A current Nathan team member was involved in a project to identify what was driving up the number of contractors (600 for day-to-day operations) employed at the refinery of a super major integrated oil company, along with the best way to reduce contractor spending over time. The project included all aspects of contractor management at the client’s refinery, and achieving success required delivering on a number of goals.
- Analyze performance against Solomon benchmarks and peer top performer
- Conduct deep dive analysis of contractor performance data for the past three years
- Perform contractor and organization span of control analysis using the tooth-to-tail tool and approach
- Perform Kaizen exercise to uncover contractor optimization opportunities
- Conduct procurement analysis to understand variances in contracting rates for similar work
- Develop implementation recommendations using proprietary tools and methodology
- Complete an organization assessment to identify opportunities to optimize use of employee resources by leveraging cross-functional roles
- Provide the plan and next steps for implementation of solutions, along with initial coaching on high priority items
The team developed over 100 ideas for improvement that were implemented in the highest priority projects leading to a potential cost reduction of ~$9 million annually. An additional ~$3 million in annual savings was identified—~$2 million through the support and professional contractors headcount turnaround budget, and a ~$1 million opportunity identified through procurement analysis. Full benefits were realized six months after implementation began.