A Global Energy Producer Implements Lean Methodology in Rail Operations at Multiple Sites to Improve Asset Utilization, Increase Loading Capacity, and Reduce Rail Transportation Costs

Client Context

• Large-scale operation: $15 billion revenue, 12 North American sites, 4000+ rail cars, and multiple on/off-site storage yards.
• Complex network: Supplier relations with all Class 1 railroads, faces inbound/outbound constraints, and manages captive shipper situations.
• Expertise gap: Strong corporate rail experience clashes with limited operational knowledge at refineries.
• Limited influence: Low influence in RLT and operational decisions. Reacts last minute to needs from various departments, including commercial department.

Key Challenges

The refinery experienced rail yard congestion, inefficient switching operations, inefficient load rack performance, underutilized load rack capacity, and limited performance measurement tracking of logistics operations. The targets were to capitalize on growth opportunities through increased use of rail transportation, minimize the impacts of Precision Scheduled Railroading (PSR), and increase throughput of inbound and outbound products to increase margins.

• Limited visibility: Poor measurement of logistics performance and daily rail operations.
• Disjointed planning: Switching plan not aligned with load plan, and inconsistent daily goals with unresolved exceptions.
• Misaligned goals: Rail stakeholders not aligned with refinery goals, who prioritize PSR over customer service.
• Inefficient operations: Suboptimal loading/unloading processes and perceived bottlenecks limit throughput.
• Congestion costs: Rail yard congestion and perceived space shortages lead to higher demurrage and storage costs.

Approach & Key Success Factors

After proving a winning implementation and sustainment model at a major Texas refinery, ARGO EFESO deployed the same playbook across four additional North American sites. We maintained a consistent implementation team for three years, fostering knowledge transfer and ensuring smooth rollouts. Additionally, ongoing sustainment audits at previously implemented sites solidified the achieved results.

The strategy targeted three fundamental pillars of operations excellence: work-flow design based on lean systems thinking, performance management with actionable KPI’s, and leader development to ensure proper application of system discipline and accountability. Key focus areas included:

1. Pulse Process: ARGO EFESO worked closely with the refinery logistics team to establish a Daily Performance Dialogue (Pulse Process) for Rail Logistics and Load Rack Operations
2. Digitization and Visual boards: Power BITM dashboards were deployed which enabled the logistics team to measure daily performance to KPIs electronically. A “user driven” app was developed to allow for mobile reporting of railcar information. Digitization of all the data inputs allowed all stakeholders to share the same critical information and to make timely decisions about car management, load rack availability and switching effectiveness.
3. Standard Work, Flow and Pull: Standard yard operating system for switching operations and load rack operations to meet the needs of the refinery. Developed a digital tool to facilitate input of information at the source.
4. Fleet Management: Car traffic coordination and fleet management.
5. Leadership Development: Coaching for leaders to increase root-cause analysis, proactive action and accountability
6. Shared KPIs with planned performance reviews: Effective coordination and service performance tracking with Class 1 provider

Results

$40M

Increased rail loading capacity with $40 Million annual impact

$10M

CapEx project avoidance

$15M

Cost reduction in labor, demurrage, switching and storage

20%-40%

Class 1 Service level improvement of “on-time” train arrival / departure

20%

20% improvement in “on-time” switching performance

30%

Average 30% reduction in rail yard car inventory