Operational Risk Management Management of Change HaJo Lockermann / SAP Joseph Jeffs / Colgate Palmolive October 03, 2012
Product Background and Colgate Experience Co-Presentation SAP Management 1.0 Why MoC? Research and development Test and ramp-up MOC at Colgate Palmolive About Colgate Palmolive Business Requirement Example Types of Change Why SAP MoC? Business Process Flow Customer Validation & Ramp up Expected Benefits HaJo Joe 2012 SAP AG. All rights reserved. 2
Effective Operational Risk Management (ORM) Ensures Operational Continuity Identify, Reduce, Prevent OPERATIONAL RISK MANAGEMENT Focus on: Informed workers Efficient Operations Operational continuity Reduce impacts: People Environment Assets Consistently Execute: Management systems Proactive risk reduction Continuous improvement An effective closed-loop ORM process ensures operational continuity by proactive risk identification and reduction to prevent unwanted events. 2012 SAP AG. All rights reserved. 3
Extensive Field Research Defining a risk-based approach to our facilities is everything Global Steel Producer Effectively managing change across organizational layers is tough Global Leader in Adhesives and Polymers Move from lagging indicators to focus on leading risk indicators Global Leader in Pymers 20 Customers, 6 Site Visits, 2 Partners > 50 Interviews > 3500 Data Points Roles VP, Safety Maintenance Manager Safety Manager Production Manager Director, SAP Applications Director, Business Systems Continuous Improvements Director, Safety Management Systems Director, Product Safety & Health Safety & Sustainable Development Operations Manager EH&S Consultant Risk Management Expert Safety & Health Business Advisor Area Manager for Facility Operations Facility Manager Safety Manager for Gas Operations Countries United States Canada South Africa France Norway Industries Mining Energy Utility (Natural Gas) Upstream Oil & Gas Mill Products Chemicals Food & Beverage 2012 SAP AG. All rights reserved. 4
Change is Necessary So managing the associated risk is essential Change is essential to a company s successful operations: continuously improve processes keep up with industry standards adopt to market requirements execute maintenance work do emergency repair to improve and mitigate identified risks Change Risk 80% of all large scale accidents in the process industries can be traced back to improperly managed change 2012 SAP AG. All rights reserved. 5
Necessary Change Introduces Unnecessary Risk Uncontrolled change leads to safety issues, incorrect purchases, costly downtime and rework Burdensome change processes tempt people to make changes without review and approval. Triggered by tragic events like the disasters of Seveso and Bhopal, the chemical industry has been on the forefront of introducing Management of Change (MoC). Involving the right experts, approvers, and technical staff is time-consuming and errorprone Follow-up actions are often "lost" and never completed, temporary changes unintentionally become permanent Change is handled inconsistently and issues are hard to trace back Today MoC has been adopted into regulations such as OSHA s 29 CFR 1910.119 and industry standards such as the American Petroleum Institute s RP75 aiming to improve process safety. 2012 SAP AG. All rights reserved. 6
Examples of Changes and Possible Consequences Equipment o Larger diameter of pump impeller to increase capacity Over pressure to downstream equipment? Causing pump cavitation because of suction side limitations? Operating above limits of Pressure Safety Valve? Process Control o New digital transmitter replacing analog one Introducing new failure mode? Infrastructure o Change in site roads Impacting emergency response? Maintenance o Postponing turn-around Exceeding allowable intervals for certain equipment? Policies o Changing overtime rules Worker fatigue? Emergency response team staffing? o Introducing low cost bidding process in purchasing Non-standard equipment? PSM system changes o Reclassifying work area Work permits affected? Operations Safety System o New CO 2 sprinkler Asphyxiation risk? o Changing to off-site control room Lack of qualified on-site staff? o Relocating technical staff Re-training required? 2012 SAP AG. All rights reserved. 7
General Steps and Roles Within a Change Process Submit Change Request Review & Evaluation Approval Release Change Request & Drive Change Processes Execute Activities Requester Reviewer Approver Coordinator Activity Owners Person who creates change request Experts or Supervisor Supervisor or Manager Person who manages and drives the change Approver, Reviewer, Task Owner Create change request Describe change Add attachments Fill out customizable questionnaires Check completeness of the request Edit request to improve input Decide if request makes sense Send change request to approver Check request for completeness Edit request to improve input Decide if request is relevant for the Process Reject change request if it is not relevant Release change request Some activities will be proposed automatically Define appropriate activity hierarchy, timelines and activity owners Trigger activities in the defined sequence Execute activities by teams or individuals: Reviews Approvals Tasks Activities can contain checklists or questionnaires Close change request when all activities are completed 2012 SAP AG. All rights reserved. 8
SAP MOC Business Benefits Manage risk and ensure operational continuity Easy-to-use UI that motivates all employees in a plant to enter change requests Highly configurable solution, including templates and rules, to decrease implementation and adoption costs Timely and effective completion of reviews, approvals, and all activities to implement the change (update documentation, training, master data, etc.) option of rules, templates and manual if needed Closed-loop integration with core ERP to reduce data entry, ensure data accuracy, and streamline business processes Consistent and auditable management of changes 2012 SAP AG. All rights reserved. 9
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Customer Engagement with MOC I am impressed by what SAP has done in this space. Your solution could be perfect for us and I look forward to the next stage. Customer Quote Co-innovation Customer Testing Customer Validation 2012 SAP AG. All rights reserved. 13
SAP MoC 1.0 Extensive Quality Assurance Development Test Phase Assembly & Validation Ramp-up DEC JAN FEB MAR APR MAY JUN JUL AUG Customer Test Customer Validation Ramp-up Development Acceptance Test Internal Validation Start of Customer Validation RTC 2012 SAP AG. All rights reserved. 14
Integration Objects and Deployment Options Change Objects Functional Location Equipment Document Info Record Material Purchase Order / Item Change Activities EHSM Risk Assessment Maintenance Notification Maintenance Order Management of Change as a standalone system and connected to other systems SAP Management of Change 100 SAP NetWeaver 731 e.g. SAP ERP 600 e.g. other system e.g. SAP ERP 604 Optional: Deploy Management of Change together with existing ERP system (Minimum SAP NW 7.31 is required) and connect to other systems 2012 SAP AG. All rights reserved. 15
Agenda About Colgate Palmolive Business Requirement Example Types of Change Why SAP MoC? Business Process Flow Customer Validation & Ramp up Expected Benefits
$16.7 + Billion in Sales Products Sold in 223 Countries & Territories Sales by Division 39,000 Colgate People Greater Asia/Africa 20% Hill s 13% Europe/South Pacific 20% North America 18% Latin America 29%
ORAL CARE PERSONAL CARE HOME CARE PET NUTRITION
Management of Change Business Requirement A global system to define, document, and effectively implement a site-wide change control system so changes affecting quality, safety, environment, production and operations, are fully understood, thoroughly evaluated, formally approved, and properly implemented 19
Example Types of Changes Materials Equipment Formulation Procedures People Follow-up from Regulatory Change 20
Business Challenges Why we need it: Documentation of Change Task Follow-up Document Approval of Change Support Standardization Ensure Consistency Decommission various site specific solutions including: - Access Databases - Lotus Databases - Manual Processes 21
Why SAP Management of Change Original plan was to use SAP Quality Notifications SAP Notifications already in use at Colgate Plan was to add additional notification type Allows for multiple task assignment and tracking We were adapting a module designed for one purpose to use it for another 22
Management of Change an exact fit to the business case Approvals Change Requests Task Follow-up Link Multiple Systems Web Based 23
Process Flow Log Change Pre-project Approval Assign Tasks Pre-Implementation tasks Approval to Implement Implementation Tasks The requestor enters information about the change. Issue Proposed Resolution Type of Change Assigns Coordinator Object being changed Project Closure Approval Close Change 24
Process Flow Log Change Pre-project Approval Assign Tasks Pre-Implementation tasks The Coordinator assigns key functional leads to review and approve the proposal to change. Approval to Implement Implementation Tasks Project Closure Approval Close Change 25
Process Flow Log Change Pre-project Approval Assign Tasks Pre-Implementation tasks Approval to Implement Implementation Tasks The coordinator and/or functional leads reviews a checklist of potential tasks. The appropriate tasks for this change are selected and assigned to a responsible individual. Project Closure Approval Close Change 26
Process Flow 27 Log Change Pre-project Approval Assign Tasks Pre-Implementation tasks Approval to Implement Implementation Tasks Project Closure Approval Close Change A subset of the tasks need to be completed prior to the implementation of the change. Responsible parties update the system as they complete each task. Supporting documentation can be attached to the task or change request as required.
Process Flow Log Change Pre-project Approval Assign Tasks Pre-Implementation tasks Approval to Implement Once Pre-Implementation tasks are complete, Functional leads review the supporting documents and approve implementation. Implementation Tasks Project Closure Approval Close Change 28
Process Flow Log Change Pre-project Approval Assign Tasks Pre-Implementation tasks Approval to Implement Implementation Tasks Project Closure Approval The remainder of the outstanding tasks need to be completed to ensure proper execution of the change. Responsible parties update the system in the same fashion as in preimplementation Close Change 29
Process Flow Log Change Pre-project Approval Assign Tasks Pre-Implementation tasks The functional leads make a final review to ensure the change and its documentation are recorded properly Approval to Implement Implementation Tasks Project Closure Approval Close Change 30
Process Flow Log Change Pre-project Approval Assign Tasks Pre-Implementation tasks Once the functional leads have approved the change, the coordinator can close the change request. Approval to Implement Implementation Tasks Project Closure Approval Close Change 31
The Customer Validation Experience 32 Close relationship with SAP product owners and developers Gives them insight into customer use of the product Gives us influence into the future designs Final Review before general release to customers. Not such an early release that it has too many issues. Dedicated developer support for any issues uncovered. Expert SAP guidance in implementation
Benefits of SAP Management of Change Consistency Each site works off of a global task list Visibility Central functions can monitor progress Resources Reduce report preparation time Timely monitoring of task follow-up IT Benefit Leverage existing SAP investment in IT resources and infrastructure for ongoing support 33
Joseph Jeffs Manager Global Supply Chain Global Information Technology 191 E Hanover Avenue Morristown, NJ 007960 Telephone 973-630-1462 E-Mail joseph_jeffs@colpal.com
95% Thank You! Contact information: of the most sustainable companies that are listed on both the Dow Jones Sustainability Indexes and the Corporate Knights 100 run better with SAP HaJo Lockermann Dir., Solution Management hans.joachim.lockermann@sap.com +1.650.576.5643 Joe Jeffs Manager Global Supply Chain Global Information Technology joseph_jeffs@colpal.com 35 2012 SAP America. AG. All rights All rights reserved. reserved. 35
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