers for the spare parts and not necessarily the reference indicated by the manufacturer of the equipment, development of reverse engineering in some of the components, bulk consumption of supplies and implementation where possible of Condition Based Maintenance.

Nor would I recommend contracting maintenance 100% with an external company, as in many other situations, it is best to have an intermediate combination, where the strategic activities are the responsibility of the organization's employees and routine activities under the responsibility of external contractors. I believe that where possible, studies FMECA (Failure Mode and Effects Analysis), RCA (Root Cause Analysis), RCM (Reliability Centred Maintenance), ADM (Maintenance Audits), ACRB (Analysis Cost Risk Benefit) and any other that is part of the Diagnosis, Planning, Monitoring and Improvement of maintenance must be developed by personnel of the organization. Of course, the organization must guarantee that its personnel have the competences or, if required, hire personnel that have them. The problem with hiring these studies is that they are not always carried out with the same rigor, knowledge does not remain in the organization and they are much more expensive. I do not recommend having a specialized group in these studies within the organization that generates a kind of elite, I believe that the organization should have suitable people from the maintenance group or from other groups that are duly certified, who act transversally and who have incentives of an economic nature due to their development.

The aforementioned and many other things that should be rethought within organizations when it comes to reducing costs, contradicts another one of the decisions that are made first hand when it comes to reducing costs and that is the cut of training programs. In my opinion it is a serious mistake, because the ideal and well-trained people are the ones that generate ideas on the front lines of the basic operations, different from those that are obviously generated at the strategic level, where if the cut of programs, projects and modification of portfolios. It is very curious because most of these trainings are offered free of charge by the equipment manufacturers and the costs for the organizations are limited to plane tickets and travel expenses and the benefit is to have personnel who know the equipment well, its spare parts, its maintenance plans, its operating windows, etc., which is what allows you to optimize costs and have new ideas on how to do it in a smarter way. Having personnel in the maintenance area who follow the maintenance instructions in the equipment manual to the letter can be very expensive. It should be noted that in general the equipment is manufactured for standard operating conditions, at sea level, with fuels of certain characteristics, etc. and the particular situation of an equipment is generally very different and if the personnel do not have adequate training, this will impact costs dramatically over the life cycle of the asset.

Ideally, at the management level and at the operational level, an organization should not have personnel who do not have decision-making power within their office, because this leads to someone doing the work and another receiving merit and of course these are costs that they have no reason to exist; If the person in charge needs someone else to do their job, the organization is missing something. The approval of assistants should be at a level that really guarantees the assistance function and not the development of activities that are the responsibility of the position in question. Organizations are not always vigilant about the support staff they are hiring and this is a source of optimization worth checking out.

Corruption is another front that must be analysed when it comes to reducing costs and that is rarely faced as it should be. In my opinion, this is a Human Talent responsibility that does not do its job during the personnel selection process, generally product of external actors. It is not possible to have sufficient controls to avoid corrupt actions, and instead they do impact the organization, making it more bureaucratic and therefore more costly to operate. Corrupt people can always be identified, firstly because they cannot stop being corrupt, they spend excessively because they lose the dimension of what they do and every day they increase their level of corruption. Corruption is not fought with controls, it is fought by being firm with sanctions, hiring people with principles and developing values within the organization.

The general requirements that are made during the contracting process should be reviewed, it is very common for example in the Oil & Gas industry to require that vehicles be diesel-powered. The truth is, no standard-built vehicle is intrinsically safe and anyone used in the midst of an explosive atmosphere will cause an accident, then this requirement impacts costs without having a technical foundation to back it up. Fire retardant clothing is also very fashionable, which should be for personnel who get involved during an emergency, but should not apply to personnel who carry out other tasks that by their nature degrade the material after a few weeks.

Finally, I recommend reviewing the requirements that are made in contracts with regard to policies, insurance, fiduciary commisions as a guarantee for the execution and assurance of the terms of reference and the contract itself. The organization should evolve to schemes with more accompaniment to the contractor, so that it can increase its level of confidence and reduce contracting costs.