Operational Excellence at Phillips 66
by Hugh Pickens, Ponca City Oklahoma
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The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.
Major Sections of this report on Phillips 66 include:
Contents
Master Index of Articles about Phillips 66
by Hugh Pickens, Ponca City Oklahoma
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The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.
Major Sections of this report on Phillips 66 include:
Operational Excellence
Greg Garland told financial analysts on April 9, 2012 that operational excellence would be a focus at Phillips 66 and part of his strategy to grow the company. "We'll always focus on operational excellence. We'll focus on building a great organization to execute our plans."[2][3][4]
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips 66 has a long legacy of being good operators and of operational excellence. "I have a real passion for this. It's the foundation that provides the opportunity to create sustainable value growth. I'm proud of our progress here. We have more work to do."[5]
In mid 2012, Phillips 66 rolled out its five-point strategy to its employees and Tim Taylor and other senior leaders of the company have hosted dozens of town-hall meetings to convey the strategy to workers across all levels of the organization. "Taylor approaches each town-hall gathering in three steps," wrote Morey Stettner in Investor's Business Daily on June 21, 2013. "If it's held at a refinery, he begins by huddling with the site managers to review operating metrics such as safety performance. He applies 'operational excellence' principles that encourage continuous improvement. Second, he visits control rooms to get an overview of the operation. Chatting with employees, he learns about different aspects of their job and the challenges they face. Finally, he hosts town halls. Between 100 and 200 employees usually attend. After Taylor's opening remarks, he engages in a lively Q&A." Taylor and other top executives at Phillips 66 use cross-functional teams to generate ideas. For example, an internal group of 10 to 15 crude oil buyers, logistics experts, refinery technicians, salespeople and others proposed that the company use railcars to transport oil. Thanks to the team's analysis, the company announced in June 2012 that it would buy up to 2,000 railroad tank cars to ship oil from inland shale fields to coastal refineries. One year later, the use of rail is already proving a winner in helping Phillips 66 boost results. "We were an early mover in rail and I'm proud (our team) came up with that," Taylor said. "Without them, we would not have made progress as rapidly as we have."[6]
Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Operational Excellence is job one for Phillips. "We have to get this done right. We believe that we protect and enhance shareholder value when we do this well. When we send every employee home safely every day without getting hurt, when we operate the processes in control, when we operate them reliably, when we reduce our environmental footprint and we manage our costs well, we create value for the owners of our Company."[7]
Components of Operational Excellence
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that operational excellence is holistic in our view and includes personal safety, process safety, environmental excellence, reliability, and cost management. "It's all those elements wrapped together."[8]
Personal Safety, Process Safety, and Environment
Reliability
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that reliability has improved over the past couple of years. "We operate above industry average rates."[9]
Cost Management
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that part of Phillips' heritage is stringent, prudent, detailed cost management. "We have all grown up in commodity businesses. We understand the importance of cost, cost structure, and managing those costs every day."[10]
August 1, 2012: Plan to Reduce Controllable Cost by 5% with Optimize 66 Program
Phillips was asked by Paul Sankey of Deutsche Bank during their second-quarters earnings report on August 1, 2012 about the $4 billion of controllable costs and if Phillips had set a target for a 5% reduction in controllable costs for around $200 million of savings. "Yes. Controllable cost, we put a number out there $200 million. We think it is a good number," said Garland. "I frankly think we will do better than that. We tend to always exceed. We have got a program we call Optimize 66 that we are working across this budgeting process, which we are in the middle of now. And people are looking at all avenues to improve efficiency and reduce costs. And, frankly, [the boys] have come up with some great ideas from their early work that I have seen. So I think that the $200 million is a good number for a target."[11]
References
- ↑ Koch Industries. "koch Companies Striving to Achieve Operational Escellence." March 25, 2003.
- ↑ ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
- ↑ ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Investor's Business Daily. "At Phillips 66, Employee Teams Generate Great Ideas" by Morey Stettner. June 21, 2013.
- ↑ Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012
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Master Index of Articles about Phillips 66
by Hugh Pickens, Ponca City Oklahoma
<html></html>
The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.
Major Sections of this report on Phillips 66 include:
