Roma company sharpens up for CSG work
With assistance from QMI Solutions, Roma manufacturer Sharpe Engineering were able to capitalise on the opportunities emerging from the coal seam gas (CSG) industry through process integration boosting business business by 50%.
Peter Sharpe, chief executive officer of Sharpe Engineering (Roma) Pty Ltd established Sharpe Engineering in 1995 while working in Roma for a company in an unrelated industry. He had previously spent six years working in Malaysia, Singapore and Columbia, managing engineering companies servicing the oil and gas exploration industries and could see the potential for a similar business in Roma.
Roma, on Queensland’s Western Downs, was the site of Australia’s first oil and gas discoveries and today is known as the industry’s cradle. The coal seam gas (CSG) industry was in its infancy when Sharpe Engineering began, but it now accounts for 95% of the business’s work.
As Australia’s largest threading facility, Sharpe Engineering provides manufacturing and repairs for drilling-related products for the CSG and traditional oil and gas exploration and production industries. It also supplies threaded casing, drilling tools and adaptors and conducts blowout preventer servicing and testing.
Sharpe Engineering manufactures and repairs drilling-related products on an as-needs basis through its in-house engineering department. It specialises in just-in-time manufacturing, from one-off to full production runs.
The business’s success is based on product knowledge and being local. It is a major employer in Roma, with a team of 45.
Sharpe Engineering operates out of two facilities on a 2ha site at Roma – one for threading and the other for manufacturing and maintenance. Sharpe has now also opened a Brisbane threading facility where it value adds to a client’s product.
After learning of the assistance available to Queensland manufacturers through QMI Solutions, Sharpe first used the QMI team to conduct a Benchmark exercise, then an enterprise resource planning (ERP) selection process and, most recently, to implement the 5S system. “We knew what we had to do to improve the business, but QMI Solutions prompted it,” he said.
The Benchmark exercise confirmed what Sharpe knew – the “business” side of the business needed improving and the company had outgrown its existing software product for accounting and business management.
Sharpe sought QMI’s assistance to conduct an ERP selection process to rectify that. QMI Solutions identified that the business suffered from a lack of integration of business processes. Financial management was handled within QuickBooks, with Excel spreadsheets, Word documents and manual handwritten documentation the basis for procedures in order processing, production scheduling, production reporting and other data manipulation.
The objectives were:
- An integrated order processing system from quoting to despatch
- Automation of manual processes of quoting and estimating; scheduling; procurement and others
- To increase the service level from 65% to 95% delivered in-full, on-time
- Accurate inventory management
- Improved capture and presentation of the status of work in progress
- Easy to understand reporting and performance management
- A system to complement and enhance the ISO 9000 quality management disciplines
- A system with the ability to scale with projected growth
- A system with the ability to consolidate general ledgers of branches and/or related companies
QMI’s report found the existing accounting software was simple to operate, but its “lack of integration with order processing, scheduling and manufacturing outweighs this benefit. The process of estimating and quoting is laborious and inefficient with time being wasted in searching for documentation, filing and redundant entry of information into documents and spreadsheets.
“The same frustration and inefficiency applies to the task of scheduling and rescheduling; a manual process to accommodate changing customer situations,” the ERP report said.
QMI recommended four options and Sharpe Engineering considered each before making a final selection. Sharpe said his team was frustrated by its old systems, but wary of selecting a new one. “To select the wrong one could have been catastrophic. We could have wasted a lot of time and money,” he said.
“It was crucial the process worked, so [QMI’s report] was worth its salt.” He said the QMI consultants “left no stone unturned” to identify the company’s requirements and their report was available promptly.
Sharpe said he was “very pleased” with the product the company selected. The ERP installation had met its desired objectives, through:
- improved front-end processes covering estimating, quoting, sales order entry, purchasing and customer interactions;
- a more co-ordinated, efficient approach to scheduling activities across the business;
- improved visibility of inventory and work in progress
- automated business processes resulting in key staff being available to focus more time on improvement activities
- better understanding of actual job costs, enabling improved pricing decisions;
- a single point of data entry resulting in significant labour efficiencies throughout the whole system
- improved information flow from order entry through to manufacture, delivery and invoicing
- easier access to timely information on order visibility and other real-time data;
- access to real-time business performance data
- improved communication between team members in the wider business environment through automated report generation
- improved customer service levels
Sharpe said there had been a vast improvement in reporting with the ability to have “figures at your fingertips”. The ERP gives the company “the ability to anticipate things faster and therefore make adjustments, where required”.
Implementing the 5S system was the next step. The 5S workplace housekeeping system has been implemented in both Roma facilities and the Brisbane depot and staff have undergone intensive training, which included:
- understanding the links between 5S and other world class manufacturing principles, particularly waste elimination, quality, safety and continuous improvement
- eliminating unnecessary items from the workplace
- selecting designated storage systems for all items remaining in the workplace;
- developing standards and audit checklists for ongoing maintenance of 5S principles
- practically applying 5S steps and techniques in the workplace
- awareness of issues surrounding implementation of 5S in the wider organisation and understanding issues for managing and sustaining the company 5S program
Sharpe said implementing 5S gave those on the factory floor a sense of pride. They welcomed the changes because 5S made their jobs easier.
The next step is improving business planning and developing a stronger marketing strategy. “We’re regarded as leaders in our field, but not everyone knows that,” Sharpe said.
Sharpe Engineering operates a quality management system certified to ISO 9001:2008 and incorporates the additional requirements of Technical Specification ISO/TS29001:2003 for suppliers to the petroleum, petrochemical and natural gas industries.
Sharpe is also seeking certification to American Petroleum Institute standards, which he says are vital recognition in the industries in which the company is working.
Sharpe says business profitability has improved dramatically since QMI Solutions became involved and business has increased 50%. While some of that is generated by the “boom time” for the CSG industry, Sharpe Engineering would not have had the ability to capitalise on that, were it not for the efficiencies QMI assisted it to achieve.
But there is no danger of the company resting on its laurels. “We’ve still got a long way to go,” Sharpe said.
The company is now on the path towards introducing lean manufacturing. Sharpe expects two major bottlenecks - saw cutting and the application of a chemical process to products – will soon be eliminated. He is investing about $100,000 in infrastructure and process improvements to achieve that.
While CSG has received “bad press” in some areas, with claims the technique can contaminate underground water tables, Sharpe says the industry is safe, but needs a more effective awareness campaign. Companies with a long history in the industry are skilled negotiators with landowners and can achieve win-win solutions.
For Sharpe Engineering, there’s been a silver lining in the cloud. Concerns about the water by product from CSG have prompted the birth of a new industry for water treatment. “That’s a big opportunity for us,” Sharpe says.
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