Product And Service Design

Published Date: 02 Nov 2017

TABLE OF CONTENTS………………………………………...…………….…………1

INTRODUCTION ……….……………………………………...…………….……….. ..2

STRATEGY OF THE COMPANY…………………………...……………….……….....3

FORECASTING………………………………………...………..………..….…..………4

PRODUCT AND SERVICE DESIGN…………………...……………...……………….5

CAPACITY PLANNING ………………………………………...…….……….……….6

PROCESS DESIGN ………………………………………...………….….…….………7

LOCATION ………………………………………...…………….…….………………..8

QUALITY and QUALITY CONTROL……………………………………..………...….9

CONCLUSIONS………………………………………...…………….…………….…...11

REFERENCES……………………………………………………….…………........…..12

INTRODCTION

ADNOC means for Abu Dhabi National Oil Company started at1971 to work in the field of oil and gas and it expanded by doing other companies operating under the main company. Nowadays the company is producing oil with more than 2.7 million barrels each day and trying to produce more: “ADNOC wants to increase its crude production capacity from about 2.7 million barrels per day to about 3.5 million barrels per day by 2018 ” (Wildcat Publishing, 2010) and this makes it up of oil and gas companies in the world. 

ADNOC is working in different fields of the oil, gas, petrochemical industry, crude oil, gas transport and services. “ADNOC produces, refines, manufactures and distributes petroleum and related products. The company accounts for over 90% of the country's approximate 92 billion barrels of proved oil reserves, the fourth-largest national reserves worldwide” (Plunkett, 2005)

For the industry of oil and gas, the biggest of products are oil and gasoline, oil is considered the basic material for many products including pharmaceuticals. In addition, there are three main categories for the oil industry; the up, mid and downstream.

ADNOC is located in Abu Dhabi, and there is a group of buildings that includes the companies working under it, like ADNOC distribution and IRSHAD. The company is operating locally and internationally and wants to open ten petrol stations in Dubai soon.

In past period of time, ADNOC added more business activities, and made its competitive position and managed to become one of the world's high oil companies with big business interests in upstream and downstream activities, including transportation, shipping, marketing and distribution. 

ADNOC's efforts in the exploration and production field focused on exploring for undiscovered reserves and hydrocarbon recovery by management of the reservoir management. In the last years, there were important achievements made in the expansion and development of gas fields to follow up with the increased demand from industry gas to make better the oil and take recovery from the producing fields. The focus of this study will be on the production and refinery of crude oil.

STRATEGY OF THE COMPANY

ADNOC wants to be good so it makes the company be satisfied and proud of its products and services. Another important thing is the wanting of the company to keep the environment clean and safe. ADNOC also aims at gaining the clients’, the partners’ and the whole society confidence, and to achieve these targets, ADNOC is important to keep the people and the community safe and to reduce the gas emissions to prevent climate change, in addition to encouraging the use of renewable energy and water recourses and playing a major role in promoting best practices in oil and gas industries.

Therefore, the mission of the company is to offer good services while being good to its owners, business partners and its employees, and cause no harm to the environment. “ADNOC and its Group Companies will make this policy by caring of Health, Safety and Environment Management System (HSEMS) and conduct periodic audits to verify compliance.” (ADNOC, 2013)

The strategy of the company is the differentiation strategy; ADNOC offers unique products and services and it has a competitive advantage as the only company of the kind in the market. The company cannot be using the low cost strategy because the company does not want to expand in the market by making demands more and gaining a market share through offering low prices. And it is not the response strategy because ADNOC is not working in a narrow market and it is not limited to a certain industry.

The company is measuring the productivity of its workers through many productivity indicators; “Organizations should monitor and analyze their productivity performance in terms of the productivity level measured by the various productivity indicators” (Spring Singapore, 2011) There are different ways to measure workers’ productivity, for example how many hours the worker work every hour so they know output for every worker.

In the oil industry, it is difficult to measure the productivity of the workers, it is true that it is related to the production of oil per barrels and this is the most important number the company seeks to know every day to deal in the market, however, average productivity is usually difficult to be interpreted correctly.

FORECASTING

Forecasting means making expectations about things will happen in the future and this is inside a company. Forecasts are important to kinds of business and it is also important to make management decisions. However, a forecast is not always true or accurate, and this is because of the changing nature of the environment around in business. Forecasting approaches can be qualitative and quantitative and their level of complex is based on the available information and the future effect of the business decision. When an organization wants to make forecasts, it should think about many factors such as time horizon, availability of data, accuracy, size of the budget to make forecasts, and availability of qualified people.

“Forecasting techniques are classified into four categories:

1. Qualitative techniques are subjective and judgmental based on expert judgment and opinions.

2. Time series analysis (quantitative) involves using past data to predict future demands.

3. Casual relationships describe how demand is related to some factors. The relationship is studied and, given the factors, demand is estimated.

4. Simulation involves identifying all factors, building a model, that describes the relationship, and then experimenting with the model under different scenarios about the condition of the forecast.” (Kolli, 1999)

For ADNOC, forecasting is important, and sure they depend on old data to make their forecasts. “Over the past 10 years, the annual growth rate of oil consumption was 4.3 percent, and positive economic growth forecasts indicate this trend is likely to continue.” (U.S Energy Information Administration, 2013) However, it is hard to get the information about the forecasting approach the company now using, therefore, we believe that ADNOC should use the Time series analysis approach to do forecasts and this must be done by computer. ADNOC is an oil company that’s why what happens in the market affects the price of oil and its production depends if people want it or not, so by looking at the old data, and everything, the production and the price of oil can be expected or determined. Other approaches do not seem good for a company with this size in the market.

PRODUCT AND SERVICE DESIGN

Companies choose different ways to design their products and to offer different types of services, this is like standardization, modular design, and robust design. The methods used are directly related to the company's target market and having the correct method makes more efficiency in the production.

For the service design, it is an activity of panning communication, material and workers to improve the quality of services offered by the company.

Product and service design means how the company presents its products. ADNOC sells oil after it refines it and this is called crude oil. Therefore, the company is using standardization. Also there are services by other companies working under ADNOC and everyone had its different service design according to the service it does.

Services and products go through four stages in the product life cycle which are; introduction, growth, maturity and decline. ADNOC is now in the stage of maturity because its products are stead and settled for demands and no real improvements are needed at this stage and in this stage forecasting is very important to know about the future of demands to the products and services ADNOC offers. The following chart describes the product life cycle:

The company is managing their product design according to their selected strategy which is differentiation because it is the only company in the market looking for crude oil and extracting it from the land and then sell it to customers who process it and sell it to others.

CAPACITY PLANNING

Capacity management means the limits of the company resources, like workers, the office space, the machines, the material, processes and the manufacturing, etc. “the total capacity of an organization is determined by how it combines and utilize the capacity it has purchased to perform work” (Yu-Lee, 2002)

Capacity management is very important for ADNOC to make the work done easily. The company is having all the support financially so they have all the wanted resources for work, they have many office space, all kinds of workers and the material which is crude oil, they have people with experience and everything needed to manage the company capacity.

So they don’t need more capacity and if they need in the future they can easily add capacity.

“Excess capacity arises when companies collectively produce too much output; to despose of it, they cut prices and excess capacity may be caused by a shortfall in demand as when a recession lowers the demand of cars and causes car companies to give customers price initiatives to purchase cars.” (Charles Hill, 2009).

So this means that the demand for oil in the market is less than the production of it in the company and for ADNOC this is not true because the market always wants more oil and that’s why the company is trying to make its production increase more and they are not trying to cut prices. The company never had to give incentives to convince customers to buy its products.

The company is managing capacity according to their selected strategy which is differentiation.

PROCESS DESIGN

Process design is the organization of the tasks that a business process is made of and designing a process that improves performance is an important task that needs many inputs. There are different kinds of processes design and those are determined by the amount and variety of products to process. Process kinds have different names and those names are chosen based on if the company is producing services or products.

In the product of crude oil, a continuous process is an approach that is meant by production companies to make the greatest amount of a product in lesser time. A continuous process is consistent, steady, and continuous as it never stops except for maintenance. Oil companies usually use the continuous process for production of crude oil. Factories in this case are designed in a way to make a continuous production of the product one equipment to the other. “A continuous process plant has been defined as "a plant which is required and designed to operate 24 hours a day" (Gupta, 2004). There is also the use of IT programs and the different equipment that collect feedback from different places to manage the rate of flow in the system, managing the amount of production. “Continuous production, has the following features: it is highly automated and highly capital intensive, items move from one stage to another automatically in a continuous manner” (Roy, 2007)

In such processes the maintenance plays an important role, a continuous process system is made using a serial configuration, therefore if any machine breaks down the whole process stops. The continuous process system is not manual it depends on automation but man input and his management remains essential to keep the process continuous. The desired target of ADNOC to produce crude oil and refine it continuously depends in the continuous approach for production.

The company is managing its process design according to their selected strategy as they have a differentiation strategy and they focus on the main product which is crude oil that’s why they use the continuous approach.

LOCATION

The company is located in Abu Dhabi, it is located in a very strategic place in the heart of the city. It is an important company that works in the field of gas and oil; therefore, it must be located in the capital and have a strategic location to serve its targets and objectives.

The company is located in the middle of the city to be near everything important for them and to make it easy for customers and workers to come to the company.

In my opinion it is a good location because it is in the heart of Abu Dhabi which is an important business hub and the capital of UAE.

The location supports their strategy which is differentiation because their location is unique and inside the capital of UAE and the group of buildings they are using are unique according to their strategy.

QUALITY and QUALITY CONTROL

The concept of TQM which mean total quality control is very important to be applied in all companies. “Total Quality Management" - should be of interest to managers of all levels in; public sector, private sector, and voluntary organizations.” (Rawlins, 2008). ADNOC is now using TQM as a quality management tool which is worldwide used. The company depends on TQM standards to have a good quality of service and products. Recently the company has started to have TQM in its operations and it is applied on the departments of the company.

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The main concept the company is using is the customer oriented approach. Customers are very important for ADNOC as it wants a long term relation with them to continue business to make sure they deliver their products and services using quality. The customer oriented approach simply means: “Provide products and services that satisfy customer requirements and earn customer trust.” (Management, 2003)

ADNOC makes use of inspection to ensure quality products and services; they have many control officers who work on daily basis to make sure the company is delivering quality services and products. They do Audits, site inspections and quality control activities for all main projects. The company is using many quality tools such as cause analysis, evaluation and project planning, and process analysis

There are several ways to improve the quality of the products and services offered by ADNOC and these are like listening to Customer and solve their complaints. Moreover, it is important to create an environment where great service is offered and bad service is rejected. Staff meetings are also important as well as managers being a role model for staff.

To improve the company facility always also plays an important role to raise quality of work and making the workers comfortable will make them offer better quality of service.

The company is managing quality in line with their selected strategy which is differentiation, not only the company is seeking to produce unique products and services, but also there is a focus on the quality of these products and services and the company is making sure to build a long term relationship with its clients by doing a quality work.

CONCLUSIONS

To sum up, ADNOC is a very big company in the oil industry in UAE and it is on top of the market. The company is using all the recent techniques of management to operate correctly and they have clear strategies to apply. This makes the company follow up with international standards in the industry and it deals with every place in the world successfully. ADNOC has unique products and services, that’s why they follow the differentiation strategy and they never offer low prices to bring more customers.

Based on the finding of the project, ADNOC will remain on the top of the market in the oil industry in Abu Dhabi and it will continue to offer unique products and services to its clients and also it gives good working environments to the company’s workers. Forecasting will make it clear that the company will develop more and they have a plan to raise their production of crude oil because the market always wants more. Therefore, ADNOC will continue to search for oil and produce it and clients will continue to deal with it, then the company will remain successful.

The company is sure following their selected strategy which is differentiation in all their processes and in all their work because they offer different products and services that are not available for other companies in the market and this makes it different and will help its development in the field. Any successful company must follow its selected strategy to keep its position in the market.

What can you suggest to them? What recommendations can you make to them?

There are several recommendations that can help the company stay on the top of the market, for example they can use computer in everything and every time there is new things in the field of IT they must learn it and use it. Also training is very important for workers to keep them up to date with the world. The company must continue to be serious about quality and quality control and they must update themselves every time there is something new in quality. Workers must be selected with care and according to more developed ways so the company is sure they have the best workers in the market.