The natural gas supply chain involves huge numbers of people, equipment, and vehicles. The movement of fluids, materials, and heavy equipment is constant and inherently dangerous. For one large and growing energy producer, this led to an unacceptable number of vehicle-related accidents-resulting in increased injuries, operating
costs, and risks.
Driving Safety and Savings in Natural Gas Logistics
Historically, carrier selection, ordering, scheduling, safety requirements, and carrier performance were managed in the field by operational personnel. With hundreds of independent field sites across North America, the company experienced wide variations in efficiency, cost, and safety.
The situation had spiraled beyond concerns over inefficiencies. After experiencing a serious accident at one of its business units that reflected poorly on the company, the leadership team intensified their attention to safety. This demanded that they critically examine how to improve safety in every aspect of the operation, including logistics, without accepting a significant increase in cost.
The company engaged Tenzing to take a closer look at the situation and develop a strategy to address this chronic and complex problem.
Getting to the root of the problem
A joint team of Tenzing experts and key client representatives started by visiting affected field locations and conducting on-site reviews of the processes in place. The team gathered information and perspectives from 75 individuals at 10 sites across the company.
Common problems included:
- Minimal planning, resulting in sporadic routing of vehicles and minimal notice given to carriers for deliveries and pick-ups.
- Different pricing models by site (ranging from 10 to 22 cents) to pick up identical barrels.
- As many as three entities scheduling carriers, each with limited visibility of the others, thereby preventing coordination.
- Misconceptions about safety based on carrier size. Although large regional carriers were perceived as lower risk, the “local guys” were slightly better.
- A mistaken belief that recent cost-cutting efforts caused the increase in safety incidents – and that paying increased rates would fix the problem.
The primary factor impacting the number of accidents was the number of miles driven. Reducing miles driven was the key to reducing costs and accidents, a double win for the company and their customers.
The team formed a three-point strategy to bring logistics into alignment with overall performance goals. The tactics applied to achieve this mission included better route planning, ensuring consistent commercial terms, aligning performance metrics, and steering work to a core set of preferred carriers that demonstrated a safety-oriented culture.
GOAL #1: SAFETY
Reduce total vehicle accident rates by 10-20%
Results: Improved safety of up to eight fewer major accidents a year.
GOAL #2: SERVICE
Avoid any major negative carrier impact to operations.
Results: Mileage reduction of up to 1 million miles a year.
GOAL #3: COST
Reduce annual expenditures by 5-15%
Results: Cost reduction of up to $21 million a year.
How Tenzing Brought Value
Adapting prior experience with logistics to this specific situation and client objectives.
Analyzing information from interviews, research, and past experience to develop viable strategies and tactics.
Engaging with client representatives to help ensure the understanding and acceptance of the action plan.