Disruptive Technology: ApplyingProcess Innovation to the Resourcing of Labour

UWA BUSINESS SCHOOLJOHN WATSONUWA BUSINESS SCHOOLJohn.Watson@uwa.edu.au

DANIELLE STOWUWA BUSINESS SCHOOLMarketing Honours Student

ELENA LIMNIOSUWA BUSINESS SCHOOLElena.Limnios@uwa.edu.au

Mainstream Conference PerthEsplanade Hotel, Freemantle, Western Australia14 & 15 March 2016

Research Funding

AusIndusty

Shutdowns Australia

UWA

Benchmarking Study• Resourcing process for

maintenance and shutdown projects

• Impact of process innovation through the use of new technology

• Potential for disruptive innovation- a new paradigm

Contents• Innovation Explained• Industry State of Play: Current Resourcing Practices • Project Aims and Methodology• Participation in the Benchmarking Study- What is in it for me?• Disruptive Technology Initiatives – Shutdowns Australia Pilot Study • How do I get involved?

Overview

• Product Innovation:– Consists of changes in product attributes with a change in how the

product is noticed by consumers

• Process Innovation:– Consists of changes regarding the product or the service production

process– It does not necessarily have an impact on the final product but produces

benefits in the production process, generally increasing the productivity and reducing costs.

Innovation is..

… the successful exploitation of new ideas

Product Innovation Types

NEWN

ESS T

O COM

PANY

NEWNESS TO MARKET

Novel

ty to C

ompan

y

Novelty to Market HI

HI

Cost Reductions

(11%)Repositionings

(7%)

Additions to existing product lines (26%)

Product improvements (28%)

New-to-the-world

products (10%)

New product lines i.e. new-to-

the-company products (20%)

LOWLOW

• A combination of facilities, skills and technologies that are used to produce and bring to market products or services

Process Innovation- Why?A process is:

Improve output qualityReduce product waste

Reduce processing timeReduce processing cost

Improve process efficiencyImprove process productivity

Reduce health hazards and improve safetyTo deliver product innovation

In response to technological advancement

Asset owners seeking cost reductions in labour supply• Shutdowns typically represent 60-80% of the fixed plant maintenance budget for

heavy industry, oil and gas, mining businesses• Resourcing (labour) makes up a large proportion of shutdown costs• External vendors are relied on for short-term labour supply and are under

pressure to reduce the cost of resourcing activities• Constant pressure to reduce overhead/margin

– What drives cost per allocation?• Impact of project size, communication timeframes, rework, etc

– What is the relative impact of different activities performed on cost?• Searching through emails, assessing applications, obtain/verify

certs/tickets/licenses, updating database, etc

Supply chains are under pressure to deliver operational efficiencies and cost reductions particularly in terms of resourcing overheads

Industry State of Play

Current labour resourcing practices

• Manual processes and low-tech communication methods

• Systems unable to or unsuitable for supporting those responsible for sourcing and engaging shutdown / project resources

• Duplication of data across the industry• Frequent failure to meet resource

requirements• Waste from ‘over-resourcing’ shutsIndustry needs to innovate, collaborate and strive to disrupt this unsustainable status-quo

Industry State of Play

Inefficient, costly, unsustainable? 50% Failure Rate

in Fulfilling Resource Requirements

95% of more of Resource Requirement MetLess than 95% of Resource Requirement Met

Resourcing fail

Resourcing success

Industry at a Glance

IBISWorld Industry Report N7211, March 2016

“Industry revenue is forecast to increase at an annualised 2.5% to reach $12.4 billion. This growth will be driven by increased business and employment activity, a strengthening labour market in most years, and the provision of a wider range of online employment placementservices.”

Aim:

Benchmarking Study

• Understand the true costs of labour supply, making waste visible• Examine the disruptive innovation potential of online engagement/

employment/ database platforms

Activity Based Costing (ABC) Method

Activity Flowcharts for “Business as Usual” vs “New Process”Determine cost centres, employees to monitor their times against these cost centres for 1-2 projects

Interviews with employees engaged in the resourcing process as well as labourers–qualitative assessment of efficiency and opportunity for improvement

Benchmarking Report

Flowcharts Interviews/SurveyTime allocated to Cost Centres

Industry Partners- What’s in it for me?

• Assessment of your cost structure identifying key cost centres and their relative contribution

• Identifying areas where efficiencies could be achieved• Benchmarking against other similar organisations (where you stand)• Your business’ data to be kept as per the UWA Research Ethics process,

your business will not be identified without your approval in any reporting or publications

• No cost to industry partners- limited opportunities for participation• Priority will be given to Vendors or Asset Owners that agree to use the new

process (Shutdowns Australia) in at least one project- for comparison of cost structure with their baseline benchmark.

Asset Owners or Vendors

UWA Pilot Study – Shutdowns Australia A Comparison of Conventional Resourcing to Online• New cloud-based technology for sourcing

of shutdown and project labour• Online access and communication

between employers and workers• Online management of compliance

documentation for trades/labourSecure portal of identification, trade papers, certificates, licences, inductions

• Greater visibility of upcoming shutdown activity

• Worker engagement and empowerment through online community, greater control of work preferences and visibility of work available.

Disruptive Solutions Industry Partner

shutdownsaustralia.com

Be Part of the Solution• Communicate upcoming shutdown activity • Provide greater visibility to the workforce• ‘Invite only’ forum for asset owners to share industry initiatives and best

practice (LinkedIn Group)• Nominate key vendors to participate in the benchmarking study

Join the Shutdowns Australia Linkedin Group

Next Steps

Calling for Industry Participation

Next Steps

Understand the true costs of shutdown / project labour resourcing• Asset Owners • Key vendors nominated by Asset Owners• Maintenance and Shutdown Contractors• Labour Hire and Service Providers

Contact Information Dr Elena Limnios Matt SmithThe UWA Business School Shutdowns Australiaelena.limnios@uwa.edu.au matt@shutdownsaustralia.com