Just like any other industry, oil has its own metrics measured through what is called oil refining KPI. KPI stands for Key Performance Indicator and this is one of the most effective ways of determining if targets are met, not only in terms of quality, but also in sales. KPIs are data driven and these numbers support findings so action plans for improvement are not blindly formulated.
Oil refining KPI is a quick snapshot of how the operation is doing in terms of productivity. The things measured are the outputs indicative of how the business will prosper. In a glance, top management can see how performance is driven across the company, whether it is from a local, regional, or global perspective. The frequency of measurement may be daily, weekly, or monthly. Many companies, though, have quarterly KPI review during the QBR or quarterly Business Review. This is when bridge goals are set on a weekly or monthly basis.
During a KPI check, numbers and data are analyzed objectively to determine the root cause of the problem. This is also when action plans are formulated that will target specific problems and improve an area that needs help. Stakeholders are then identified since this is customer centric. Goals and expectations are then set from top management down to rank and file employees.
In oil refining KPI, one of the most seen of all metrics is exploration and development. The metric indicator is money. Of course, the ultimate result of the investment is the cost per barrel of oil. Other than that, the ultimate goal of exploration is finding oil itself. Significant amount of money will be put to waste if the exploration did not yield results. After finding oil, development ensues. Licenses for business are granted and infrastructures are built.
Another way of measuring performance in the oil industry is through its marketing, which has something to do with the quality of the end product or output. There is practically no sense exploring and developing if the output of the process does not meet the specification of end users or consumers. It is then a necessity to first identify the customer before venturing into business. Crude oil has a lot of by products, such as gasoline and diesel. By identifying what type of customer is targeted, the quality of the process and the output itself will be streamlined. Thus, marketability of the output would not border on quality anymore. Rather, it would be on availability and letting the people know that the product exists.
Of course, sales figures are the metrics that will not go away. At the end of the day, a company’s ultimate measurement of its value is profit or income. All AFIs or areas for improvement are factored in to identify what causes poor sales. It may have something to do with business logistics, productivity, training efficiency, machine, or man. In most cases, businesses shut down because they have no effective methodology of metric measurement in place. Thus, an effective and scientifically proven oil refining KPI should be in place to ensure longevity and profitability of the business.
Source by Sam Miller