A Lean approach to information management in Statoil

Aarhus University School of Business and Social Sciences A Lean approach to information management in Statoil Mariann Morvik August 2013

i ABSTRACT In recent years lean has been applied outside its traditional use in manufacturing contexts. This is due to its beneficial effects of enterprise wide improvements. This paper describes and discusses how lean can be applied to information management. Lean information management is considered to involve activities which add value to the information and enable valuable information to flow to the information user. The information user is in this paper defined as the information consumer. The definition is used as a working hypothesis to uncover if value should be defined by the information consumer or the end user of information s perspective in the context of lean information management. The subject of lean information management has not been extensively studied and few publications have been published. This paper discusses the validity of lean principles in the context of information management. Waste definitions from traditional production environments of transport and inventory are found to lack bias in the context of information management. The principles of lean are applied to Statoil s information management practices which support distribution to offshore installations. It is found that a lean philosophy, often described as lean thinking, can improve the way information is being managed. By focusing on value perceived by the information consumers, waste in the current information management practices can be identified and eliminated. Focus on value creation will also provide an information system with the information and functionalities which are valued by information consumers.

ii ACKNOWLEDGEMENTS This work has been carried out under the supervision of Anders Thorstenson, at Aarhus University. His contribution in the development of the problem formulation has been highly appreciated. I would like to thank Oddmund Fuglestad, leader of operational procurement drilling and well Stavanger for helping me in the process of data collection. I would especially like to thank the interview participants and their collaboration in the corrective reading of the interview summaries. I would also thank Anders Selvåg for his proof reading and patience during the final weeks.

iii CONTENTS Abstract... i Acknowledgements... ii Nomenclature... vi List of figures:... vi List of tables:... vi Abbreviations:... vi 1 Introduction... 7 1.1 Background for problem formulation... 7 1.2 Research scope... 9 1.3 Apparisal... 10 1.4 Outline of thesis... 10 2 Presentation of Statoil ASA... 11 2.1 About Statoil... 11 2.2 Statoil and the research context... 11 2.2.1 Demand... 12 2.2.2 Delivery... 12 3 Introducing Lean... 13 3.1 Abstractions of Lean... 13 3.2 Lean thinking... 14 3.3 Muda... 15 3.3.1 Overproduction... 15 3.3.2 Transport... 16 3.3.3 Inventory... 16 3.3.4 Motion... 16 3.3.5 Waiting... 16 3.3.6 Extra Processing... 16 3.3.7 Defects... 16 3.4 The five principles of Lean... 17 3.4.1 Value... 17 3.4.2 Value stream... 17 3.4.3 Flow... 17 3.4.4 Pull... 18 3.4.5 Perfection... 18 3.5 Criticism of Lean... 18

iv 4 Introducing Lean information management... 21 4.1 Information management... 21 4.1.1 Data, information and knowledge... 22 4.1.2 Information systems... 22 4.2 Lean information management... 23 4.2.1 Who is the end customer?... 23 4.2.2 The five lean principles in the context of LIM... 24 4.2.3 Defining waste in the context of LIM... 27 5 Research method... 33 5.1 Research design... 33 5.2 Plan of approach... 33 5.3 Data collection... 34 5.3.1 Interviews... 34 5.3.2 Supply base visit... 34 5.3.3 Department meetings... 35 5.3.4 Internal documents and systems... 35 5.4 Reliability and validity... 35 5.5 Current information management practice... 35 5.6 Defining value... 36 5.7 Waste identification... 37 5.8 The value stream... 38 6 Current information management practice... 39 6.1 How information is created... 39 6.1.1 LPS... 39 6.1.2 Time planner... 40 6.1.3 Need list... 41 6.2 How information is organized, represented and visualized... 41 6.3 How information is maintained... 42 6.4 How information is shared and communicated... 43 6.4.1 Information exchange: DSR, D&W team and suppliers... 43 6.4.2 Information exchange: DSR and supply base... 43 6.4.4 Information exchange: DSR and suppliers... 44 6.5 How information is reused... 44 6.6 How information is disposed of... 44 7 The five lean principles applied... 45 7.1 Value... 45

v 7.1.1 DSR and supply base responsibilities... 45 7.1.3 Critical success factors... 46 7.1.4 Information requirements... 46 7.2 The Value stream... 49 7.2.1 Waste identification... 49 7.2.3 The value stream... 53 7.3 Flow... 53 7.3.1 Enhancing flow by waste reduction... 54 7.3.2 Performing Information management activities with simplicity... 55 7.4 Pull... 55 7.5 Continues improvement... 55 8 Discussion... 57 8.1 Definition of the term information consumer... 57 8.2 Classification and discussion of data and information... 58 9 Limitations of the study... 59 10 Conclusion and future research... 61 11 Works Cited... 63 12 Appendix 1: Interview questions... 59 13 Appendix 2: Information flow... 60 14 Appendix 3: DSR activity statements... 64 15 Appendix 4: Supply base activity statements... 68 16 Appendix 5: Information in LPS... 71

vi NOMENCLATURE List of figures: Figure 1: The research scope... 10 Figure 2: Logistics operation (1. Demand, 2. Delivery, 3. Supply base activity, 4. Shipment, 5. Goods receipt and reverse logistics, 6. Reverse logistics, 7. Return processing) (Source: Logistikk Portalen, 2013 )... 12 Figure 3: Different perspectives of lean (Based on Arlbjørn et al. 2008 as cited in Arlbjørn & Freytag, 2013; 177)... 14 Figure 4: Continuous process... 18 Figure 5: Information created in LPS... 40 Figure 6: LPS report... 42 Figure 7: Waste identified... 49 List of tables: Table 1: Information Requirements... 46 Abbreviations: CSF Critical Success Factor D&W Drilling and Well ERP Enterprise Resource Planning IM Information Management IR Information Requirement IS Information System IT Information Technology LIM Lean Information Management LPS Logistic Planning System SAP Systems, Applications, and Products in Data Processing

7 CHAPTER 1 1 Introduction Today, we live in the information age where an increasing amount of information is accessible and distributed within and across organizational boarders (Simchi-Levi, Kaminsky & Simchi-Levi, 2009; 143). Information is a critical element for the efficiency and effectiveness of operations within an organization (Hicks, 2007). This makes todays organizations highly dependent on information to be able to perform their business processes. Management of the information within and across organizational boarders is therefore an important and necessary activity which should be performed (Hicks, Culley & McMahon, 2006). 1.1 BACKGROUND FOR PROBLEM FORMULATION I first came in contact with Statoil two years ago when I was employed as a summer intern. After two summers I got the opportunity to write my master thesis in cooperation with the company. Statoil initially asked me to look at the information flow related to shipping of equipment to offshore installations. They wanted me to illuminate the way information was being managed. They believed there are problems in the way information is managed to support distribution to offshore installations. Distribution of equipment and fluids to offshore installations is set in a dynamic environment. The dynamic environment is due to the offshore operation which is a changing factor itself, as a perfect overview of what the operation will bring is impossible to foresee. Therefore, as unexpected contingencies occur new requirements are set for the distribution and management of information which support the distribution. It is shown that the importance of information management increases in the context of dynamic environments (Bodendorf & Zimmermann, 2005). Information management should therefore be of high relevance in this context. Further discussion about the context indicated that part of the problem may be related to a newly developed application which supports distribution to offshore installations. The newly developed application is called the Logistic Planning System (LPS). LPS is developed as part of Statoil s enterprise resource planning (ERP) system named Systems, Applications, and Products in Data Processing (SAP). The goal by introducing LPS was to use data and information which was already available in SAP. Another goal was to

8 make distribution more compliant by connecting the financial transaction to the physical distribution of goods. Further discussion of how information was managed indicated that Statoil may face problems related to excessive information, wrong information, and irrelevant information in the SAP applications being interconnected to support distribution of offshore deliveries. Due to the impression of how information was managed, I wished to investigate if the information management activities could benefit from a lean approach. The basis of lean is to reduce waste, and make value flow (Womack, Jones & Roos, 1990). Based on this, lean seemed as a suitable approach for the initial interpretation of the current situation. The principle of lean was introduced in 1990. Since then, lean has extensively been applied in manufacturing and production environments because of its beneficial effects. Benefits include increased productivity, an overall approach for continuous improvement, improved quality and management (Hicks, 2007). Due to the beneficial effects of lean, both industry and researchers are beginning to investigate the usefulness of a lean application beyond the traditional application in manufacturing environments. In recent years, lean principles have been implemented outside the manufacturing environment. By example, Dasari (2005) implemented lean to the process of software development. Lean has also been applied to the process of product introduction (Haque & Moore, 2004). Piercy and Rich (2009) (as cited in Arlbjørn & Freytag, 2013) applied lean to service companies, and Pedersen and Huniche (2011) (as cited in Arlbjørn & Freytag, 2013) applied lean to public administration. The question is therefore if lean also could be implemented successfully to information management. Ibbitson and Smith (2011) state that there is a general perception in the information industry that lean is too problematic to implement in a non-manufacturing environment. No explanation is given by the authors to describe why this is a common perception within the information industry. A publication of Hicks (2007) may answer to the question of why lean is perceived as being too problematic to implement to information management. He identifies that the barriers of implementing lean to information management is the lack of a characterization of waste and establishment of the five lean principles within the context of information management. It is further argued that lean can be implemented to information management if a clear understanding and definition of these elements is provided. Hence, the lack of these definitions within the context of information management may be the reason why lean has not been implemented to information management. This may also be the reason why the information industry find lean too problematic to implement to information management. Based on the two publications of Ibbitson and Smith (2011) and Hicks (2007), I want to investigate if a lean implementation can have beneficial effects on the way information is managed to support of Statoil s distribution to offshore installations. An investigation of lean information management (LIM) showed that its application will give benefits of greater capacity to undertake work with the business core activities, increased competitiveness and improved responsiveness (Hicks, 2007). The problem formulation is therefore developed to investigate how LIM can be defined, if all elements of lean are suitable in the context of information management, and if a lean implementation can improve the current information management practices in Statoil.

9 The problem formulation is: How can Statoil improve their information management practices, which support distribution to offshore installations, by adopting a lean approach? To provide an answer to the main research question, three sub questions are developed. These are the following: 1. How can the five lean principles be defined in the context of information management? 2. How should the end customer be defined in context of information management? 3. How can waste be defined in the context of information management? 1.2 RESEARCH SCOPE The research scope is defined by the business processes supporting the distribution of equipment to offshore installations. The scope includes the management of information within the department of drilling and well (D&W) in Statoil, from the point of dispatch to the point of delivery at a supply base. Suppliers play a big role in the Statoil s core operations. Initially, the study was also meant to include information management between Statoil and their suppliers. After conducting a number of interviews with internal actors, concerns were raised regarding Statoil s internal management of information. As problem areas within the internal information management were highlighted, a decision was made to only study the internal information management practices. Information obtained from suppliers is however part of the internal management of information and is included in the research scope. The scope is defined by the business processes and actors supporting distribution to offshore installations. These actors are the drilling supply responsible (DSR) and supply base personnel. These, and especially the DSR, are dependent on information from suppliers and D&W team. Thus, information and management of the information obtained from suppliers and D&W team are also part of the study. Figure 1 gives a visual presentation of the research scope. Due to newly implementation of LPS, the system gained a lot of focus in the data collection phase as participants were eager to discuss the new system. The scope of the study is not limited to the particular information system (IS) and includes all activities of information management.

10 Figure 1: The research scope 1.3 APPARISAL The scope will not include information management which supports the reverse flow of equipment from the offshore installation back onshore. This is excluded as LPS to days date is not implemented to support the reverse flow of equipment. This is an implementation which will take place later on in the implementation process. Focus has not been attended to information management supporting distribution of OCTG equipment to offshore installations. OCTG equipment is an overall term used for pipes. Distribution of pipes requires additional handling and set other requirements for IM supporting the distribution. The implementation process of LPS is not included in the scope of research. The implementation process of LPS is relevant, as it recently has been conducted. Statoil could use the experience of the implementation process to learn, which can be beneficial for later implementation processes. The implementation process is not included as it is not directly related to the way information is managed to support distribution to offshore installations, as it is related to the process of implementing a new system. 1.4 OUTLINE OF THESIS The following chapter will provide a presentation of Statoil, as well as an overview of activities performed within the scope of research. The concept of lean is presented in chapter 3. Information management and LIM is presented and discussed in chapter 4. The chapter provides an elaboration of how lean can be applicable in the context of information management. Chapter 5 describes how the research was conducted. Chapter 6 describes how information is currently managed in Statoil to support distribution to offshore installations. The five principle of lean is applied to the research context in chapter 7. A discussion is provided in chapter 8. Limitations of the study are presented in chapter 9. Chapter 10 presents the papers conclusion as well as suggestions for future research within the topic of LIM.

11 CHAPTER 2 2 Presentation of Statoil ASA The purpose of this chapter is to give the reader an introduction Statoil. The first part will describe the company and its core activities. The following part of the chapter will describe Statoil s internal supply chain which is part of the research scope. The description will provide an understanding over the business processes which the information management should support. 2.1 ABOUT STATOIL Statoil is an international energy company with 40 years experience from oil and gas production on the Norwegian continental shelf. Statoil has been one of the main actors in the Norwegian oil industry since the 70s. Today, the company operates in 35 countries worldwide (Statoil, 2009). With a turnover of 670 billion in 2012, Statoil ranks as the biggest company in Norway and as number 41 worldwide. In the oil- and gas industry Statoil was ranked as the twelfth biggest company in 2012 (Arneson, 2012). 2.2 STATOIL AND THE RESEARCH CONTEXT The following section is based on information provided on Statoil s intranet named Logistikk Portalen, which translates to The Portal for Logistics. Within the department of D&W two separate operations are performed. The activities are drilling and intervention. The drilling operation includes activities such as drilling of new wells and further development of existing fields. Well intervention is carried out to enhance production by maintaining production pipes from the reservoirs. Figure 2 gives an overview of what Statoil defines as their logistic operations. The first two points in the picture is part of the research scope. The next sections will describe parts of the chain which is in the scope of research. A description will be provided of how demand is created and how delivery is made.

12 Figure 2: Logistics operation (1. Demand, 2. Delivery, 3. Supply base activity, 4. Shipment, 5. Goods receipt and reverse logistics, 6. Reverse logistics, 7. Return processing) (Source: Logistikk Portalen, 2013 ) 2.2.1 Demand Oil and gas related activities on the Norwegian continental shelf have increased the latest years. This leads to a growing demand for material and equipment needed at the offshore installations. Demand for equipment and material varies in relation to the installations size and the type of operation held. When demand for equipment occurs during the operation, it is registered at the offshore installation by the respective supplier. Equipment and material within drilling and well is usually ordered from external suppliers. Demand is met through a supply base. Suppliers deliver equipment and fluids to the supply base, which ensures that the deliveries are shipped offshore as needed. Every installation on the Norwegian continental shelf is supplied by one specific supply base, and demand should usually be met through the respective supply base. 2.2.2 Delivery DSR: The DSR is responsible to follow up the suppliers to ensure that demanded equipment and fluids are delivered at the supply base within delivery deadlines. The DSR work as an intermediary between the D&W team, suppliers and the supply base to ensure that demand created by the offshore operation is met. Supply base: The supply base is responsible for all activities from goods receipt to shipment of cargo to rig. When the goods receipt is made, the goods can be prepared for shipment. Statoil Marine, organized at the supply base, is responsible for planning vessel routes. Supply vessels are routed to installations on certain days. Thus, an installation will not have a vessel access seven days a week. Vessels are usually routed to a group of installations in the same area.

13 CHAPTER 3 3 Introducing Lean The purpose of this chapter is to provide an overview of lean as lean thinking is the foundation of LIM. The following sections will provide an overview of the origins of lean and central concepts within lean thinking. 3.1 ABSTRACTIONS OF LEAN The term lean has various interpretations and is described at different levels of abstractions in different publications (Arlbjørn & Freytag, 2013; Čiarnienė & Vienažindienė, 2013). Papadopoulou and Özbayrak (2005) describe a lack of agreement concerning implementation elements to use when implementing lean. Hence, as there is no agreement of which implementation elements to use, there is no uniform way of a lean implementation. The implementation elements can be viewed in figure 3. Different implementation elements have different levels of abstraction. Arlbjørn, Nørby, Norlyk, Wiborg and Holm (2008) (as sited in Arlbjørn & Freytag, 2013) suggested a division of lean in three levels. The levels are developed to gain a better understanding of what is meant by lean. The three levels are shown in figure 3. Figure 3 is created based on Arlbjørn et al. (2008) (as cited in Arlbjørn & Freytag, 2013) model. The top layer in figure 3 is the philosophical level which is often discussed as lean thinking. This is the most abstract level of lean and it suggests that lean should be used to reduce waste and drive up customer value (Arlbjørn & Freytag, 2013). The middle level in the pyramid is implementation of the five lean principles deducted from Toyota Production System (TPS) (Womack & Jones, 1996). The lowest level represents tools and techniques which are practices which can be applied to a process to implement lean (Arlbjørn & Freytag, 2013; Čiarnienė & Vienažindienė, 2013).

14 Figure 3: Different perspectives of lean (Based on Arlbjørn et al. 2008 as cited in Arlbjørn & Freytag, 2013; 177) The model developed by Arlbjørn et al. (2008) (as cited in Arlbjørn & Freytag, 2013) is similar to Hines, Holwe and Rich (2004) definition of a lean framework. Hines et al. (2004) describe a lean framework which is divided in two levels, the strategic- and operational level. The strategic level consists of the two top layers in figure 3. The operational level, consist of the lowest level in figure 3. Both publications stresses that lean should not be applied exclusively as a set of tools and techniques. Hence, applying the tools of lean (level 1) will not provide a good lean implementation. It is argued that the tools and techniques should be used as means for implementation of lean principles (level 2) and gain focus on value creation (level 3). Hines, Holwe and Rich (2004) also argue the concept of providing customer value (level 3) is aligned with a lean strategy as long as customer value is provided. It is argued that the lower levels of lean (level 1) do not have to be applied to implement lean, as long as customer value is provided. It is therefore important to not only focus on the typical tools and techniques when implementing lean. There should be focus on the top two layers as cited in figure 3 to achieve real lean (Arlbjørn & Freytag, 2013). The next sections will describe lean in the perspective as a philosophy which is often described as lean thinking, as well as the five core principles. 3.2 LEAN THINKING The concept of lean was first introduced in 1990 by Womack, Jones and Roos. They used the term lean to describe the production process of Japanese vehicle manufacturers, in particular the Toyota Production System (TPS). They observed that the philosophy

15 provided an approach for continuous improvement by eliminating what the Japanese called muda form the production process. Muda is the Japanese word for waste and is of central concern in lean thinking (Womack et al., 1990). The principle of waste elimination drives the overall goal of lean which seeks to increase profit by reducing costs and increase productivity (Ibbitson & Smith, 2011). The basis of lean is to eliminate waste and enabling value adding activities to flow without interruption of other activities (Womack et al., 1990). Hence, an understanding of waste and value is important to be able to adopt lean thinking to a process. Fujio Cho of Toyota defined waste as anything other than the minimum amount of equipment, material, parts and workers, which are absolutely essential to production (Ibbitson & Smith, 2011; 6). Value is defined from the end customer s perspective. As the end customer defines value, value is perceived in the attributes of the products which are produced. Thus, value in the context of lean is product specific (Womack & Jones, 1996). To define value it is important to know who the end customer is, as value should be defined from the end customer s perspective. Thus, it is important to understand who the end customer is. Womack and Jones (1996) define the end customer as the ultimate customer, which is the individual buying the product or service which is being produced. Toyotas vise chairman, Katsuaki Watanabe, described the end customer as We don t mean just the end customer; on the assembly line the person at the next workstation is also your customer (Ibbitson & Smith, 2011; 9). This indicates that Toyota defined value from the end customer s perspective, but also used this definition to define value creation in the production process. 3.3 MUDA Taiichi Ohno (1912-1990), an executive at Toyota, was the first to identify muda in a production process. Muda is described as all activities which absorbs resources and does not create value for the end customer. Womack & Jones (1996) were the first to report on the types of waste which was defined by Ohno. Ohno distinguished between seven types of waste within a manufacturing environment. The seven types of waste are overproduction, inventory, transportation, motion, waiting, extra processing and defects. The next paragraphs will describe the seven types of waste in detail. 3.3.1 Overproduction Overproduction is the process of continuing the production of goods/services when it should be ended. The result is production of more than the customer needs. Overproduction is defined as waste as resources are consumed, without adding value to the product from the end customers perspective (Womack & Jones, 1996). The production adds no value to the product because the product is not demanded by the customer. Thus, the product is perceived as having no value form the end customer s perspective. Overproduction results in an excess of products because products are

16 pushed through the production without being demanded. As a result, products are put on inventory, which also is defined as waste. 3.3.2 Transport Transport is unnecessary movement of materials in the production process. An example of such transportation is work in progress (WIP) products being transported from one production cell to another. Transport adds time to the process, without adding value to the end result and it also increase the risk of handling damage (Womack & Jones, 1996). Hence, moving a product from one production cell to another is an activity which does not add any value to the end result (the product) from the customer s perspective and should be defined as waste. 3.3.3 Inventory Inventory is defined as work in process (WIP) components and finished products which are not directed to fulfill current customer demand (Womack & Jones, 1996). Having products on inventory is a process which does not add any value to the product from the customer s perspective, and should be defined as waste as no value is added. 3.3.4 Motion Motion is the unnecessary movement by employees and equipment to accommodate for defects, overproduction, inefficient layout or excess inventory. Motion, as transportation, adds time to the process without adding value to the product from the end customer s perspective (Womack & Jones, 1996). 3.3.5 Waiting Waiting in is also defined as waste. Waiting is defined when no activities are performed to the product. Value cannot be added to the product if no activities are being performed. Thus, waiting does not add any value perceived by the end customer to the end product and should be defined as waste. A typical scenario for waiting is when downstream activities are held up waiting because upstream activity has not delivered on time (Womack & Jones, 1996). 3.3.6 Extra Processing Extra processing are extra operations such as reprocessing, handling, storage and rework which occur because of excess inventory, overproduction and defects (Womack & Jones, 1996). Extra processing is defined as waste as the activities consume resources without adding value to the product from the customers perspective. 3.3.7 Defects Defects are finished goods or services which does not meet the specifications or customers expectations. Defects require extra processing for inspection and correction. Using resources to identify defects will not provide any value to the product from the end customer perspective, as is therefore defined as waste (Womack & Jones, 1996).

17 3.4 THE FIVE PRINCIPLES OF LEAN In 1996 Womack and Jones made a more extensive definition of lean by developing five principles which was meant to describe the concept of lean further. The next paragraphs will describe the five principles of lean which was developed. 3.4.1 Value The first principle is to specify value. Value should be specified in terms of what the end customer perceives as valuable, and should be expressed in a product or service (or both) which the company provides. Hence, value is perceived as product specific, as value is defined to a specific product. Specifying value from the end customer s perspective is the start point for lean thinking (Womack & Jones, 1996). 3.4.2 Value stream The next principle is to identify the value stream which is the processes required to bring the product to the end customer. Thus, the value stream should consist of activities which add value to the product from the end customer s perspective. It is argued that the value stream may not only consist of the processes which add value to the product defined by the end customer. To be able to bring the product to the customer some activities are often necessary for the end result, but not directly valued by the end customer (Womack & Jones, 1996). Hence, the value stream consists of activities perceived as valuable from the end customers perspective, as well as activities which are necessary to provide the product to the end customer. Thus, Womack and Jones (1996) distinguish between two types of waste (muda). Type one muda represent non-value-adding activities which are necessary to achieve the desired end result, and should be part of the value stream. Type two muda represents non-value adding activities which are not necessary for the end result, and should not be part of the value stream (Womack & Jones, 1996). Hence, eliminating waste is part of the process of identifying the value stream. Eliminating type two muda from the processes will identify the value stream for the product. 3.4.3 Flow When the value stream is identified, the next principle is to make the value-addingactivities flow. This is a process which challenges the processes which initially is seen as automatic. Examples are grouping tasks by departments, or having a batch and queue process. The goal by making value-adding-activities flow is to eliminate aggregated, disconnected and department oriented processes. These should be replaced with activities which are specific for a product. The argumentation behind this change is that production is improved when focused on a product and the product s needs, instead of the organization s needs. By doing so, value-adding-activities should flow without interruptions of other activities (Womack & Jones, 1996).

18 3.4.4 Pull The fourth principle is to allow the customer to pull value rather than the organization push value through the process. By letting the customer pull value the product/service is only provided when the customer wants it. Hence, the goal is to make a process which is structured in a way to achieve just in time results (Womack & Jones, 1996). 3.4.5 Perfection The last principle is the pursuit for perfection. In the pursuit for perfection focus should be on continuous waste elimination to achieve a perfect process (Womack & Jones, 1996). The pursuit of perfection implies that lean is a continuous process as described by figure 4. The five lean principles show that a lean approach is an antidote to waste. Lean provides a way to define value and make value-adding-activities flow without interruption when a customer requests the output from a process. The continuous pursuit for perfection will make the process more efficiently as waste is identified. Perfection Value Pull Value stream Flow Figure 4: Continuous process Lean thinking is lean because it provides a way to do more and more with less and less less human effort, less equipment, less time and less space while coming closer and closer to providing customers with exactly what they want (Womack & Jones, 1996; 15). 3.5 CRITICISM OF LEAN Lean as a philosophy has not avoided criticism. Hines, Holwe and Rich (2004) developed factors which criticized lean over its evolution. Four key aspects which criticize lean are found. The four aspects are the lack of contingency, lack of consideration of the human aspects, lack of strategic perspective and scope and the lack of ability to cope with variability. Lack of contingency is concerned with the major focus to implement lean by a set of tools and techniques to shop floor processes. Major focus on shop floor processes neglects other factors of lean implementation beyond the organizational boundaries and within other parts of the organization. Lean, as an integrative approach, should be implemented

19 to the whole organization and not only as a tool for a part of the organization (Hines et al., 2004). High focus of implementing lean as a set of tools and techniques to the shop floor processes is also defined by Bhasin (2012) to be the obstacles of lean implementation. Looking at lean in the narrow sense of tools and techniques, will not provide the organization with the benefits of its implementation. Lean has been criticized for lack of human aspect and is often described to be dehumanizing and exploitative towards shop floor workers. Lack of human aspect is related to continuous pressure to improve the efficiency of a process which results in high pressure on shop floor workers (Hines et al., 2004). Lack of human aspect is also stressed by other researchers. Mehri (2006) describe that creativity and innovation is limited when lean is implemented. Limited creativity and innovation can lead to isolation for the shop floor workers. He argues that this will lead to dangerous work environment. Over time this can result in a poor quality of life for the employees. Lean is also criticized due to its scope and lack of strategic perspective. There is high focus in describing how to apply tools and techniques but less of the strategic level of lean thinking (Hines et. al., 2004). Thus, lean has been criticized to lack of perspectives of implementing lean to the leadership levels in an organization. A key aspect of the lean approach is that lean supply chains and production systems should cope with variability. In order to add value to the product, lean is focused on approaches to manage variability and utilize resources more efficiently than traditional systems. Lean approaches have been implemented to cope with variability, such as mixed model scheduling and heijunka. In the case of demand variability some authors argue that the approaches are not as flexible as they need to be to be able to respond to customer driven variability (Hines et. al., 2004). Hence, the models used in lean are considered by critics, as not to be able to handle variability driven by the customer.

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21 CHAPTER 4 4 Introducing Lean information management The purpose of this chapter is to establish a foundation of the theoretical platform on which the thesis will be constructed. The chapter will first provide an understanding of what information management is. Next, a definition of information, data and knowledge is provided as the terms are often used as synonymous. Information systems (IS) are often part of information management and are also presented. The last part of the chapter will present and elaborate what LIM is. An elaboration and discussion of how lean principles can be applied to information management is provided. 4.1 INFORMATION MANAGEMENT Information management is one of the most important pillars which support supply chain management (SCM). Wrong, delayed and/or distorted information can be source for serious problems within a supply chain. Management of information is thus of great importance (Pereira, 2009). Information management is a board conceptual term, which has various meanings and interpretations to different groups (Detlor, 2009). Three perspectives of information management are identified. These are the library, personal and the organizational perspectives. From the library perspective, information management is about managing information collections. An information collection can be a public, academic, research or corporate library. The goal from this perspective is to help people to borrow and access information in the information collection (Detlor, 2009). The personal perspective involves management of information relevant for the individual within an organization. The perspective deals with how individuals create, acquire, organize, store, distribute and use information for personal purposes. The management of information typically includes information for everyday use, such as personal calendars and personal schedules (Detlor, 2009).

22 The library and personal perspective is not suitable in the research context and will not be used in this paper. The library perspective is not suitable as information collections are not present in the research scope. The personal perspective is not suitable as information supporting distribution to offshore installations is not information which is of interest for the individual. The information studied is of interest for the organization and the part of the organization which supports distribution to offshore installations. In this paper the organizational perspective is used. The organizational perspective of information management, is by far the most common and popular, and encompasses information which is relevant for the organization. The perspective deals with all information processes which are involved in the information life cycle form the creation to use of the information. Fundamental to the perspective is to view and treat information as a strategic resource. By treating information as a strategic resource emphasizes the importance of managing information like other strategic resources within the organization (Detlor, 2009). Detlor (2009) define the organizational perspective of information management to involve[s] the management of a varied set of information resources, ranging from data to information (Detlor, 2009; 104). Larson (2005) (as cited in Hicks, 2007) define information management from the organizational perspective to include activities such as creating, representing, organizing, maintaining, visualizing, reusing, sharing, disposing and communicating of information. Thus, Information management is the collection and management of information from various sources where the goal is to enable efficient and effective access, process and use of information (Detlor, 2009). 4.1.1 Data, information and knowledge It is necessary to define the meaning of the term information, to be able to understand what information management is about. To do so, a distinction between data, information and knowledge is made as these often are considered to be synonymous of one another (Hicks, Culley, Allen, Mullineux, 2002). Data can be viewed as raw facts which reflect characteristics about an event or entity. Examples are customer names, unit price and order quantities. Information is usually defined with respect to the definition of data (Checkland, 1981; Holstrom, 1971; Wall, 1986 as cited in Hicks et al., 2002)). Information can be viewed as meaningful data, where relevance and purpose has been added (Detlor, 2009). Thus, data represents raw facts which can be transformed to information when meaning and relevance is added to the data. Adding relevance to data is important, as information is the basis for decision making. Knowledge is argued to be more contextual with a closer link to the individuals beliefs and actions and is often discussed as information within people s minds (Davenport & Donald, 2001). 4.1.2 Information systems To be able to identify and exploit information in the best possible way, organizations implement various techniques, tools, procedures and methods to improve the activities of information management. The tools and techniques for managing information are often implemented in an information system or information management systems (Hicks et al., 2006)

23 An information system is defined as a set of interrelated components that collect (or retrieve), process, interpret, store, filter and distribute information to support decisions within and across partners (Pereira, 2009; 375). Information systems are usually provided to support a specific business process, or a specific group within an organization (Hicks et. al., 2006). Hence, information systems work as a channel for information transfer, where the information provided supports a business process or a group within an organization. To be able to meet the need which the information system is supposed to serve, information requirements which support the specific business process or group within the organization has to be identified. Information requirement should thus be defined by the processes or people which the information system intendeds to support (Hicks et. al., 2006). Obtaining a complete picture of all information requirements is generally difficult to obtain (Davis, 1982). 4.2 LEAN INFORMATION MANAGEMENT It is argued that lean principles, and especially the principle of waste elimination and the continuous pursuit for perfection, could be applied to any system where a product flows to meet the demand of a customer (Hicks, 2007). The question is therefore if information management is a system where a product flows to meet a customer demand. Information management is, among other, a process of managing activities of how information is shared to support a group or a process within an organization. As such, it is true that information management is a system where information (product) flows to meet demand from an information user (customer demand). Hence, looking at information as the product which needs to flow, it should be possible to apply the lean principles to information management. LIM is defined as an approach to improve organizational systems by reducing waste and drive up value (Ibbitson & Smith, 2011). The thought behind LIM is to enable continuous improvement and pursuit of perfection in all activities within information management. The activities of information management are listed in section 4.1 Information management. LIM focuses on establishment of roles, practices and responsibilities to manage the value of information (Ibbitson & Smith, 2011). The next section provides a discussion of how the end customer can be defined in LIM. The section is followed by a presentation and discussion of how the five lean principles is applicable in a LIM context. The last section will elaborate the interpretation and validity of the seven types of waste in the context of LIM. 4.2.1 Who is the end customer? As previously stated, central for a successful implementation of lean is the definition of value from the end customer perspective. In a manufacturing system the end customer is defined as the user of a product being produced (Womack & Jones, 1996). This section will describe and elaborate how the end customer could be defined in the contexts of information management.

24 In general, information systems and information is created to support an end user of the information s ability to undertake work. The work can be defined as activities which add value to the product/service delivered to the end customer (Hicks, 2007). The end customer is the individual buying the product/service. Defining value from the end user of information point of view will provide a definition of information which is necessary to undertake activities which is valued by the end customer. This definition is aligned with the definition from the manufacturing context, where value is defined by the end customer (Womack & Jones, 1996). Defining the end customer as the end user of information may not be sufficient in the context of information management. When supporting a business process, actions are often undertaken upstream in the chain to support the work of the end user of information. The different users of information will usually have different responsibilities, requiring different information to be able to solve their tasks (Hicks, 2007). Hence, information relevant for one actor in the chain may be irrelevant for another actor, or the end user of information. Managing information from the end user of information perspective could disregard value perceived by other actors supporting the same business process, or achieving the same ultimate goal. It is therefore argued that defining value in an information flow, which supports a business process, it is important that information supplies value to the individual using the information, and not only to the end user of the information (Hicks, 2007). By defining value from the information users perspective, information and activities which are valued by the information users can be identified. Information could thus be created, represented, organized, maintained, visualized, reused, shared and communicated in a way which provides value to the information users. As the goal of information management is to support these elements, it could be beneficial to define the end customer as the user of information. This interpretation is aligned with Toyotas perception of the end customer. Katsuaki Watanabe, as described in section 3.2 Lean thinking, argued that every person in the assembly line should be looked upon as an end customer so value could be defined between work stations. On the basis of the above argumentation, it is reason to believe that in the context of information management, the end customer should be defined by the person who retrieves information at different stages in the information flow. The information user is in this work defined as the information consumer. Thus, the information consumer may not be the end user of the information. The definition of the information consumer will be applied in the research conducted. This is done to indicate if such a definition gives meaning in the context of information management. If the information consumers define value differently may indicate that such a definition should be used in the context of LIM. 4.2.2 The five lean principles in the context of LIM This section will describe how the five core themes of lean can be applied to information management. As argued by Ibbitson and Smith (2011) and Hicks (2007) it is important to understand how these themes can be applied to information management, as they form the

25 basis of understanding waste, value and how flow is essential in information exchange (Hicks, 2007). Value: Hicks (2007) argue that information and information systems should provide value for the information consumer. Value should as such be defined based on the information consumer s perspective. Hence, value is defined by the information itself and the functionality of information systems used for its management. The definition of value is not aligned with the definition used in manufacturing environments, where value is defined by the end user of the product, the end customer. In the context of information management, value would be defined by all information consumers using the same information system, or supporting the same business process. The way value is defined is also different. In the manufacturing context, value is product specific as it is defined by the products attributes which is valued by the end customer (Womack & Jones, 1996). In the context of information management, value is perceived in the information itself which enables the information consumer to undertake work. Value is also perceived in activities of information management, which drives up value defined by the information consumer (Hicks, 2007). Value stream: The value stream is represented by information management activities and information which drives up value from the information consumer s perspective. Functionalities of the information system perceived valuable from the information consumer s perspective is also included in the value stream. The activities of information management include the process of how information is captured, represented, exchanged, organized, retrieved and visualized (Hicks, 2007). Hence, the value stream in the context of information management is represented by information management activities which drive up value perceived by the information consumers. Hicks (2007) argue the importance of understanding the difference of direct and indirect value for the organization which is perceived by the information consumers. Direct value is defined to be beneficial for a specific information consumer. Hence, direct value is information consumer specific. Indirect value is defined as being beneficial for a part of the organization or another information consumer, but requires one or more information consumers to undertake work to make the value flow (Hicks, 2007). Activities which are performed to drive up indirect value are argued to be a non-value adding activity for one or more information consumers. Thus, a non-value activity is performed to drive up value perceived by other information consumers. If the information consumers support the same business process, it is argued that the non-value adding activity is necessary to perform. This is because an information consumer perceives the activity to drive up value, and is therefore valuable in supporting the business process. Thus, the notion of indirect value can be applied to type one muda identified by Womack and Jones (1996), as described in section 3.4.2 Value Stream.

26 By introducing the analogues between indirect value and type one muda, the definition of the value stream in the context of information management is almost analogues the definition provided in the manufacturing system. The difference is, in the context of information management, value and the processes in the value stream is defined by all information consumers and not the one and only end customer. Flow: The principle of flow suggests that activities in the value stream should flow (Womack & Jones, 1996). This means that the activities should be performed without interruptions and backflows (Ibbitson & Smith, 2011). Hicks (2007) argue that the principle of flow might not be directly duplicated from manufacturing environments to the concept of information management. This is due to the activities of information management rarely are in a single piece flow (Hicks, 2007; 245). It is suggested that the principle of flow should be implemented to ensure efficient information flow which contain most relevant and up-to-date information. Hence, the flow principle in the context of information management is not about aligning all information management activities in a uniform way, as in the case of production environments. The principle of flow is about enabling information to flow efficiently. To achieve flow, information should be available and presented as soon as it is acquired. One of the most important elements in achieving flow in the context of information management is development and use of a IS which can be used for information exchange. The processing of information and activities of information management should be conducted in the shortest possible time in a simple way (Hicks, 2007). Conducting these activities as simple and quick as possible will enable relevant information, which is the product of the processes, to flow to the information users as soon as possible. To make information flow, it is also important that old and unnecessary information is minimized (or eliminated). Eliminating this type of information will enable relevant information to flow more efficiently (Hicks, 2007). Relevant information will flow more efficiently as time and resources are not used in making unnecessary information flow. Pull: The pull principle in lean thinking states that one should only provide what the customer wants, when the customer wants it (Womack & Jones, 1996). In the context of information management, information systems should be established to manage communication from downstream to upstream activities so that no information is produced until a need is specified by an upstream information consumer (Ibbitson & Smith, 2011). Hence, information should only be provided if and when the information consumer demands it (Hicks, 2007). Perfection: The last principle is to strive for perfection through continuous improvement of the information systems and information flows. Regular reviews of the information management system should be conducted to work towards total waste elimination. The goal is to provide a value stream where all elements provide value to the information

27 consumer (Hicks, 2007; Ibbitson & Smith, 2011). The principle of perfection is thus analogues to the definition used in manufacturing environments. 4.2.3 Defining waste in the context of LIM The concept of waste within manufacturing and production is generally visible and understood. In relation to information management the concept of waste is less clear and tangible. Lack of a clear definition and perception of waste in context of information management is identified as being one of the biggest barriers for LIM implementation (Hicks, 2007). Thus, it is necessary to define waste within the context of LIM. Only two previous publications have been identified in the extended search for literature conducted for this paper. These are Hicks (2007) and Ibbitson and Smith (2011). They both define waste in the context of LIM. The definitions are not aligned, therefore a description and elaboration of the definitions will be provided in the following sections. The definitions provided by Hicks (2007) and Ibbitson and Smith (2011) has one main difference. Hicks (2007) define waste by the activities which are undertaken while Ibbitson and Smith (2011) define waste in relation to the information itself. Hicks (2007) often use the nature of the information as the reason for the waste, but not defined as the waste itself. Hicks (2007) identified four causes of waste within information management, which give rise to four corresponding types of waste which he named flow excess, flow demand, failure demand and flawed flow. The four waste types identified were compared with the seven waste types from the manufacturing context. He did not find any analogues dimensions between the four types of waste identified and the waste of motion, transport and inventory form the manufacturing system. He argues that this is due to the study, where digital systems were considered. By introducing the information consumer, he provided a description of how the waste of transport, inventory and motion could be defined within information management. The description will be provided in the corresponding sections bellow. The next sections will present the seven types of waste within information management as Hicks (2007) and Ibbitson and Smith (2011) has outlined. A comparison of the definitions will be made, as well as an elaboration if they have relevance in the context of LIM. Overproduction Flow excess Hicks (2007) describe overproduction in the context of LIM to be caused by generation (creation) and maintenance of excess information. Generating and maintaining excessive information makes the process of identifying the right information less efficient. As appropriate information is hard to identify, waste is defined as the time and resources used to identify relevant information in the information overload (Hicks, 2007). Thus, information which is perceived as valuable for the specific actors responsibilities may be difficult to obtained, due to excessive information. This creates waste which is represented by the processes undertaken to identify information which provides value.

28 Ibbitson and Smith (2011) define overproduction analogies to the definition from the manufacturing context. They define overproduction as creation of information which no one uses. This is analogous to the manufacturing context where overproduction is production of products which no one wants (Womack & Jones, 1996). There are some deviations between Ibbitson and Smiths (2011) and Hicks (2007) definition of waste. First, Ibbitson and Smith (2011) define overproduction as creation of information which no one wants. This means that information which provides no value is created. Hicks (2007) argue that overproduction is simply creation of too much information, where valuable information is included in the information overload and has to be identified. Second, Ibbitson and Smiths (2011) definition extends to the information itself. Hicks (2007) definition of waste is related to the processes and resources used to identify valuable information in the information overload, while generation of the excess information is defined as the cause of the waste. As described, one definition is related to generation of information, and one is related to the resource consumption trying to identify valuable information in the information overload. It is arguable that both definitions have relevance in LIM. Creation of information which no one uses should be defined as waste in the context of LIM, as it consumes resources without adding value to the information itself, or the information consumers tasks. Use of resources trying to obtain valuable information in the information overload should be defined as waste. This is a process which takes up resources but adds no value to the information or the information consumer s task. A combination of the two definitions will be used for further work. Hence, overproduction is defined as generating and maintenance of excess information and resource consumption used to identify valuable information. Waiting Flow demand Hicks (2007) define waiting as the time and resources used to identify information which needs to flow. The cause of the waste is a broken process or simply because the information can t be identified. Ibbitson and Smith (2011) define waiting as idle time which occurs because information is not ready, which result in people waiting for the right information. As described, Hicks (2007) definition is about identifying information which needs to flow. Ibbitson and Smiths (2011) definition also concerns information which needs to flow but has not yet been created. Thus, both publications have the same basic perception of waiting. Waiting occurs because information which should flow cannot flow. This is waste as it does not provide any value to the information or the information consumers responsibilities. The definitions are analogues with the manufacturing context where a typical scenario of waiting occurs when upstream activities are not delivered on time, which held up downstream activities. In LIM context whether information is not identified of created it will impose waiting for other actors, because they need the information to perform their tasks. For the purpose of this work, the basic understanding of waiting will be used to define waste. Whether information can t be identified or not yet created.

29 Extra processing Failure demand Hicks (2007) argue that extra processing in the context of LIM is connected to lack of information. He argues that the waste is related to activities undertaken to overcome a lack of information. These activities may include creation of new information or accusation of additional information (Hicks, 2007). Ibbitson and Smith (2011) describe extra processing as activities which creates no value from the customer s point of view. This may include designing features of information which the information consumer does not value. Ibbitson and Smith (2011) definition is analogues to how extra processing are defined in the manufacturing context, where extra processing is defined as activities which does not add value to the product from the customer s perspective defects (Womack & Jones, 1996). Hence, Ibbitson and Smith (2011) definition, and the definition from the manufacturing context, define waste as those activities which do not add value to the customer, and in the case of LIM, the information consumer. Hicks (2007) definition could be argued to be somewhat incorrect. Extra steps taken to overcome lack of information can be viewed to be valuable to the information consumer. As the information is relevant, creation of new or additional information is a valuable process if the information provided is of value to the information consumer. At the same time, this is a process which initially should not occur, as valuable information should be provided to the information consumer in the first place. Taking extra steps to provide information may indicate that a process is missing in the chain which should have provided the information. Hence, extra processes taken to overcome lack of information should be defined as waste, as the information should be available initially. Thus, extra processing is defined as activities which creates no value for the information consumer and resource consumption due to lack of information. Defects Flawed flow Hicks (2007) argue that the cause of defects is inaccurate or wrong information. Waste is defined by the resources and activities used to correct and verify information. Basing decisions on wrong/inaccurate information can also result in inappropriate actions. These actions might not be conducted if the information provided was right. Inappropriate actions taken based on wrong information is also defend as waste (Hicks, 2007). Ibbitson and Smith (2011) define defects as work containing errors, wrong information, and incomplete information. Hence, the definitions are different as Ibbitson and Smith (2011) define defects in relation to the information itself. Hicks (2007) define wrong information as the reason for defects and waste is defined by resources used to correct and verify information. Waste is also defined by inappropriate actions taken based on wrong information. Hicks (2007) definition is almost analogous to the definition of defects in the manufacturing context, while Ibbitson and Smiths (2011) definition fail to include the actions which are a result of defects. As described in section 3.3.7 Defects, in a manufacturing context, defects are defined by products which do not meet customers

30 specifications. Such products result in corrective actions to ensure that the product meet customers specifications, is also defined as waste (Womack & Jones, 1996). Wrong information will not provide value for the information consumer and can result in improper actions based on the wrong information. Hence, a combination of the two definitions is used for further work in this thesis. Transport: Hicks (2007) did not find any analogues between the four types of waste he identified, to the waste of transport. This is due to the study, which concerned a digital system. He argues that in digital system, transport happens immediately and cannot be defined as waste (Hicks, 2007). As transportation in a manufacturing system adds time to the process without adding value it is defined as waste. An electronic transfer (transportation) does not add any value to the information. This is aligned with the definition from the manufacturing context. Even as no value is added, transportation is not defined as a waste because it does not consume resources. In addition, as a transfer happens immediately it will not add time to the process. Thus, in the context of a digital system, transportation or a transfer cannot be defined as waste. This is because there may be negligible resource consumption and time added to the process by an electronic transfer. By taking account for the information consumer, Hicks (2007) argues that it is possible to define the waste of transport in a LIM context. It is argued that in the context of LIM, transportation occurs through mass electronic communication. The waste is not related to the movement of the information itself, as it happens instantly, but the fact that the receiver must determinate whether or not the information provides value (Hicks, 2007). Hence, waste is related to the person receiving the pushed information, and the time and resources used to identify if the information provides any value. The definition provided by Hicks (2007) when introducing the information consumer, does have similarities to the way overproduction is defined in LIM context. As described in section 3.3.1 Overproduction, overproduction is defined by excess information as well as the activities of identifying valuable information in the information overload. There is a vague difference between these two definitions. As Hicks (2007) argues, when taking account for the information consumer, waste of transportation is related to the process of assessing if the information provides value. Hence, both definitions describe the process of identifying or assessing the value of the information as a wasteful activity. There may be one difference between the two definitions. The waste of transportation is related to information which is pushed directly to the information consumer, for example by email. In the case of overproduction, the information is not necessarily pushed directly to the information consumer. Overproduction is about the information which is available and accessible to the information consumer, for example on internal sites. Nevertheless, there is a high degree of resemblance as waste either way is defined by the process of identifying and assessing the value of the information. The definition by Hicks (2007) should also be criticized as it is not related to transportation of information, as electronic transfer is an immediate transfer who requires

31 negligible resources. The definition may therefore lack basis in the context of information management. In today s business environment computers are mostly used to transport (transfer) information from one cell to another. Due to Hicks (2007) argumentation concerning such transfers, the waste of transportation may not have relevance in the context of LIM. Ibbitson and Smith (2011) define transport as movement of information which does not add value. Waste is represented by information which is sent and received which no one uses. This definition differs from Hicks (2007) because Ibbitson and Smith (2011) only account for information which does not add value, not all information which is transported (transferred). Taking account for immediate electronic transfer and the negligible resource consumption of electronic transfers, Ibbitson and Smiths (2011) definition may be more related to overproduction because information which is of no value is produced. As such, there is a question if transportation has relevance in the context of LIM. Indicated in Ibbitson and Smith (2011) definition of transport, waste may be related to the fact that wrong information is provided to the wrong information consumer. The information which is provided might be valuable for another information consumer, but send to the wrong information consumer. In this manner, transportation is not a waste in itself, due to the immediate nature of electronic transfers. The waste may be related to the fact that the management of the information and how information is organized to flow might be wrong. Based on the above arguments, the waste of transportation is not used for further work in this thesis, as no usable and clear definition can be made within the context of LIM. Inventory: Hicks (2007) did not find any analogues between the four types of waste he identified, to the waste of inventory. As information consumers obtain information, they create an increasing archive of the information obtained over time. Information is typically stored in a digital platform, which does not represent a significant financial cost (Hicks, 2007). In addition, digital inventories do not take up any physical space as opposed to the situation in manufacturing environments. Thus, the waste of inventory is not defined by the cost of storing the information. Hicks (2007) define inventory as a waste by including the information consumer. He argues that the waste is related to the performance of the information consumer to retrieve information from inventory (the electronic storage). Ibbitson and Smith (2011) define inventory in the context of LIM as more information than the information consumer needs at a given moment in time. Thus, information is collected and stored, but is not used by the information consumer. Both definitions have similarities to the way overproduction is defined in LIM context. First, Hicks (2007) defies the waste of inventory as the process undertaken for obtaining the right information from inventory. It is thus the excess information in the inventory which makes the process of retrieving information less efficient. Hence, it is possible to draw analogues to the definition of overproduction provided in section 3.3.1

32 Overproduction. It is therefore argued that the definition is closer related to overproduction than a waste which can be classified as related to inventory. Second, Ibbitson and Smiths (2011) definition is about storing information which the information consumer do not value or need at a given moment in time. Thus, the stored information may be relevant at a later point in time. Hence, waste may be defined as information which is created and available too early. Providing information too early will require storage, which is not defined as waste as the cost is significantly low. The information therefore represents excess information, because it s not needed at the moment in time. Hence, this waste may be defined within the waste of overproduction. Information is created to early and is stored which increase the amount of available information, which makes the process of identifying valuable information less efficient. This is analogues to the definition of overproduction described in section 3.3.1 Overproduction. A definition of inventory in a LIM context might give more meaning if information is stored in paper format. If so, an analogues model to the manufacturing context could be drawn. Information inventories would take up space, required handling and maintenance, which is costly. As most businesses today have electronic storage, a definition of inventory as a waste provides less meaning. Based on the above argumentations, the waste of inventory is not considered in this thesis, as it is unclear if it has basis in LIM. Motion: Motion is also defined by Hicks (2007) based on the information consumer. The waste of motion is argued to be related to the organizations adoption of gatekeeper functions. A gatekeeper function is created when one individual is trained to use a particular software application (Hicks, 2007). Hicks (2007) argue that organizations create gatekeepers for particular software applications, where only the gatekeepers are trained to use the particular application. This results in high dependence of gatekeepers to provide information obtained by use of the particular software. He argues that this leads to waiting and movement between computers, which he defines as unnecessary motion. Ibbitson and Smith (2011) define motion as unnecessary movement, which are analogues to the definition from manufacturing context. Movement is defined as extra processes taken to obtain information. An example of movement is extra clicks on a computer when searching for information. It is argued that Ibbitson and Smith s (2011) and Hicks (2007) definitions are related to how information is organized and accessible for the information consumer. How information in organized is part of information management activities. Hence, the definition should have relevance in the context of LIM. Thus, motion is defined as unnecessary steps taken to obtain information. Unnecessary steps are taken due to improper organization and representation of information, and should be defined as waste in the context of LIM.

33 CHAPTER 5 5 Research method This chapter provides an overview of how the research has been conducted. The research design is first presented followed by an overview over the structure of the analysis which is conducted. The data collection process is described as well as the validity and reliability of the data. A description is provided of how the current information management practice was uncovered and how value and waste is identified. Last it is shown how activities which are defined to be within the value stream was identified. 5.1 RESEARCH DESIGN In order to answer the research question the activities of how information currently is managed had to be identified. A descriptive design is used to uncover how information is managed today. Descriptive design was found suitable as it aims to describe what is going on in relation to a process or situation (Gripsrud, Olsson & Silkoset, 2004). In the latter part of the research, exploratory design was used. The design is often used when there are few or no previous studies which can be referred to. The primary purpose of the analysis design is to explore the topic further and not necessarily arrive at a final conclusion ( Organizing Your Social Sciences Research Paper, 2013). As there are identified few previous publications discussing LIM the design was found suitable to use. The design enabled flexibility to explore the topic of LIM, and how LIM could be applied to the research case. This design was necessary to be able to answer the research question and sub questions. 5.2 PLAN OF APPROACH A foundation of LIM is first provided as a basis for the analysis conducted. The description is provided to determinate what LIM is, and how principle of lean can be applied in the context of information management. Next, data was collected. The data was used to describe the current information management practice. Data collected was further analyzed, and used to define value from the information consumer s perspective. Waste was identified based on the description of the current situation and the information consumer s perspective of value. The data

34 collected was also used to define waste. Activities which should be part of the value stream were defined based on the previous value and waste identifications. Last, a discussion is provided of how Statoil can apply the principles of flow, push and continues improvement to their information management practices. 5.3 DATA COLLECTION Various methods are used to collect data for further analysis. This section will give an overview of how data was collected during the study. 5.3.1 Interviews Four interviews were conducted with DSR and supply base personnel. The main goal was to get an understanding and broad overview of how information is managed to support distribution to offshore installations. The first part of the interview, participants were asked to explain and elaborate their main responsibilities, and how they work on a day to day basis. This was done to get an understanding of the actor s different responsibilities, as well as an understanding of how work is conducted. The second part of the interview was related to the topic of information management. The participants were asked about which information they needed to be able to perform their tasks and how this information was obtained. They were also asked about which information they provide to other actors in the chain, and how this information was exchanged. The participants were encouraged to suggest key issues they were facing in their everyday work related to management of information. Unstructured interviews were conducted where the goal was to let the interviewee elaborate without much interruption. However, some structure was provided. A sheet of main question was prepared to form a framework for the interview. This sheet is accessible in appendix 1. Before each interview an information sheet was presented. The information sheet gave a short presentation of what I wished to study, and a general description of the main principles of information management. This was done to provide the participant with an understanding of LIM and the dimensions which is dealt with in this study. During the interviews notes were taken so a summery could be written. The summaries were written and sent back to the participant to read. This was done to eliminate misunderstandings of what was described during the interview. All the participants were more than willing to correct and explain the areas which were misunderstood. After a feedback on the summaries, they were rewritten and used as data for further analysis. 5.3.2 Supply base visit A visit to the supply base is also included in the data collection, in addition to a visit at the base the summer of 2012. These visits have given great understanding of which processes are conducted at the base and problems they are facing.

35 5.3.3 Department meetings I got the opportunity to attend some departments meetings with all DSRs. This gave great insight in problems the DSR are facing, and especially in relation to LPS. The meetings also gave insight in how the DSR face and handles daily problems and why the problems occur. 5.3.4 Internal documents and systems Data was collected from two internal documents. The first document describes the DSR and supply base personnel s tasks when supporting distribution to offshore installations. The second document describes the best practices by use of LPS for the DSR and supply base. Information available on Statoil s internal platform describing their logistic operation was also used to obtain data. Internal systems such as LPS and the DSRs common mail have also been studied. 5.4 RELIABILITY AND VALIDITY During the interviews the interviewees did describe the same situations, problem areas and perception of value in relation to their responsibilities. Hence, the individual s which are interviewed have very similar perceptions concerning the studied context. The reliability of data collected is thus perceived as high. It is expected that if data was collected by the same methods at a latter point in time, the data would not vary significantly in relation to data collected in this study. It is important to note that due to the human aspect of qualitative studies, some deviations in data material would be expected. The validity of the report is perceived as high as the paper answers to the research question. Hence, the research does measure what it was intended to measure. 5.5 CURRENT INFORMATION MANAGEMENT PRACTICE The current information management practices which are conducted to support distribution to offshore installations were uncovered by use of data material collected. Focus was attended to uncover how the activities of information management are conducted in the research scope. First, a table was made in excel to define the information flow. The table show how information is transferred from one point to another. The table also presents which information is being exchanged, and which information channels are being used. The table was used as base in providing an understanding of how information is exchanged between the actors involved. The table was further used as support in the process of identifying how information management activities are performed. The table is accessible in appendix 2. Based on a part of the table, a graph was created by use of diagramed modeling. The goal was to make a graphical presentation of how information is created in the information

36 system (SAP) to support distribution to offshore installations. The conceptual model focuses on how information is created and duplicated to LPS. The model was created using Microsoft Visio. Microsoft Visio is a powerful diagramming platform, and was found suitable to use ( Microsoft Visio Standard, 2013). 5.6 DEFINING VALUE Value is defined from the information consumer s point of view. The definition of information consumer is made as a working hypothesis to uncover if the definition is meaningful in the context of LIM. Initially all activities of information management, as described in section 4.1 Information management, was to be studied in relation to their value for the information consumer. This proved difficult, as the interviews did not provide sufficient data on the activities of information management. Value is defined by identifying the information requirements for the information consumers. To be able to define information requirements critical success factor (CSF) analysis has been conducted. Information requirements are based on the CSF analysis. By defining CSF it is possible to define factors which are critical to support distribution to offshore installations in a successful manner. Information which supports a CSF should be information of value for the information consumer. Information requirements are defined from an application level. Generally, information requirements are divided in two levels in an organization, the organizational- and application information requirements. Organizational information requirement defines the general structure for an information system and specifies data bases and applications in a system (Davis, 1982). Application information requirements are more detailed. An application can be defined as a subsystem in the information system, which usually is dedicated to a specific business process or a group within the organization (Davis, 1982). Since information requirements should be defined in relation to a specific group in Statoil, the application level is used. Hence, the information requirements will define the information required to support distribution to offshore installations. Data obtained in the interviews and data from supply base visit was used in the process of identifying value (information requirements). The data was organized by removing identities and irrelevant comments to provide factual data and valid perceptions of the business context. Raw data was transformed into manageable statements and listed in a table. Two lists were made, one for the DSR and one for the supply base. These are accessible in appendix 3 and 4 respectively. Two tables were made to enable identification of value from both the DSR and supply base point of view. In total 52 statements were identified from the DSR and 35 statements from the supply base. The statements represent problem areas, as well as particular actions which takes place in the process of supporting the distribution. The statements also included information needs for problem solving, and where this information was obtained. For each statement a supporting theme was developed. The supporting theme describes the underlying

37 intention which the initial statement represented. In total 25 supporting themes was identified for the DSR and 13 identified for the supply base. I wished to group the statements in groups of similar or related statements for development of the CSF. By grouping similar statements together, the thought was that the supporting theme would define and underpin a CSF for each group. The supporting themes did not provide a useful definition of CSF. Hence, a general theme was created in addition to the supporting theme to each activity statement. The general theme was made to describe the absolute underlying theme in each statement. An example is given by a DSR statement: I need close communication with the rig to get an overview of the operational process. The supporting theme is operational process, which means that the DSR need information about the operational process to be able to undertake work. The general theme developed is internal information exchange, as the DSR states that there is a need for internal communication with the rig to obtain this information. By developing the general themes, it became easy to group the activity statements in clusters based on the general themes. At this point, the data had been reduced to a small number of general themes and some supporting themes, which is easier to handle than the large number of statements. On the basis of general themes and the supporting themes two CSF were identified for the DSR and supply base. This was a back and forth process, due to the qualitative aspect of identifying them. The CSF was used to identify information requirements (value) from the DSR and supply base personnel s perspective. The activity statements were also used in this process. The information requirements identified supports the two CSF identified. 5.7 WASTE IDENTIFICATION The process of identifying waste started with a discussion and elaboration of how waste should be defined in the context of LIM. Two previous publications are identified to define waste in the context of information management. As the two sources do deviate in some levels a discussion of how to define waste is provided in section 4.2.3 Defining waste in the context of LIM. When a definition of waste was established, value was defined based on the information consumer s perspective. The perception of value, and the current way information is managed to support distribution to offshore installations, was used to identify waste in the research scope. By looking at the current way information is managed and the perception of value defined by the information consumers, it was possible to define waste in the way information is being managed. In determining waste, data from the interviews were also used to look upon areas which the participants had described as problematic or confusing. An assessment of the information system LPS and the DSRs common mailbox was also used to identify waste.

38 5.8 THE VALUE STREAM Activities in the value stream is found by looking at the information requirements defined by the information consumers, as well as the waste defined in the way information is currently management. By looking at what the information consumer s find valuable, it was possible to define a set of information management activities which will drive up value perceived by the information consumers. These activities should be part of the value stream.

39 CHAPTER 6 6 Current information management practice Information management was in section 4.1 Information management described to include activities of creating, organizing, representing, visualizing, maintaining, sharing, communicating, reusing and disposing of information. This section will describe how these activities are observed to be conducted in the research context. 6.1 HOW INFORMATION IS CREATED This section will describe how information which supports distribution to offshore installations is created. The first section will describe how information is created in the information system LPS. LPS is the main system supporting offshore distribution. The last two sections shortly describe how information which is used to maintain information in LPS is created. 6.1.1 LPS Information which supports distribution to offshore installations is presented in LPS. Information available in LPS is created by two other SAP applications, a network application and an application called E-Bob. Figure 5 show the process of how information flows in the ERP system, and how information available in LPS is created. A dedicated network is created to each operation. The network is created by a Statoil engineer and is an internal interface. The network will ultimately contain all information of the operation. In the network, activity lines are created (arrow 1). An activity line gives an overall description of the job to be performed in the operation. Thus, the sum of all the activity lines gives an overview of all the planned jobs to be performed during the operation. As unexpected contingencies occur, new activity lines may be added in the network. The activity lines are interconnected to the supplier(s) responsible to perform the job. Suppliers access the activity line through an SAP application called E-Bob (arrow 2).

40 E-Bob contains all contracts currently available in SAP. The application provides the supplier with information about all activities they should perform (arrow 3). Suppliers use E-Bob to pick items directly from a contract to a specific activity (arrow 4). The term item is used to describe equipment and fluids. Suppliers are responsible to pick all items necessary to perform the job. When all items are picked the item information is available to the Statoil engineer in the network application (arrow 5). Hence, the network will contain an activity line, describing the job to be performed and the details of equipment needed to perform the job. At this point, the Statoil engineer checks the information which is added by the supplier (arrow 6). If incorrect, the supplier has to correct the information in E-Bob. If correct, Statoil engineer releases the activity line (arrow 7). When the activity line is released, all information connected to the activity is duplicated to LPS and immediate available for the DSR and supply base personnel (arrow 8). Releasing an activity line will also automatically generate a purchase order (PO) to the supplier. Hence, information available in LPS is created by the engineer, who creates the activity line, and by the contracts available in E-Bob. Information present in LPS is also created by the DSR and supply base (arrow 9 and 10). This concerns maintenance of the duplicated information as well as creation of new information. This is described in section 6.3 How information is maintained. 6.1.2 Time planner Figure 5: Information created in LPS The time planner gives an overview of all activities to be performed during an operation and describes which suppliers are performing each job. This document is not made to

41 support distribution, but is used by the DSR to get an overview of the operational progress and future plans. The document is created by Statoil engineer, and is continuously updated according to the operational progress. 6.1.3 Need list The need list is made in an excel sheet listing all equipment and fluid needed for each job in the operation. The list is manually made be a Statoil engineer, and is updated when contingencies occur which shifts demand. 6.2 HOW INFORMATION IS ORGANIZED, REPRESENTED AND VISUALIZED Figure 6 gives an overview of how information is organized, represented and visualized to the information consumer in LPS. The figure is divided in two and the lower part is a continuous of the upper part of the figure. A table describing all column abbreviations in the figure is accessible in appendix 5. Information is represented to the information consumer in a table. Information provided in the table is organized based on the planned date of shipment. The planned shipment date is indexed key date in figure 6. Each row in the table represents information about a delivery or an item. These rows are called rental lines. Rental lines are organized to interconnect the delivery with the financial transaction. Hence, a rental line will contain the PO number to the specific delivery. As can be seen in figure 6, rental lines are also interconnected to the supplier responsible which is indexed vendor name, as well as the activity which is to be performed offshore Act. Description. Information describing the delivery is represented in the coulomb indexed Srv/Mat description. This information is represented by the information which the supplier ticked off in the E-Bob application. The information is often represented at an item level. This means that a rental line often describe an item which are part of a bigger delivery, an item which is part of a tool, or a chemical part of a mix. As information in the contracts often is represented on an item level, a delivery is often represented by more than one line in the LPS report. An example of this is present in figure 6, where row 3-5 which is marked in red is one delivery.

42 Figure 6: LPS report 6.3 HOW INFORMATION IS MAINTAINED Information supporting the distribution is maintained in LPS. It is the DSR s responsibility to maintain the information. Maintaining the information provided in LPS is important to ensure that demanded equipment and fluids is distributed according to the operational progress. Information in LPS is maintained by use of information from the time planner, the need list and morning meetings. Information is extracted from these sources, and used to update and maintain the information which is duplicated to LPS (the rental lines). The time planner and need list is documents which are continuously updated and maintained by a Statoil engineer, when changes are made to the offshore operation. The main concern when maintaining information in LPS is insurance of correct shipping dates. The planned shipment dates for the deliveries must be correct to ensure that demand created by the offshore operation is met with execution of the LPS report. It is observed that the DSR maintain the information in different ways. Similar for them all is that rental lines are not only maintained by altering shipping dates. The DSR also maintain the information which is presented by the rental lines. Three different way of maintaining the duplicated information is identified. The first two approaches is deleting or removal of rental lines. Rental lines are often deleted to manually create a new line for the delivery. Manually created lines are called PRT lines. The blue square marked in figure 6 show which lines are PRT/rental lines. It is not generally known that rental lines can be deleted. Hence, to remove the rental lines the shipping date is set back in time. This is done to get the rental line out of the way. Then, as in the case of deleting the rental lines, a PRT line is created to describe the delivery. Deleting the rental lines disconnects the delivery from the financial transaction. When the delivery is disconnected from the financial transaction it cannot be tracked by its PO number. Thus, for some, it is important to maintain the rental lines. This includes entering

43 the PO to change delivery volumes of fluids delivery. By doing so, the description about the delivery is not changed, only the volumes and quantities of the delivery. Thus, the DRS maintain information to ensure that the LPS report is correct in relation to the offshore operation. This is done by altering shipping dates, so demand is met. Information is also maintained by deleting and removing rental lines to create PRT lines describing the delivery. Others do not create PRT lines, and enter the PO to correct the delivery volumes/quantities. 6.4 HOW INFORMATION IS SHARED AND COMMUNICATED The way information is shared and communicated describes the information exchange which takes place to support distribution to offshore installations. The next section will provide a description of how information is shared and communicated to support distribution to offshore installations. 6.4.1 Information exchange: DSR, D&W team and suppliers Each morning a meeting is held with the D&W team and suppliers. The DSR is part of the D&W team. The meeting summarizes the operational progress during the night and the plan for the next 24 hours. If changes are made, all parties involved are informed as they are present at the meeting. Thus, information is exchanged to give all parties an overview over the current situation offshore. 6.4.2 Information exchange: DSR and supply base Information concerning future deliveries is mainly shared and communicated from the DSR to the supply base by use of LPS. The information which is shared in this system can be viewed in figure 6. LPS does include a box where the DSR and supply base can add a free text to each rental/prt line. These boxes are used to exchange additional information concerning a delivery. A free text is typically added when a delivery is not delivered within delivery deadlines. LPS is also used by the supply base to share and communicate information to the DSR. The base take goods receipt in LPS, which generates a green light on the respective rental/prt line. This can be seen in figure 6. The green light indicates to the DSR that delivery is received, and will be shipped according to the LPS report. A lot of information is also exchanged by other means than LPS. This is evident for the information flow mapped which is accessible in appendix 1. Usually information is exchanged by phone in addition to information provided in LPS. This typically occurs if goods are not received at the supply base. The supply base then needs verification from the DSR regarding the correctness of the LPS report.

44 6.4.4 Information exchange: DSR and suppliers There are no formal channels for sharing information about shipment dates to the supplier, as the supplier do not have access to LPS. The DSR and suppliers use phone and mail to exchange information, to ensure that Statoil and the supplier s planes are aligned. Suppliers also exchange information with the DSR by use of a common mail accessible for all DSRs. The mailbox is exclusively used by the suppliers to send delivery tickets (DT). When a DT is sent, this is an indication to the DSR that the delivery is on its way to the supply base. 6.5 HOW INFORMATION IS REUSED As described, information available in LPS is duplicated from other SAP applications. Hence, all information duplicated to LPS represents information which is being reused. Information retrieved from the time planner and need list also represents information which is reused by the DSR. These documents are not created to support distribution, but are used by the drilling and well team for other purposes. Information which is maintained in LPS is reused by the supply base to be able to take goods receipt, and ensure that deliveries are shipped accordingly to the LPS report. The information provided in LPS is also reused by other supply base activities. The information is by example reused to organize the loading operation and to generate a shipping manifest. Information provided in the LPS report is also reused by the drilling supervisors. They use the information to verify that demand is met by execution of the plan. The information is further reused by the rig owners. The rig owners are the company which owns the offshore installation. They use information in LPS to obtain an overview over which material is present at the rig at any point in time. 6.6 HOW INFORMATION IS DISPOSED OF Information provided in SAP is not disposed of. Information in the DSRs common mailbox is disposed of randomly. Some DSRs store the old mails received in a dedicated folder, while other delete the mail when read. The dedicated folder is deleted when full.

45 CHAPTER 7 7 The five lean principles applied This chapter describes how the five principles of lean can be applied to the research context. The first section presents the analysis result of value perceived by the information consumer. Next, waste which is present in the information management practices is identified as part of defining activities which should be present in the value stream. The last sections will elaborate how the principle of flow, pull and perfection can be applied to the information management activities supporting distribution to offshore installations. 7.1 VALUE This section shows the findings of the analysis defining value from the information consumer s perspective. Value is defined based on which information the information consumers need to be able to undertake work. Hence, an overview of the information consumers responsibilities within the research scope is first presented followed by the analysis result and a description of the results. 7.1.1 DSR and supply base responsibilities Within the research scope, the DSR is responsible to plan, implement, coordinate and follow up shipment of equipment and fluids to offshore installations. Their responsibilities within LPS are to notify when equipment should be shipped offshore, and indicate future shipments. The DSR should make sure that the LPS report for the two next days is correct, so the supply base personnel can plan for vessel capacity. Changes made to the LPS report on the days deliveries should be made within 1200 a.m. The DSR should also add a DT to the correct LPS lines (Logistic Planning System, User Documentation, 2012). Supply base personnel are responsible for goods receipt in LPS. Goods receipt should be made within 1130 a.m. Supply base personnel are also responsible to ensure that deliveries are loaded and shipped accordingly to the LPS report (Logistic Planning System, User Documentation, 2012).

46 7.1.3 Critical success factors The overview of actively statements, supporting theme and general theme for the DSR and supply base can be found in appendix 3 and 4 respectively. Four main general themes are identified from the DSR and supply base point of view. These are internal information exchange, information system, information quality and external information exchange. It is found that internal information exchange is a critical factor for success for both information consumers. In total 37% of the statements was classified as internal information exchange by the general theme for the DSR, and 40% for the supply base. The information system which was discussed by the participants is LPS. Thus, the general theme information system is part of the internal information exchange, as LPS is an internal interface. All general themes of information quality are concerned with information quality in LPS. Hence, part of the internal information exchange, is an information system with high quality information. CSF1: Efficient internal information exchange: information system with high quality information. The DSR also indicate that good communication with suppliers is a critical factor to support the distribution. For the supply base this is less critical. CSF2: Efficient external information exchange These are factors which are perceived as most critical by the DSR and supply base in the process of supporting distribution to offshore installations. 7.1.4 Information requirements Information requirements (IR) identified are listed in table 1. The next sections will elaborate what is meant and perceived as valuable with the information requirements identified. Information Requirements, CSF1: DSR: Supply Base: Operational progress Future deliveries Equipment to job Delivery information: Delivery information: -Number of units each delivery - Type of equipment -PO number for delivery - Supplier information -Carrier type - Rental equipment -Loose items Delivery verification from supply base Information when LPS report is changed Information Requirements, CSF2: DSR: Supply Base: Delivery Status Temporary equipment Transport validation (DT) Table 1: Information Requirements

47 7.1.4.1 DSR information requirement supporting CSF1: For the DSR the internal information exchange is about obtaining information (operational progress, equipment to job, delivery information) and transferring the information to the supply base. It is also about verification of received deliveries at the supply base (Delivery verification from supply base). IR 1: Operational progress Obtaining information about the operational process is perceived as value as it is the basis of information needed to support distribution of equipment to the offshore installations. A typical statement describing these requirements is I need information about operational progress to determinate delivery date for equipment and fluids. Thus, an overview of the operational progress is the basis which is used for further planning. IR 2: Equipment to job Equipment to job is defined as information about which equipment is demanded for each job. The DSR find value in information about which equipment is to be used to perform each job. This information is valuable as it is used with the information of the operational progress to ensure that equipment is shipped according to the operational progress. Thus, to be able to plan for future deliveries, the DSR find value in knowing which equipment is demanded for each activity offshore. IR 3: Delivery information Delivery information is defined as information concerning a specific delivery. It if found that the DSR find value in information about which type of equipment is being delivered. Value is perceived in the equipment name. Value is perceived in information concerning which supplier is delivering the equipment. This is perceived as valuable as the DSR is responsible to follow up suppliers if demand changes. The DSR also find value in information concerning which rental agreement is giving for the delivery (if rental). This information is valuable as the DSR is responsible for cost reductions. There are different types of rental agreements in different contracts. For some equipment, the rent start to run when goods receipt is made. Other equipment is defined as consignment, where rent start when the equipment is being used. Hence, for the DSR it is value in knowing the rental agreement so that expensive rental equipment is not delivered days before demand occurs. IR 4: Delivery verification from supply base The DSR value receiving a verification regarding received deliveries from the supply base. This information is valued as the DSR is responsibility to follow up when deliveries are not received. The information is also perceived as valuable as the DSR must create a priority for late deliveries to get the delivery shipped according to the LPS report.

48 7.1.5.1 Supply base information requirements supporting CSF1: IR 5: Future deliveries For the supply base it is important that the LPS report show future planned deliveries, and that the report is correct. This is valuable in planning for vessel capacity. IR 6: Delivery information Delivery information is defined as information describing a specific delivery. The supply base finds value in information of the deliveries PO number. This information is valuable as goods receipt is made in connection to the deliveries PO number. The supply base also values the PO number being present at the DT as well as in LPS. The DT often represents information differently than the representation provided in LPS. The PO number makes the task of connecting the physical delivery to the right LPS lines easier. The supply base also perceives value in information about the total number of carriers a delivery contains. As the information represented to the supply base in the DT and LPS differ, this is a way of verifying that the whole delivery is received. Opening and checking carriers is not part of supply base responsibilities, as the suppliers are responsible for the carrier s content. The carriers are sealed by the supplier before delivered at the supply base, and should not be opened. The supply base also finds value in knowing which type of carrier is delivered. This is due to planning and loading of vessels. Further, the supply base finds value in knowing if the delivery is made as a loose item. When a supplier delivers a loose item it has to be repacked at the supply base in a certificated container which meets packing regulations. Hence, loose items require extra processing which needs to be planned for. IR 7: Information when LPS report is changed It is valuable for the supply base to be notified when changes are made in the LPS report on due date. This is valuable as it can reduce unnecessary activities at the supply base. This was stated as a problem multiple times in the interview. 7.1.5.2 DSR information requirements supporting CSF 2 IR 8: Delivery Status Delivery status is defined as information concerning the status of a delivery, where the delivery is and when it will be delivered at the supply base. This information is perceived as valuable for the DSR when a supplier is unable to deliver according to delivery deadlines. When deliveries are not within the delivery deadlines, a priority must be created to ensure that the delivery is shipped according to the LPS report. IR 9: Transport validation The DSR also find value in transport validation of deliveries. The validation is made as the supplier mail a DT to the DSR common mail. This indicates to the DSR that the delivery is transported to the supply base.

49 7.1.6.1 Supply base Information requirements supporting CSF 2 IR 10: Temporary equipment The interviews show that the supply base generally have little contact with suppliers, as the DSR should be the middle part in the information exchange. In the case of temporary equipment, classified as Z015 in Statoil s internal systems, the base find value in being informed about delivery of such equipment. Suppliers are responsible to contact the supply base when such equipment should be delivered. Z015 has to be clarified by technical personnel from the supply base before it can be delivered. Thus, the base finds value in being informed about such equipment, and should as a rule be informed 3 days prior to delivery of Z015. 7.2 THE VALUE STREAM This section will list the activities which should be present in the value stream. The first part of the section will show the identified waste in the current information management prates. Next, the activities which create waste are eliminated and activities which should be part of the value stream are listed. 7.2.1 Waste identification This section provides an overview over the waste which is identified in the current information management practice. The definition of waste provided in section 4.2.3. Defining waste in the context of LIM, is used as basis for the identification. Figure 7 gives a representation of the waste identified and where the waste is identified in the information flow. Figure 7: Waste identified

50 7.2.1.1 Overproduction - flow excess In section 4.2.3 Defining waste in the context of LIM, overproduction is defined as the activity of creating and maintaining information which no one uses. Processes which are undertaken by the information consumer to obtain relevant information in the information overload are also defined as waste. Various cases have been identified as overproduction in the research scope. Creation of information which is not used The interviews indicated that excess information is available in LPS. This is evident from statements such as I don't use all information provided in LPS and Delivery information in LPS is too detailed. The statements are respectively a DSR and supply base statement. It is also found that 80% of information duplicated to LPS is deleted or removed to create new information. This indicates overproduction of information in LPS. The functionality of the IS which ensures that information is duplicated to LPS is defined as waste. The functionality is not valued as the information provided is not used. Hence, the functionality is embodied but it creates information which no one (generally) uses. Hence, the functionality of duplicating information from E-bob to LPS is defined as waste. It is also identified that all information which is accessible in LPS is not used. Processes are undertaken to create the information and is thus defined as waste. Appendix 5 provides an overview over all information which is duplicated to LPS. The table describes which information is actually used by the information consumers. Resource consumption due to information overload Overproduction is also identified in the common mail which all DSRs access. All information available in the mailbox is defined as valuable, as the DSR perceive value in receiving DTs on all deliveries. The value of a DT is dedicated to a specific DSR. This is because information regarding an installation is only valuable for the DSR supporting distribution to the specific installation. Since all DT s are sent to the common mail, the DSR use time to search for the information which is valuable for them. The excess information result in resource consumption in the process of identifying valuable information. It is important to note that this organization on information is necessary due to the DSR work rotations. The DSR are structured in duty teams, where one DSR is on duty at all times. When on duty, the DSR is responsible for all offshore installations in in the respective team. Thus, for the supplier to be able to send information to the DSR, the common mail must be present. Without this mail it would be difficult for the suppliers to provide information to the right person. Hence, the common mail represents overproduction as the DSR has to search for valuable information in the information overload, but is perceived as necessary due to duty rotations. The waste is therefore classified as type one muda, which is none value adding but necessary to safely support offshore distribution.

51 7.2.2.1 Defects Flawed flow Defects are defined in section 4.2.3 Defining waste in the context of LIM, as wrong and/or inaccurate information. Defects are also defined by processes of verification and correction of information, and inappropriate actions based on wrong/inaccurate information. Inaccurate information The interviews show that the DSR use time to correct information about deliveries which is duplicated to LPS. Duplicated information is also deleted to create new information. An example of activity statement is I use a lot of time editing lines in LPS. The statement indicates that information duplicated to LPS may be defect as time and resources are used to edit duplicated information. Further, the definition of value from the information consumer s perspective shows that little value is perceived in information which is duplicated to LPS. These are both indications towards defining duplicated information as defect. It s a fact that information duplicated to LPS is correct. The information is correct as it is duplicated from contracts, which describes details of equipment and fluids. As information is correct, the question is why the information consumers perceive so little value in the information and use so much time editing the duplicated information. The information consumers have stated that a lack of product knowledge makes them unable to understand the detailed information in LPS. This is evident from statements which describe that We do not have sufficient product knowledge to know every item in LPS, and Generally, supply base personnel does not understand all lines in LPS in relation to a delivery. The statements are given by a DSR and supply base respectively. Further, the DSR also stated that The language used in LPS does not fit. This indicates that the defect is related to the way information is represented to the information consumer and not to the correctness of the information. Hence, it is argued that the information which is duplicated to LPS is defect due to its representation to the information consumer. The contract language is too detailed, which unable the DSR and supply base personnel to understand which equipment the delivery contain as they do not have sufficient product knowledge. This causes the DSR to delete and edit the information to improve the way information is represented to the supply base. Hence, resources are used to improve the way information is represented and duplicated information should be defined as defect. Verification of information It is found that the DSR and supply base exchange a lot of information by phone. The information which is exchanged regards the correctness and the meaning of information present in the LPS report. The activity of verifying information which is available in the information system is defined as waste. The information provided in the information system should in the first place provide value, which means that the process of verifying information should not be present in the information exchange. Verification of information present in the LPS report is defined as waste and should be eliminated.

52 Inappropriate actions due to wrong information It is found that inappropriate actions are undertaken at the supply base due to wrong information. Inappropriate actions occur when the supply base use old information for decision making. The supply base stated that When changes are made to the day s plan after gods receipt is taken, the change is often not noticed before the loading operation has started. Hence, when deliveries are postponed in LPS after goods receipt is made, inappropriate actions occur as the delivery is loaded for shipment. Loading a delivery requires much handling at the supply base, and consumes a lot of resources. Supply base personnel are unable to update the LPS report rapidly, as they have other responsibilities. This result in inappropriate actions based on old and wrong information. 7.2.2.2 Extra processing Failure demand Extra processing is defined in section 4.2.3 Defining waste in the context of LIM, as activities which create no value for the information consumer and resource consumption due to lack of information. Activities which creates no value It is found in the studied LPS report that supply base often uses the free text field supply base text item to comment when receipt of goods is taken. This can be seen in figure 6, where the text Motatt is added to the last three rows. Motatt is the Norwegian word for delivered. This action represents extra processing as LPS automatically generates a green light on the respective line when goods receipt is made. This is also evident from figure 6. The DSR has stated that When a light is green in LPS, I assume the equipment is delivered and will be loaded as stated in LPS. The activity of adding information which already is available in the information system represents extra processing and should be defined as waste as it creates no value for the DSR. 7.2.2.3 Waiting Flow demand Waiting is in section 4.2.3 Defining waste in the context of LIM defined as the time and resources used to identify information which needs to flow. When information of value is not identified or created, activities are held up waiting for the information. Identification of information which needs to flow The DSR use resources to identify information which should flow in LPS. As duplicated information is generally unused, resources are used to identify the information which should flow instead of the duplicated information. Waiting occurs because the information system applications are not organized to duplicate valuable information between applications. Additional processes are undertaken by the DSR because if the IS lack of functionality. The inability of the IS to provide valuable information to flow create waste as resources are used to identify information which should flow. 7.2.2.4 Motion Waste within the category of motion was not fond from the data collected.

53 7.2.3 The value stream This section lists the activities which should be part of the value stream. The activities are identified based on value defined by the information consumer and waste defined in the current way information is managed. How information in LPS should be created: DSR should create information in LPS regarding a delivery by retrieving information from the time planner, need list and morning meeting. Supply base should create information in LPS when delivery is made (automatically). How information is organized, represented and visualized: Information in LPS should be organized as it is today (in a table). It is important that the information describing the delivery, Srv/Mat description is represented by the equipment name. Information which should be represented in LPS is the information requirements identified in section 7.1.3 Information requirements. subject boxes in the DSRs common mail should be marked with the DSRs address. How information should be maintained: DSR should maintain information in LPS so execution of the LPS report will meet demand created by the offshore operation. Statoil engineer should maintain information in the time planner and need list as changes are made to the initial plan. How information should be exchanged: DSR and supply base should exchange information by use of LPS. In special cases, information should be exchanged through other means (phone). Suppliers should provide DT of deliveries in a common mail. 7.3 FLOW The flow principle within information management suggests that relevant and up-to date information should flow. Focus is attended to making value flow, and not on aligning activities in a uniform way. To implement flow to the research context focus is attended to elimination of unnecessary information and activities. If unnecessary information and activities are eliminated, it is easier for the information users to make valuable information flow within and outside the information system (LPS). Thus, waste defined in section 4.2.3 Defining waste in the context of LIM should be reduced or eliminated. Focus is also attended to conduct information management activities with simplicity. If information management activities are performed in a simple and yet correct way,

54 information will be able to flow to the information consumers sooner than if the activity was performed in a more time consuming way. 7.3.1 Enhancing flow by waste reduction 7.3.1.1 Overproduction: Common mail The organization of information in the common DSR mailbox is defined as waste. The organization of information results in resource consumption in identification of valuable information. The waste was classified as type one muda due to the DSRs duty rotations. It is argued that the time used by the DSR to search for valuable information in the mailbox (waste) can be reduced by focusing on the principle of flow. In the common mail all subject boxes are marked with the content of the mail and the short name of the offshore installation. Describing the content of the mail does not create a structured overview of the mail box, which result in the DSR using more time to identify valuable information. It is argued that the subject box should be used to describe the DSRs address. The address should be the short name of the installation. This will provide a better overview in the mailbox. A better overview will make it easier and less time consuming to identify valuable information because the mailbox would be less cluttered. Hence, using the DSR address will reduce the time spent searching for valuable information. Thus, flow is enhanced as information is enabled to flow to the right information consumer. 7.3.1.2 Defects: Inappropriate actions As described in section 7.2.2.1 Defects, inappropriate actions occur at the supply base due to decisions based on old information. It is argued that the basis of the waste is not related to use of old information for decision making. Inappropriate actions occur because there is a lack of understanding of how to exchange information in different situations. Correct information is often presented in LPS when inappropriate actions occur. This means that the DSR has exchanged the new and correct information to the supply base. The new information is not retrieved by the supply base due to their inability to rapidly update the LPS report. Hence, there is a lack of understanding of how to exchange information in different situations. This is argued to be the basis of why inappropriate contingencies (waste) occur. Hence, inappropriate actions occur because there is a lack of understanding of how to exchange information in different situations. It is argued that if the actors understand each other perception of value, it will enable them to exchange valuable information. It will also enable them to understand which channels to use for information exchange in different situations. To reduce inappropriate activities at the supply base, the DSR should call the supply base when they alter the days plan in LPS. This will enable information to flow more efficiently, as the supply base does not continuously update the LPS report. As flow is improved, inappropriate actions at the supply base can be reduced. Hence, it is important that the DSR and supply base understand each other perceptions of value. This would provide relevant and up-to date information to flow by use of the right channels of communication.

55 7.3.2 Performing Information management activities with simplicity Conducting the activities of information management in a simple, yet correct way, will provide the DSR and supply base with valuable information as soon as it is acquired. 7.3.2.1 Maintaining information The maintenance of information is argued to be easier and less time consuming if contract information was not duplicated to LPS. It is found that this information is usually deleted or removed by other means. Information which is valued would be provided earlier to the supply base if the DSR did not conduct the activity of deleting/removing rental lines. This means that the DSR should create the information accessible in LPS. Hence, the flow would be improved if contract information was not duplicated to LPS. 7.3.2.2 Information exchange To be able to implement flow it is necessary that the DSR and supply base obtain an understanding of each other perception of value. The two actors support each other in reaching the same goal. An understanding of the other actor s perception of value will enable both actors to exchange information which is valuable for the other part. It will also enable them to understand how information should be exchanged. This will enhance the principle of flow and enabling valuable information to flow between them. 7.4 PULL Information and functionality of information should only be implemented if it is demanded by the DSR and supply base. This will enable the then to pull information when needed. The principle of pull should be implemented in LPS. Pull could be achieved if duplicated information was of value for the DSR and supply base. Then, the DSR and supply base could pull information form LPS as necessary. The way information is duplicated today, involves a punch principle. Information of low value is pushed from other SAP applications to LPS as the information is not perceived as valuable for the information consumers. By altering the representation of the information, it is argued that the principle of pull is applied. If information of value is duplicated it is demanded by the information consumer and is as such pulled. The principle of pull should also be used it if Statoil is to change the way information is being managed. By introducing the concept of pull in the process of changing information management practices, the result will be a practice of managing information which is perceived as valuable from the information consumer s point of view. 7.5 CONTINUES IMPROVEMENT To be able to apply the principle of continuous improvement, focus should be attended to continuously assessing and evaluating the information management practice which support distribution to offshore installations.

56 By creating a focus group consisting of all parties involved could enable a process of continuous improvement. By regularly assessing the current information management practices and how the practices are perceived by the information customers would enable focus on improvements. This would enable the information management supporting distribution to offshore installations to become better over time. This will enable Statoil towards perfection by continuously removing layers of waste as they are uncovered by the focus group.

57 CHAPTER 8 8 Discussion 8.1 DEFINITION OF THE TERM INFORMATION CONSUMER In this paper, the term information consumer has been used to describe the information user. Value has been defined from the information consumer s point of view. Hence, value is defined from the DSR and supply base point of view. Definition of value from the information consumer s point of view was used as a working hypothesis. This was done to be able to reveal if it is beneficial to define value form the information consumers or end customer s point of view. Value is defined by which information the information consumer needs to undertake work. Although the DSR and supply base has the same immediate goal of supporting the distribution, the findings show that they have somewhat different perceptions of which type of information they find valuable. Both value information concerning planned deliveries, but the information valued concerning the delivery is different. By example, the DSR value information about required delivery dates and the name of the equipment. The Base need more detailed information regarding the delivery. They value information regarding container ID, total number of carriers and so on. The different perspectives of value indicates that defining value from the information consumer s point of view may be a good approach in LIM. Defining value from the end customer point of view, in this case the supply base, would not uncover the value perceived by the other actors in the chain, the DSR. The value perceived by the other actors is important, as they are working towards the same goal. Hence, when managing information which supports a business process, it is important that all actors define value from their perspective. If not, value perceived by other actors would be neglected. Neglecting value could harm the performance of the process which the information intends to support. Hence, defining value from the information consumer s point of view is beneficial in the context of LIM as this will provide a definition of value for all actors supporting the same goal.

58 8.2 CLASSIFICATION AND DISCUSSION OF DATA AND INFORMATION After conducting the analysis of what is perceived as value, it is clear that information which is duplicated to LPS do have low value for the information consumers. Hence, it is relevant to discuss if the information duplicated to LPS from other SAP applications can be classified as information or if it should be classified as data. In section 4.1.1 Data, information and knowledge, data is defined to be raw facts concerning an event or entity. Information is defined as meaningful data which is used as the basis of decision making (Detlor, 2009). It is argued that the process of editing information in LPS is conducted by the DSR to add meaning to the information which is duplicated. This is done to improve the information which is exchanged in LPS. Editing the information enables the supply base to make decisions based on the information provided in LPS. Hence, information is edited to provide meaning, which enables the information to be used as basis for decision making. Duplicated information in LPS is information which is created in contracts. The contracts use very specific language to ensure their correctness. To provide this, contracts include specific details of equipment which is dealt with in the contract. These details are facts concerning the specific equipment (or fluid), or a part of the specific equipment. In this manner, the information duplicated to LPS should be classified as data. This is because it presents raw facts about equipment, which has low value in the process of making decisions to support distribution of offshore deliveries. Hence, most of the information duplicated to LPS is classified as data, and not as information. The DSR add meaning to the data by editing the duplicated information. This means that the DSR transform raw data to usable information. This information provides better communication between the DSR and supply base, which is important to ensure correct and safe distribution of equipment and fluids offshore.

59 CHAPTER 9 9 Limitations of the study Only two previous publications of LIM are identified. The description and elaboration of lean principles in the context of information management is fully dependent on the two publications. The study is limited to the correctness and validity of the two publications, as they are used as a base for defining lean concepts within information management. The study has described how lean can be implemented in supporting distribution to offshore installations. Lean principles are thus implemented to a local island in Statoil. It is stressed that lean should not be implemented locally in an organization. This is because the greater benefits of a lean implementation occur when lean is implemented to the whole organizations and extended outside the organizational boarders (Liu, Leat, Moizer, Megicks &Kasturiratne, 2012). For Statoil to achieve the greater benefits of lean, focus should shift to implement lean as part of the organizations mindset. The study is thus limited to show that it is possible to implement lean principles to information management practices.

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61 CHAPTER 10 10 Conclusion and future research This paper has studied the concept of LIM. A foundation of lean principles in the context of information management is provided. It is found that the five core lean principles can be applied to the context of information management. The study has also discussed the validity of the seven types of waste in the context of information management. It is found that the waste of transport and inventory cannot be translated from a manufacturing context to an information management context. Transportation lack basis in LIM because today s organizations usually transports information by electronic means. Hence, transportation is an immediate transfer which adds no time to the process. Transportation is therefore not defined as waste in the context of LIM. In addition, physical inventories are generally nonexistent in today s organizations. Information is usually stored in electronic formats. It is argued that insignificant costs are associated with electronic storage and is therefore not considered to be a wasteful activity in the context of LIM. The study applies the two top layers of lean, as cited in figure 3, to a research case. The research case is Statoil s information management activities which supports distribution to offshore installations. The first step in implementing lean principles to the researched case was to provide a definition of value. An analysis is conducted to identify the information consumer s perspective of value. The information consumers are in this case the DSRs and supply base personnel. Value is identified based on their information requirements to undertake work and live up to their responsibilities. It is found that the information consumers have different perceptions of value. Because the DSR and supply base personnel support the same business process, it is argued that defining value from the information consumer s point of view should be conducted in the context of LIM. If not, value (and information) is neglected and this may harm the business process which the DSR and supply base support. Applying lean principles to the information management practices in Statoil has proved to improve the current information management practices in the company. Applying lean principles identifies that it exist a lack of understanding concerning the value perceived by the information consumers. The lack of understanding of value, results in an information system (LPS) which does not support the business process in the way it was intended. The information provided to the information consumers in LPS, is found to

62 have low value. The low perception of value is due to the fact that information available in LPS in reality should be defined as data. The data provided is not found suitable to support distribution to offshore installations. The data is not suitable as it describes raw facts concerning an equipment or fluid mix. Because the DSR and supply base personnel are not supposed to be experts on such details, they find it difficult to understand the meaning of the data provided in LPS. The study has shown that applying lean principles can help Statoil in shifting their information management practices towards activities which creates value for the information consumers. It is therefore concluded that LIM can help Statoil improving their information management practices which support distribution to offshore installations. Lean will enable Statoil to define value, and provide value to individuals supporting a process. Implementing LIM will also reduce the information which is necessary to support distribution as it is identified that the information consumers value less information than they access today. Hence, it is found that Statoil can improve information management which supports distribution to offshore installations with focus on value creation and waste reduction. Future research should be provided on the definition of the information consumer. The research has shown that different information consumers do have different perception of value. Future research should be conducted to identify if the definition of the information consumer is generally applicable in the context of LIM. This study did not find the waste of transport and inventory to be of relevance in LIM. These definitions were neglected as their validity within information management was unclear. Future research should be conducted to uncover if all the seven types of waste do have relevance in the context of LIM, or if the findings in this study is generally applicable. This is important as a missing definition of waste is found to be one of the barriers of a lean implementation to information management.

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