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Invoice 'noise' gets order of das boot

dasboot

How the Silent Running project minimized misunderstandings between accountants and operational staff responsible for moving refined product around the UK.

Submarine crews under attack have to work in silence using sign language and a thorough knowledge of colleagues' roles.

This tactic, known as silent running, struck a chord with Dick Talboys, a pricing and supply manager with BP at the supply and logistics head office in Milton Keynes. In early 2001, Talboys volunteered to lead a programme that would radically alter relationships between BP people moving refined products around the UK and accountants matching up orders, deliveries, invoices and receipts.

Moving refined product around the UK is the responsibility of the supply and logistics team. Supply plans bulk shipments from BP refineries at Grangemouth and Coryton to BP customers, while logistics run the terminals and road tankers that deliver products to service stations and other customers. They are non-profit making departments with income and costs allocated to relevant business units (BUs) such as retail, marine and commercial transport. But matching up the thousands of invoices generated is a complex task.

Each December, when BP's financial year ends, public holidays and unpredictable weather would cause huge discrepancies in predictions made by accountants and operational planners. This would lead to 'noise': misunderstandings between the BUs. Hence the adoption of the submarine metaphor for the project and the name 'Silent Running'.

The supply and logistics team were a constant presence on the board report, an auditor statement of risk areas to BP's board of directors. 'Getting off the board report was a priority. Clearly there was something wrong in our system,' says Talboys. Although the accounting methods used were correct, they had not kept pace with the changes in the various BU's reporting the figures.

External consultants from Cap Gemini Ernst & Young were recruited to help identify and manage both the process and people's expectations of how improvements could be made.

As Talboys recalls: 'There were around 70 of us in one workshop. We had a series of difficult discussions, and came away with a better understanding of each other's needs.'

Rather than pour more systems onto teams with highly structured working methods, Talboys' team focused on getting the accountants to understand the needs of operations, and operations to understand the requirements of their financial colleagues. 'Problems seemed to occur in the 'gap' between departments,' says Talboys. 'But once we found a way to look at the problem from all points of view, the solution popped out.'

Initial progress slowed as most project team members already had a full-time job. Lumina Consulting, specialists in change projects, were called in to solve this. 'We found ways to engage people and to review work processes in parallel with existing methods.

As Silent Running progressed, BP accountants and operations staff gained insight into roles and interconnections, dramatically reducing 'noise'. Examples of success include Air BP receiving just three invoices from supply and logistics each month, instead of the usual 70, and stock accounting closure at terminals being completed in half the time.

The Silent Running file was closed in March 2002 leaving a support system, co-ordinator and a programme of follow-up meetings in place. Talboys hopes the project can be repeated in Europe where systems and processes exist from previous BP joint ventures and newly acquired companies.

The team's work has been recognized with a performance management and control commendation award from Reg Hinkley, chief financial officer for integrated supply and trading (IST).'

Words: Bruce McMichael Print Editor: Michael Rook This e-mail address is being protected from spam bots, you need JavaScript enabled to view it +44-020-7496-4017 Print Deputy Editor: Oliver Broad mailto: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it +44-020-7496-4819

Updated 16 June 2003

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