An Oil & Gas Refinery Implements Lean Methodology In Rail Operations To Improve Asset Utilization, Increase Loading Capacity, And Meet Customer Demands In Asphalt Shipments
Client Context
- A U.S.-based Oil & Gas conglomerate with annual revenue of approximately $31.96 billion.
- The energy company offers a diverse range of products, including gasoline, diesel, jet fuel, renewable diesel, specialty lubricants, chemicals, and asphalt.
- The company faced regulatory challenges and rising demand for asphalt, necessitating a prioritization of safety and reliable delivery.
Key Challenges
The refinery experienced a surge in asphalt demand, while simultaneously confronting escalating safety concerns, inconsistent operational performance, and inefficient railcar switching and loading procedures. To capitalize on the growing market, the client sought to enhance rail transportation utilization, standardize rail and rack operations to bolster safety and refine training programs, and ultimately increase the throughput of both inbound and outbound products to drive higher margins.
- Regulatory Challenges: FRA violations related to improper hazmat railcar securement after leaving the refinery.
- Congestion costs: Railyard congestion and perceived space shortages lead to higher demurrage and storage costs.
- Inefficient operations: Suboptimal loading/unloading processes and perceived railyard bottlenecks limit loaded railcar throughput.
- Limited visibility: Lack of performance measurement system for logistics performance and daily rail and rack operations.
- Disjointed planning: Switching plan not aligned with load plan, inconsistent and under-communicated daily goals, and lack of problem-solving skills and exception management.
- Inconsistent operations: Poor performance led to reliance on external asphalt sources and limited reliability in meeting future growth opportunities.
Approach & Key Success Factors
ARGO EFESO partnered with the client to create Improvement Teams used to identify, improve, and embed standard processes to ensure the plant was well-positioned to meet the demands of the growing asphalt business and sustain its competitive edge.
The strategy focused on three core pillars of operational excellence: standardized work practices rooted in lean principles, performance tracking with actionable key performance indicators (KPIs), and leadership development to foster systematic discipline and accountability. Improvement Teams focus areas:
Rail Yard Management
Organized rail yard with development of yard Classification Plan. Created a Terminal Clock to switch internal plant ‘customers’ with planned service windows, which led to optimized loading, unloading, arrivals and departures. Improved communication with Class 1 Rail service provider, which led to better adherence to operational plan.
Standard Work
Revamped Standard Operating Procedures (SOPs) and job aids by observing operations firsthand and collecting best practices. Implemented a 5S system at the load rack, resulting in ongoing improvements through regular housekeeping audits. Enhanced safety and communication among operators and across shifts.
Performance Management
Established a system that improved adherence to the daily plan, identification of barriers and tracking of solutions. Improved communication through visual management system with use of Pulse Boards. Keep the team engaged in Pulse meetings and daily handover meetings.
Rail Safe Operations
Developed Rail Operations Manual to define expected safe behaviors on and about the rail operations. Implemented Rail Safety Audits to enable targeted training on areas of focus. Shifted culture for more safety focus through a Peer-to-Peer accountability model.
Results
$1.4M
annual margin impact in additional asphalt loaded shipments
$17M
Capital cost avoidance for additional load capacity
$168M
Average increase in asphalt shipments
0
Railcars purchased from external sources to fill demand.
30%
Average reduction in rail yard car inventory