By Saleh Karsou with a contribution by Abdullah Boodai
Data-driven research relevant to Just in Time (JIT) in the oil and gas industry is rare. This article discusses the inception of JIT in the automotive industry, whether the JIT knowledge has been transferred to the oil and gas industry, and the extent of that implementation. The importance of management support as one of the potential success factors for implementation of JIT is also a critical factor. As result of the COVID-19 pandemic, many JIT suppliers are also considering old methods of the Just in Case (JIC) approach for continuity and scenario planning to meet future demand forecast.
JIT is defined as “a management pull system, used for planning and controlling of operations that are carried out for producing and supplying the requested products and services at the right time are needed, at the right place, and at the exact desired quantities¹.” The distinctive feature of a JIT system is to eliminate all types of waste, which could be achieved by organizing the entire activities throughout the productions’ system. Additionally, JIT systems work continuously to improve the processes throughout the entire supply chain within the company. The big difference between a JIT system and JIT is that JIT focuses on the complete elimination of waste. This is defined as anything that does not add any value to the services and products.
Moreover, JIT can be described as a set of elements that work seamlessly together to achieve an innovation method to conduct business. Such elements are —but not limited to — eliminating waste, reducing tool setup times, and preventative maintenance, which leads to production schedule flexibility.
There are various assumptions out there about JIT. This includes that it is a rigid system that provides no flexibility to the production line and workers, and that it’s a production concept used only in the automotive assembly plants and production lines. Not all these assumptions ring true. Car manufacture Toyota used JIT for decades as a result of continuous methodical and intentional efforts supported by management at all levels. There have been some instances where JIT is used in the oil and gas industry. This is mostly attributed to automotive consultants taking on roles in the oil industry, and thus transferring the knowledge.
JIT is based on a short, slim production line, which allows companies to respond to the fluctuating orders from the market.² Not investing in progress and structured initiatives such as JIT can be costly to a company’s market share and has the potential to negatively impact consumer confidence. This emphasizes that the need for JIT is dictated by the ever-changing market demand. For example, Ford Motor Company had forecasted 900,000 units of production for the 2007 model F-150 truck. As gas prices increased, these trucks became less attractive to buyers. Trucks were parked in huge lots waiting for dealer orders. This resulted in endless quality problems, such as dead batteries and flat tires.
Imia² highlighted a revolutionary way of thinking: that, in a system that uses JIT, the only warehouse “inventory” is the truck carrying products. He states that he often comes across a narrow understanding of JIT, one which focuses solely on supplier delivery issues. He also contests that JIT must cover the entire value chain from the origins of raw material to the end user. Furthermore, research has proven that JIT helps improve bottlenecks in the system through the implementation of robust preventive maintenance, waste elimination, and continuous improvement programs.
Research from Hokoma¹ for the surveyed oil and gas company revealed that under the category of “The extent of the implementation status of the JIT,” the “Company is familiar with JIT” scored the lowest mean value of 1.06 out of 5.” Further investigation into the same category showed that implementing key JIT elements, such as waste elimination, preventative maintenance and continuous improvement, were used. The implementations were in the range from medium to acceptable levels. According to Hokoma¹, this indicates that there may be a modest implementation levels of some JIT elements. It is clear that the surveyed oil and gas company is practicing these key elements without knowledge that these elements belong to a JIT system.
A quick examination of the JIT practices at Saudi Aramco revealed that some form of JIT is practiced. For example, in the pipeline purging activities, nitrogen gas is usually procured for injection into the pipeline to purge it from any leftover hydrocarbons. The required nitrogen is usually ordered in large quantities on an as-need basis prior to the start of the purging activity. The material is either picked up from the manufacturer by.
Another example of a JIT used as preventive maintenance is for pipeline reconditioning activities, where sleeve installation is often the recommended method for metal loss repair. For this, the required sleeve size is ordered and delivered JIT upon the identification of the pipeline defect, depending on the pipeline diameter and the defect length. The sleeves are then ordered and delivered to the contractor shop for fabrication and installation. This a demonstration of the agility of the ordering system within Saudi Aramco.
On the national level, many opportunities present themselves in which results can be aligned with national goals such leading transformation through lean practices and innovation. In the oil and gas industry, as well as renewables, there is an opportunity for manufacturers and suppliers to use the latest technologies to implement JIT in supply chains and material delivery. This is accomplished with manufacturers having direct access to local inventories of spare parts; establishing a “pull” system where material is delivered upon request with a considerable reduction in lead time. This starts with having suppliers’ manufacturing capabilities in the proximity of the manufacturers and oil and gas producers like Saudi Aramco. This will also be governed by well-defined contractual agreement to invest in the JIT concept.
Middle management also have an important role to play in applying JIT. During my employment at Federal Mogul, it was clear that the intent of applying JIT in the Van Wert plant was to reduce cost, where management at all levels were committed and empowered to the implementation and success of the JIT initiative. In the book “The Machine That Changed the World,” production leaders had full authority from the plant manager to improve the system. They worked as a team toward a common goal, where input of many departments and divisions was vital to fulfill and meet customer demands and improve customer satisfaction.
Hokoma’s¹ research states that there are three reasons for not implementing JIT in the oil and gas industry as given by the respondents at different management levels. This includes unfamiliarity with JIT practices (for about 42% of respondents). Secondly, JIT does not fit well with their companies (for about 21% of respondents), and thirdly, lack of top management support (for 14.0% of respondents). This data supports that the lack of JIT transferability and implementation is a result of management unfamiliarity and lack of support to newly introduced initiatives such as JIT.
It is worth noting that in light of the consequences of the COVID-19 pandemic, which resulted in supply chain constraints and major delays, many JIT suppliers are considering old methods of a newly revived JIC approach for continuity and scenario planning to meet future demand forecast. JIC is the traditional strategy of conducting supply chain management where goods are produced and stocked in anticipation of a surge in demand or another restrictive pandemic. So, could this mean the end JIT? This can be a proposed scope of future research.
The scholarly publications on the topic of JIT in the oil and gas industry are rare. However, the literature available demonstrates that there has been some presence of JIT key elements such as preventative maintenance and waste elimination. This is shown in Hokoma’s¹ research paper and my own research within Saudi Aramco. The commitment of management is key to the implementation of JIT key elements as shown in the literature review. This paper can serve as basis for further evaluation and formal implementation of the JIT initiative into the oil and gas industry.
- Hokoma, R. A. (2016). A WAY FORWARD FOR IMPLEMENTING JUST-IN-TIME TECHNIQUES WITHIN THE LIBYAN OIL AND GAS INDUSTRIES. Journal of Engineering Research, (21).
- Imai, M. (1998). Will America’s Corporate Theme Song Be “Just in Time”? The Journal for Quality and Participation; 21, 2; ABI/INFORM Global, pg. 26.
About the authors
Saleh Karsou is the Operational Excellence Engineer at Saudi Aramco. Abdullah Boodai also works at Saudi Aramco as a Reliability Engineer.