MANAGING BUSINESS

BM027-3.5-2-MBUSS

Contents
1.0 Introduction to company .................................................................................................................. 1 1.1Companies Vision .............................................................................................................................. 2 2.0 Demings 14 points .......................................................................................................................... 3 2.1 Brief history about Deming and his philosophy ........................................................................... 3 2.2 Create constancy of purpose towards improvement; ................................................................ 3 2.3 Adopt new Philosophy .............................................................................................................. 3 2.4Cease dependence on inspection to achieve Quality:................................................................. 4 2.5 Move towards a single supplier for any one item ..................................................................... 4 2.6 Improve constantly and forever ................................................................................................ 4 2.7 Institute training on the job ....................................................................................................... 5 2.8 Institute leadership: ................................................................................................................... 6 2.9 Drive out Fear ........................................................................................................................... 6 2.10 Break down barriers between departments: ............................................................................ 6 2.11 Eliminate Slogans and targets ................................................................................................. 7 2.12 Eliminate management by objectives ..................................................................................... 7 2.13 Remove barriers to pride of workmanship .............................................................................. 7 2.14 Institute education and self-improvement ............................................................................... 8 2.15 The transformation is everyones job ...................................................................................... 8 3.0 Conclusion ......................................................................................................................................... 9 References ............................................................................................................................................. 10

1|Page

Introduction to company

MANAGING BUSINESS

BM027-3.5-2-MBUSS

Royal Dutch Shell as a group was created in February 1907 through the merger of two companies which are Royal Dutch Petroleum and Shell Transport and Trading Company Ltd in the United Kingdom. The merging was due to the challenges brought by the crisis of 1907 and they both needed to compete globally with the dominant American petroleum company. The two companies merged all operations: 60% Royal Dutch; 40% Shell (Corporate watch). Royal Dutch Petroleum was a Dutch company founded in 1890 by jean Baptiste August Kessler along with Henry Detering. Shell Transport and Trading Company which was founded in 1897 by a British business brothers called Marcus and Sam Samuel young shopkeepers selling bric-a-brac in Londons east end. Marcus later transformed his shop into import/export business. Later on, they moved the business into oil industry which deals which the transport and storage (shell.com).

1.1Companies Vision To engage efficiency, responsibility and profitably in its products. To participate in the search for and development of other sources of energy To meet up customer needs and the worlds demand for energy.

2|Page

2.0 Demings 14 points

MANAGING BUSINESS

BM027-3.5-2-MBUSS

2.1 Brief history about Deming and his philosophy W. Edwards Deming is the internationally renowned consultant whose work led Japanese industry into new principles of management and revolutionized their quality and productivity. The 14 point was enjoyed and practiced by Deming for more than 40 years (Deming W.2000). Below are the Demings 14 point in application in comparison to whether they are applying it or they are not.

2.2 Create constancy of purpose towards improvement; At this stage of quality improvement, it defines the values, mission and vision to provide long-term direction for management and employees. It also includes investing in innovation training and research (joel D wisner et al 2008). In shell, they set their vision is to help meet the worlds demand for energy economically environmentally and socially responsible ways. This are the long term goals set by shell. Secondly shell tries to improve its product and services through setting out some strategic goals which are setting out new agendas for growth and concentrating on their project. They also aim at delivering benefits and reduce their impact through the choices they make about which project to invest in through making of more energy efficiency products. Not only that, they control the way they operate by setting their business principles, code of conduct and policies like health , safety, security and environmental & social performance in which all the shell companies and joint ventures they control must follow(shell.com). 2.3 Adopt new Philosophy This explains the new standards which helps in scraping out or reducing the mistakes, defects, poor workmanship, bad materials, handling damage, fearful and uninformed workers, poor training or not at all, executive job-hoping, and inattentive and sullen service(Mark A. Friman 2002) In Royal Dutch Shell, they have different modus operandi which is similar to this point but they apply it in a different way. The management team and the work force work hand in hand, most works are delegated from top to bottom of the organisation, but the employees are carefully monitored by management team to ensure efficiency and effectiveness.
3|Page

MANAGING BUSINESS

BM027-3.5-2-MBUSS

2.4Cease dependence on inspection to achieve Quality: This point is achieved by thoroughly understanding the sources of variation in the processes and working to reduce variation (Russell C.2002). In Royal Dutch shell, they do perform inspection on their products and services; example in Nigeria there was an oil spill in 2011 in which the oil company lost up to 40,000 barrels of crude oil (the guardian 2011). When investigations were conducted it was found out that some of their pipelines were licking and that was that was the course. This incident happened due to lack of inspection on the pipelines. The oil company has they have their Fuel oil quality assurance system (FOQAS). It is there to give confidence in the quality of shell marine fuels (Shell.com). This are inspections carried out before the final product is been finished. 2.5 Move towards a single supplier for any one item This means that when there are multiple suppliers variation occurs between raw materials (Gupta 2009). This will result in variation of manufactured parts. If shell will depend on one supplier, the uniformity will be ensured and variation due to raw materials can be drastically reduced. The research I have conducted, I found out that Royal Dutch Shell doesnt apply this Demings philosophy or principle. I will like to suggest that they should apply this principle because there are a lot of draw backs when it comes to moving towards a single supplier of items or raw materials.

2.6 Improve constantly and forever Dr.Deming says, Quality must be built at the design stage this cannot be achieved except there is teamwork. Dr Deming emphasizes that management must lead the way. Only management can initiate improvement in quality and productivity production workers on their own can achieve very little in terms of improvement. In shell, they have continuous improvement programmes in place to increase operational uptime and performance and to control costs. The new projects are driving growth in the company today, and their investment decisions should drive oil and gas production for decades to come. Here are some of the examples of the continuous improvement.

4|Page

MANAGING BUSINESS

BM027-3.5-2-MBUSS

In Nigeria, a gas project ramped up well, the production of some 250,000 b/d. it has added Nigerians liquefied natural gas supply capacity and will feed electricity supplies for some of the local communities. In Qatar in 2011 there were two projects which is the Pearl GTL and Qatargas 4 LNG will improve the production to 350,000 b/d which is over 10% of their world production as of 2011. This shows that they are also going with the deming philosophy.

2.7 Institute training on the job Most of the organisations in today world have large training for their employees, few small enterprises or small scale business needs no training for the job. As Dr Deming has said It is very difficult to erase improper training, so at least an organisation should try its possible best to institute modern training to the employees and the management to make use of every employee. New skills are required to keep up with changes in the materials, methods, product and service design, machinery, techniques, and service (Qualityregister). In Shell Company, they also apply same philosophy by introducing training to their employees and manager. At shell Oman, they have two types of trainings which are; 1. Training for development 2. Training for employment 2.7.1 Training for development: Shell Professional training programme Shell career awareness programme Sidab women sewing group

2.7.2 Training for employment Oil and gas industry training Customer service programme Assistant ships & fording agents Medical Transcription training

5|Page

MANAGING BUSINESS

BM027-3.5-2-MBUSS

2.8 Institute leadership: Management has to adopt leadership aimed at helping people do their job in a professional way. Managers and supervisors responsibility must be changed from sheer numbers to quality. If quality improves automatically the level of productivity will increase. Management must ensure that immediate feat must be taken on the reports of poor tools, maintenance, defect, services, and all aspects that will affect the quality (Quality register). Leadership in royal dutch Shell has a single-tier board of directors chaired by a Nonexecutive chairman, Jorma Ollila. The executive management is led by chief Executive Officer, Peter Voser.

2.9 Drive out Fear This Demings principle pointed out clear for leaders and managers who sought the benefits of continuous improvement should drive out fear in them. Deming claim that eliminating fear would enable workers to share ideas for improvements in their work process, ideas essential for improvements in both the process and product (Vincent L. 2012) In Royal dutch shell the leadership demonstrate ts true commitment to quality by daily involvement in the improvement of the most needful business processes. To give a clear understanding on how shell apply this to their business, in Nigeria, shell spends millions of money working with NGOs and community development organisation. This has shown that it has drove out the fear and for this reason it can win more contracts with the Nigerian government (Andrew B. 2011). 2.10 Break down barriers between departments: Breaking down barriers simply means people in almost all the department in the organisation which include research, design, sales, and production must work as a team, to tackle problems of production and in use that may be encountered with the product or service (Deming E 2000 pg 24). Barriers no more exist between employees in Royal Dutch Shell. Middle level managers and the high level managers do sit down together and discuss the issues regarding the issues and how it can be resolved. Every employee is entitled to bring suggestions to the Growth of the company and that shows that no barrier exist between the departments in the organisation.
6|Page

MANAGING BUSINESS

BM027-3.5-2-MBUSS

2.11 Eliminate Slogans and targets Getting rid of unclear slogans, exhortations, and targets asking for zero defects of new level of productivity is Demings tenth point. In most cases, its not the workers that usually make mistakes but the process their working with. Putting blame on the workforce instead of improving the process is counter-defective (Walton M.1986 pg 76). In Royal Dutch Shell, there is no place for slogan they have been able to deal with this by ensuring that the process and the people have to work hand in hand, they believe by improving the process it will adversely have effect on the performance of work done because the process serves as a guideline to the workers. 2.12 Eliminate management by objectives This point is point indicates that the organisation should learn and institute methods of studying the capabilities of processes and how to improve them. They should use statistical methods for continuing improvement of quality and productivity. Management by objectives should be replaced by leadership (Tapan B. pg 46). Shell Company has adopted the role of leaderships in the company. The company has its form of leadership in which they work all together to increase the production rate. 2.13 Remove barriers to pride of workmanship A sense of pride and fulfilment can unleash the inherent talents of people. The appraisal systems now used are heavily tilted towards numbers. People are recognised and rewarded for short-term number crunching despite all exhortations of quality. All such system must be replaced with new ones because it strangles creativity (Tapan B. pg 46). In Royal Dutch Shell, they have applied this principle in such a way that they work in team to achieve quality they try to ignore any problem that will arise in terms of working which can lead to ego issues. For example when there was an oil spill in Nigeria, a team of engineers came together and fixed those pipes that were leaking causing the spill (UPI 2012). The organisation provides professional training and development programmes and support, an also offer leadership programmes to the employees. This kind of trainings will keep the knowledge of the employees updated and they will be happy about that, and that will motivate them to work happily for the organisation.

7|Page

MANAGING BUSINESS

BM027-3.5-2-MBUSS

2.14 Institute education and self-improvement Here Deming pointed out that there must be all-round development {including selfdevelopment} of people and the management through education. It keeps the people updated with what is going on in their relevant field, hardness and leadership qualities and implants self-reliance (Bose T.). Shell Company appointed QUT Company to be as one of its global learning partners to form the shell project Academy and Finance in projects programs. QUT works as part of a global consortium in the academy to deliver a cutting-edge, project and financial management education programs to shell project teams at all stages. This is how Shell Company train or educate its employees to enjoy better quality products and services (QUT).

2.15 The transformation is everyones job Success cannot be achieved without dedication in every aspect of life. So here, Deming pointed out that everyone in the organisation has to come together and work to accomplish the transformation. This transformation is everyones job, and it requires the talents of all the employees. It requires all the talents of each person (Levitt J. 2004 pg 48). Royal Dutch shell involves all its employees in planning and direction of their own work. The company values communication with it employees, directly or via staff councils or recognised. Employees are encouraged to report their views about the processes and practices safely and confidentially to managers or Human Resource staff.

8|Page

3.0 Conclusion

MANAGING BUSINESS

BM027-3.5-2-MBUSS

In conclusion I would like to express that Demings 14 Point has been applied in Shell Company in many different aspect of the organizations tasks and project. The 14 Demings point is a form of guide for the company which has really improved their productivity and management, the philosophy has created very good relationship between the employees and the employers. Implementing quality measure is very important for a business to succeed, Royal Dutch Shell has been able to promote its business and attract more customers by applying quality measure which has led to an increase in their market. Basically, the 14 Demings point has contributed greatly to the success of businesses and also quality measures are quite important in order to achieve goals and success in business.

9|Page

MANAGING BUSINESS

BM027-3.5-2-MBUSS

References
BOSE, T. K. (2011). Total quality of management. Delhi, Pearson. http://proquest.safaribooksonline.com/?fpi=9788131700228. Burger, A. (2012) Shell in Nigeria: Oil, Gas, Development & Corporate Social Responsibility. [online] Available at: http://www.triplepundit.com/2011/07/shellnigeria-csr-corporate-social-responsibility/ [Accessed: 24 Aug 2012]. DEMING, W. E. (1986). Out of the crisis. Cambridge, Mass, Massachusetts Institute of Technology, Center for Advanced Engineering Study. FRYMAN, M. A. (2002). Quality and process improvement. Albany, Delmar/Thomson Learning. LEVITT, J. (1996). Managing factory maintenance. New York, Industrial Press. Qut.edu.au (2012) QUT - Customised education - Business School. [online] Available at: http://www.qut.edu.au/business/corporate-education/customised-education [Accessed: 27 Aug 2012]. Shell.com (2012) Royal Dutch Shell sets out new growth agenda | Shell Worldwide. [online] Available at: http://www.shell.com/home/content/investor/news_and_library/2012_media_releases/sh ell_sets_out_new_growth_agenda_02022012.html [Accessed: 6 Sep 2012]. Upi.com (2012) Shell starts repair work in Nigeria - UPI.com. [online] Available at: http://www.upi.com/Business_News/Energy-Resources/2012/05/17/Shell-starts-repairwork-in-Nigeria/UPI-12231337254899/ [Accessed: 1 sep 2012]. Vidal, J. (2011) Nigeria on alert as Shell announces worst oil spill in a decade | Environment | guardian.co.uk. [online] Available at: http://www.guardian.co.uk/environment/2011/dec/22/nigerian-shell-oil-spill [Accessed: 23 aug 2012]. VINCENT, LANNY. (2012). Prisoners of Hope How Engineers and Others Get Lift for Innovating. West Bow Pr. WISNER, J. D., TAN, K.-C., & LEONG, G. K. (2005). Principles of supply chain management: a balanced approach. Mason, Ohio [u.a.], Thomson South-Western.

10 | P a g e