QUALITY INSITES ISSUE 2

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FEATURES Africa: doubles BHOS utilization Transforming a team BHI Quality Survey outstanding results

QUALITY. LIVE IT.

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INTRO CULTURE OF QUALITY

JOIN ME IN A QUEST HONEST MISTAKES, PLAIN AND SIMPLE, together constitute “human error.” We’re working hard to decrease error rates and there are a few ways you can help. Everyone has a responsibility and a role to play in reducing errors.

Shrinking error may appear routine, but it plays a crucial role in keeping our company successful through good times and challenging times. It avoids damage, disruption, costly delays and expensive rework, while preventing human and environmental harm. It saves lives, reduces injuries and prevents spills.

That’s why reducing errors is a worthy pursuit – a transformative journey that can produce amazing results. That may seem far-reaching, but it’s true.

We’re not alone in this mission. More than a million companies worldwide make every effort possible to reduce error. Similar to BHI they implement training, strive for continuous improvement and earn quality certifications.

Still, it’s a considerable challenge. It’s why we at Baker Hughes grow our Culture of Quality, and perhaps why you are reading QualityInsites magazine right now.

The ways you can help: • Embrace training. Mistakes often come from simply having insufficient knowledge or abilities. Baker Hughes provides a broad range of training to refresh and upgrade skills, and we’re working to develop and expand our training. It advances our shared quest for quality and also can enhance your career growth.

• Skip shortcuts. Numerous BHI procedures are designed to reduce errors and, if mistakes are made, to catch them before they can “escape” to cause harm. To achieve positive results everyone needs to follow recommended procedures, even when the necessity may not always seem obvious. Root cause analysis repeatedly confirms that skipping shortcuts eliminates enormous sources of probable errors.

• Think it through. Considering impacts of old routines and legacy practices can help reduce complexity, another potential source of error. Attempt to see the familiar with fresh eyes; discover what might be done differently, and better.

• Submit observations. “When you see it, share it.” Submit observations on any potential problems you see.

Everything’s connected: your task, your skills, your diligence – all are linked through “degrees of separation” with everything Baker Hughes does, and why everyone’s vigilance is important. You are the eyes, ears and heart of our Culture of Quality.

These elements are vital to everyone’s health and safety, the environment, and the accomplishments of this remarkable enterprise we’re all proud of. Results show up everywhere. In fewer spills, fewer escapes, disruptions, delays. In fewer unwelcome consequences of every type imaginable. Plus in stronger, quality-focused teams.

Quality. It’s everyone’s business. Thanks for doing your part.

Richard Ward

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F EATURES QualityInsites is a publication of Baker Hughes Quality Assurance organization. Please direct all correspondence to QualityInsites@bakerhughes.com. ©2015 Baker Hughes Incorporated. All rights reserved.

No part of this publication may be reproduced without prior written permission of Baker Hughes Incorporated.

PUBLISHER/EXECUTIVE EDITOR Ken Price

CONTRIBUTORS Alex Baues Anthony Gaucher Bob Witten Chris Huynh Des Burnley Jonathan Price Keith Terhune Marilyn Blaschke Mike Gentry Natalia Pecora Phil Kurkoski Ricardo Scala Steve Ellison

CREATIVE TEAM Mary Kuna Diana Reyes

BECOME A MEMBER NOW: Culture of Quality Community of Practice GO/COQ

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CMP: MORE INSIGHT, SKILLS, GROWTH Certification rates soar with BHI’s Competency Management Program.

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BAKER HUGHES 2015 CULTURE OF QUALITY SURVEY Results indicate stellar performance on a global scale.

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”RIGHT-SIZING” QUALITY Product designers strive to build-in the quality BHI products need, plus a safety margin.

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TAKING ACTION TO GET MORE COMPETITIVE BHI’s Midland (Texas) District performed quality audits to gain a competitive edge.

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TRANSFORMING A TEAM Guidance helped Norway Wireline Services drive major improvements in quality processes.

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QUALITY: IT’S ABOUT SUPPLIERS, TOO Supplier Self-Release extends Baker Hughes Quality standards to BHI suppliers.

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BHOS MAKES BIG GAINS IN AFRICA A six-country training and awareness initiative gives BHOS utilization a major boost.

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PREVENTING UNWELCOME SURPRISES BHI Management of Change procedures mitigate risks, help save lives.

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SPOTLIGHT SHINES ON INDIVIDUALS Global Multisite Certification means individual Quality performance can affect the entire company.

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QUALITY DESIGN RAISES PERFORMANCE How Baker Hughes makes products and services more reliable, and minimizes errors.

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ADDING IMPACT TO OBSERVATIONS New Guardian integrated system adds value to observations in several important ways.

FEATURE COMPETENCY MANAGEMENT PROGRAM

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CMP: MORE INSIGHT, MORE SKILLS, MORE GROWTH Certification rates soar with BHI’s Competency Management Program

A RECENT SURVEY conducted across multiple global industries found that many employees don’t have a clear understanding of what’s expected of them at work. By contrast, Baker Hughes’ Competency Management Program lets every BHI participant know exactly what steps they must take to advance. CMP’s online platform also serves up coursework, training, and manages certification testing to document skills.

A key word is participant, says Des Burnley, Director, Training and Competencies. Thanks to concerted efforts across BHI regions and GeoMarkets, CMP participation rates are escalating fast. Burnley lists the most important reasons: 1. Confidence. Everyone likes knowing where they stand. It adds to job satisfaction and aids peace of mind.

2. Career. CMP lets each person know exactly what they must do to gain advancement opportunities. With a clear path and recognitions for acquiring skills, it’s great career motivation.

3. Fairness. CMP shows people that BHI advancement operates on the level: it’s fair to all. Everyone must meet the same standards and have evident qualifications.

4. Quality. BHI’s Culture of Quality is all about getting things done right the first time. Its foundation: mastering the right skills and training.

5. Compliance. Increasingly, BHI customers seek to mitigate project risks by requiring Competency Certification. It’s frequently written into Baker Hughes contracts – and customers do verify compliance.

6. Competition. Certifying the competency of BHI people helps Baker Hughes win contracts.

Certifications demonstrate the company’s commitment to quality; as noted, customers are paying attention.

The previous issue of QualityInsites profiled BHI Brazil’s outstanding success in increasing CMP participation. Other BHI GeoMarkets are achieving extraordinary gains as well. For example Kristi Decou, Competency Assurance Manager (CAM), Gulf of Mexico (GOM), reports that they reached a remarkable 93% CMP participation by year-end 2014, the highest worldwide, outperforming BHI’s 80% enterprise-wide target. To get results like these, Decou works closely with GOM Product Line Managers and Supervisors. “They’re the ones who really deserve the credit,” she says.

Glenn Hanagriff, Senior Operations Coordinator, GOM Drilling Fluids, points out that CMP Certifications help ensure safety on numerous Gulf offshore rigs. He adds, “It lets us know who is most capable of doing the work, and gives us a gauge to determine who we can best send on the next job, based on their qualifications.” CMP also helps GOM establish solid relationships with BHI customers, notes Richard Vincent, GOM Field Engineering Services Coordinator. “It raises their comfort level, knowing we are sending our best qualified people with documented skills to their sites.”

Meanwhile, the Permian GeoMarket registered the most improved CMP performance, growing from 40% participation to an astounding 83% within just five months. Ronald Perry took over as Competency Assurance Manager there only in July 2014. By year-end, his area had doubled the number of assigned trainings marked “Acquired”, a key performance indicator for CMP. “I started by reaching out to Kristi Decou and other BHI people to help guide me,” Perry recalls.

“Then I contacted all my Product Line Managers, visited our Permian Districts and reviewed all the program requirements with them. After that, we got down to specifics, reviewing qualifications assigned to each employee. We discussed adding

qualifications to people who weren’t yet in step with their career development progression.”

That was just the start of Perry’s ‘encounter plan’. He ran weekly reports, keeping managers updated on exactly where they stood with his CMP improvement drive. He kept visiting his districts and made himself continuously available to handle questions and concerns.

Perry concludes, “Throughout my entire career, I’ve taken the same approach with every task I’ve performed...applying an exceptional will to win.”Q

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93

% GULF OF MEXICO GEOMARKET 2014 CMP PARTICIPATION “HIGHEST WORLDWIDE”

83

%

PERMIAN GEOMARKET 2014 CMP PARTICIPATION “MOST IMPROVED”

40

%

PERMIAN GEOMARKET 2013 CMP PARTICIPATION

FEATURE CULTURE OF QUALITY SURVEY

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BAKER HUGHES 2015 CULTURE OF QUALITY SURVEY Workforce Perceptions of Quality: 2014 Survey of Global Companies In late 2014, ASQ/Forbes Insights surveyed more than 2,000 global corporations over 25 percent of the Company’s global workforce having annual revenues of $100 million to – submitted answers, a remarkable 400 percent over $2 billion. Results show that Quality participation increase over the previous survey. perceptions, engagement and personal ”Responses to our 2015 BHI Culture of Quality ownership at Baker Hughes far exceed survey show we’re making a measurable impact,” says worldwide averages. Findings at other Price. “Exceptionally high scores show Baker Hughes corporations include: to be one of the ‘best of the best’ among the top • Only 12 percent of respondents 2,000 corporations worldwide, with respect to how the described their Quality programs as company’s own people judge their Quality environment.” ‘world class’ or ‘state-of-the-art’, yet (See sidebar, “Workforce Perceptions of Quality.”)

42 percent considered their Quality In all but one metric, BHI people worldwide gave programs ‘advanced’; 36 percent their Quality environment a positive ranking between judged their Quality programs to be 65 and 87 percent; most metrics scored above 71 ‘average’. percent. “We’re delighted with these results,” Price • Only a third of respondents said says. “Compared with last year’s independent survey of their leaders have a complete global companies, BHI’s own results show that we’re understanding of how Quality incorporating Quality processes and communicating our supports their business.

Quality mission far ahead of most other corporations • Overall, only half said that Quality surveyed globally.” values are clearly understood Price adds, “Our survey results show plenty of room for throughout the organization; only 33 continued improvement, but most other large companies percent view their company’s Quality don’t even come close to what we’ve achieved so vision as compelling. (Note: these far. I am proud of all our people worldwide for being judgments trended even lower in committed to Quality and for ‘owning the process.’ This Europe and Asia Pacific.) outstanding achievement belongs to everyone at Baker • Only about 30 percent of energy Hughes.” Q companies surveyed are running Quality ‘operational excellence’ programs.

• Nearly half of energy industry workforces surveyed typically report insufficient emphasis on Quality.

- Only 10% found their company’s Quality messages credible.

- Only 20% said their company creates a sense of employee empowerment and/or ownership for Quality outcomes.

- Just 38% reported high levels of peer involvement in Quality.

Results indicate stellar performance on a global scale A TRUE CULTURE OF QUALITY has easily recognizable attributes. For example, senior leadership unwaveringly and visibly supports our Quality objectives. There’s passion in the drive to continually identify and address customer needs, often taking extraordinary steps to engage the voice of the Baker Hughes people along with that of our customers.

“Through Baker Hughes’ Quality Organization,” says Ken Price, Senior Manager, Quality Global Initiatives & Communications, “we establish and declare our visions and values, and disseminate them throughout the global enterprise in Quality magazines, videos and presentations, even in casual conversations in hallways and break rooms.”

By adhering to Quality principles, ethical behavior and collaboration become second nature, as does relentless pursuit of innovation and continuous improvement. “We become a quality-driven ecosystem from top to bottom and bottom to top, at all levels, in all departments and in every country, working in concert to achieve Quality objectives and process excellence while improving operations,” Price says. “Could we consciously enhance our Culture of Quality to become even more effective?

Where do we go from here?”

Our Culture of Quality’s success depends partly on periodic self-assessment, including our BHI Semi-annual Quality surveys, notes Price. “Response results help us gauge progress and shape our future efforts.” Key drivers of these investments include Quality’s positive impact on effectiveness and profitability. There’s also Quality’s ability to set Baker Hughes apart from competitors, discourage potential competitors, and serve as a barrier to entry. Further, Quality initiatives are vital to managing risk and driving innovation. All these roles contribute to the value of BHI Quality Initiatives.

In November 2014 the BHI Quality Initiatives team circulated our 2015 Culture of Quality Survey to more than 60,000 Baker Hughes people worldwide, in 12 languages. By year-end, more than 16,000 people –

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BHI CULTURE OF QUALITY SURVEY COMPARISON OF AVERAGED RESULTS, 2014-2015 2014

2015

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Internal barriers do not prevent me from improving the quality I deliver.

56%

87%

2

When I communicate to my manager on ways to improve quality he (she) discusses my ideas with me.

77%

85%

3

I’m empowered to make decisions to ensure the quality of my work.

77%

83%

4

My manager takes proactive action to ensure that quality requirements are always met.

75%

81%

5

One or more of my 2014 individual Achieve goals are tied to improving quality.

73%

73%

6

My peers seek opportunities and take action to improve quality.

72%

83%

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My team regularly discusses “success stories” that demonstrate continuous improvements made in quality.

60%

63%

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My peers have the same commitment to quality that I do.

N/A

69%

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When working on projects with other teams, everyone has similar expectations of quality.

56%

65%

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Messages on the significance and importance of quality are meaningful and credible.

N/A

72%

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I’m confident in management’s commitment to quality.

88%

71%

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Baker Hughes products and services are the best in the industry.

78%

76%

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The overall quality of Baker Hughes products and services has improved over the last 12 months.

51%

65%

N/A%*: New question for 2015 survey

FEATURE RIGHT- SIZING

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”RIGHT-SIZING” QUALITY Product designers strive to build-in the quality BHI products need, plus a safety margin

CAN A PRODUCT HAVE TOO MUCH QUALITY? Surprisingly, the answer is yes. Across many industries, product designers over-engineer products containing a significant safety margin, ensuring a product is durable and reliable for its intended purpose. Beyond that, though, overengineering is considered a waste: it adds cost without adding value. That’s why designers and engineers strive to not just build quality into their products, but to “right-size” quality.

O-rings incorporated into Baker Hughes tools and equipment offer an example. BHI suppliers ship millions of elastomer O-rings each year to BHI Manufacturing Facilities; lot sizes range from a few rings to thousands. BHI products’ functionality and performance can depend on the reliability of these O-rings, often under harsh operating conditions.

Baker Hughes Quality Inspectors test samples from each O-ring lot to ensure they meet applicable standards, and achieve expected performance. These standards specify O-ring diameters, cross-sections, tolerances and surface characteristics. For instance the smoother an O-ring’s surface, the more dependably it can seal fluids in, or seal them out.

For years, BHI Engineers specified a type of ‘gold standard’ for O-rings: “BHI-EL-07” (MILSPEC) in combination with the obsoleted United States Military Spec. In 2014, however, Quality Inspectors at a BHI Manufacturing Facility began spotting out-of-specification O-rings from a trustworthy, established supplier.

A BHI Quality Team investigated and identified an unusual, indirect root cause. The O-rings weren’t defective; rather, the extraordinarily high MIL-SPEC with the correlated United States MILSPEC itself was outdated. The supplier had been complying with newer standards published by the

International Standards Organization (ISO) which were not reflected in BHI specifications.

Once BHI’s Quality Specialists understood what happened, they collaborated with the Chief Engineering Office and the supplier to determine a solution. “We always try to look beyond the obvious,” says Alex Baues, Director, Manufacturing Quality, Eastern Hemisphere. “In this case, our supplier was delivering components, O-rings, that met standards across industries.

Could BHI accept this standard too? Or did we need to insist on the much more costly MIL-SPEC components?”

Baues added that the cost difference was not in the O-rings themselves, but in the extraordinary, and expensive, piece-by-piece inspection examination required of O-rings to verify MIL-SPEC. “Imagine two identical O-rings,” Baues says. “Both perform the same and meet ISO standards. However, one goes through an additional, rigorous inspection by hand.”

Baues notes, “Keep in mind, we’d been accepting ISO-standard O-rings without realizing it. We found that no Baker Hughes product failure had ever been caused by an O-ring failure not meeting specification. Not one. This finding together with a thorough evaluation of the minor differences between the two standards showed us we could accept the ISO quality standard giving us the opportunity to save tens of thousands of dollars annually.”

Baues added, “That’s the value of ‘right-sizing’ Baker Hughes Quality.” Q

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L O O K B E YO N D T H E O B V I O U S

BHI works to ensure that technical standards match real-world needs.

FEATURE GAP ANALYSIS

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GAP ANALYSIS: MAKING BHI MORE COMPETITIVE BHI’s Midland (Texas) District performed quality audits to learn how to be a stronger competitor. Then it took action.

IN LATE OCTOBER 2014, Charles Diaz, Director of Quality, North America, determined that the Midland, Texas district in the Permian GeoMarket needed to improve Drilling Services performance to better compete for business. He ordered a comprehensive GAP Analysis.

A GAP Analysis identifies where a team stands (Point A) and where it needs to be (Point B). The ‘GAP’ lies between. The analysis reveals what needs changing to get desired results; it typically focuses on processes. What process improvements could improve quality? First to tackle this challenge in Midland District was Drilling Services. Once answers were in hand, the rest would be up to Drilling Services people. Midland quickly assembled a Quality Assurance team to perform an endto-end quality audit. They discovered numerous ways to improve. For example, sometimes miscommunication occurred between Sales and Operations, resulting in faulty information on which Drilling Services set customer expectations for a given project. Performance could fall short of these expectations.

Over a busy two-week span, Drilling Services’ quality audit identified 70 action items they could improve. Some were simple solutions performed immediately; others required more time. Processes earmarked for improvement included procedures employed by the Assembly-Maintenance-Overhaul (AMO) shop to set up and configure downhole tools. Elsewhere, some individuals weren’t certain how to most efficiently use the abundance of information in BHOS – the Baker Hughes Operating System to help ensure best performance – a training issue.

During and after this audit and analysis, recalls Bryan Keith, Quality Manager, Permian Area US Land,“Morale shot up 100%. Everyone wanted to perform better; we just needed a clear framework.

The quality audit and GAP Analysis provided it. We now had the power to change, and knew how to get it done.”

The Midland District organized its Drilling Services audit and analysis into three phases: 1. Launch. Gather information, identify functional leads, and choose a focal point; then develop a plan, obtain buy-in from stakeholders, and define deliverables, such as the form that findings would take.

2. Assessment. Perform the audit of Sales, Operations, and Post-Job activities to identify gaps for improvement. The audit included talking with every person, and studying their documentation and communication processes.

3. Action. Produce and present the final, detailed analysis, consisting of a situation assessment and recommended action items. Also deliver a plan and schedule for implementing improvements. Teams assigned an “owner” to each action item – the person who’d be responsible for ensuring completion.

Midland District began holding weekly meetings to ensure timely, thorough follow-up on all action items, Keith says. “These meetings will continue until the last action item is completed.” Process improvements began producing measurable results almost immediately. Bryan reports that of the nearly six dozen items, teams have already implemented 75% of them and “the rest are well underway.” For example, says Keith, “We’ve seen an 80% decline in both internal and external escapes” – a clear sign that BHI’s Culture of Quality is on the upswing in BHI Midland.

In fact, Keith adds, Midland Drilling Services’ morale gains and performance improvements have been so impressive, this district’s Artificial

Lift Systems opted to perform a comprehensive Quality Audit and GAP Analysis as well. This time, the initiative produced more than a hundred action items. ALS teams have fast-tracked many of these improvements which, says Keith, “are already reducing costs and making impacts on customer satisfaction.”

Midland District’s significant success with quality auditing and GAP Analysis is encouraging other BHI Districts worldwide to take similar steps – aiming to become stronger competitors in their respective GeoMarkets. Q

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A GAP Analysis identifies where a team stands (Point A) and where it needs to be (Point B). The ‘GAP’ lies between.

FEATURE WIRELINE SERVICES

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TRANSFORMING A TEAM Guidance helped Norway Wireline Services drive major improvements

IN JUST FOUR MONTHS, Baker Hughes Wireline Services based in Stavanger, Norway, substantially improved its processes with the assistance and support from BHI’s Quality Organization. “It was a remarkable transformation,” says Clive Knight, EARC Assembly Maintenance and Overhaul (AMO) Quality Engineering Manager, Aberdeen, Scotland. Knight and three other BHI Quality Team professionals guided the modifications.

“Before we intervened, interactive communication and coordination within this Stavanger team were often inadequate and incomplete,” Knight says. The initiative began in June 2014 when he and his Quality colleagues visited Stavanger. The goal: to raise customer satisfaction by assisting Wireline Services in improving their quality processes. The Wireline Services Team welcomed the consultation and collaboration. They knew they needed to make improvements, but couldn’t clearly identify what the root cause was causing their performance to deteriorate, or what improvements were needed consider applying to achieve the appropriate solutions During the first week in Stavanger, Wireline Services people and the visiting Quality Team engaged in briefings and collaborated on developing a plan for the initiative. In Week 2, Knight used BHI’s Europe-Asia-RussiaCaspian (EARC) Quality Audit Template, an exhaustive checklist, to identify specific processes to be improved. Knight categorized findings into four “opportunity improvement themes:” • United Kingdom / Norway Planning Interface • Reliability, Service Delivery, Execution • Assembly-Maintenance-Overhaul • Operations Support

Normally the Quality Organization would perform root cause analyses on various findings to determine specific corrective actions. However, says Knight, “I was extremely impressed with Wireline Services’ dedication to this process.” He decided to attempt a different approach.

Under Quality’s guidance, the Stavanger people would perform their own root cause analyses. Although a departure from common practice, this approach offered several advantages. By learning and repeating the process of identifying root causes, the local BHI Stavanger Team would have “ownership of the solution.” They would also gain a stronger, hands-on understanding of connections between specific processes and operational results. And through “learning by doing,” they could internalize the Quality mindset more effectively than through conventional training.

Together, the Quality team and Wireline Services assigned four local teams, one for each “opportunity theme,” to identify root causes. Knight and his colleagues worked closely with the local teams, explaining methodology and guiding the process. In many cases, these teams discovered that absence of communication between stages of a process instigated operational problems and, as a result, customer dissatisfaction.

The Stavanger team could now see what actions they needed to take to achieve a higher level of quality, and thus improve their performance. They generated a list of more than 80 corrective actions. “Changes were identified in processes, behaviors and communication,” Knight says.

This phase completed, Knight and his Quality team returned to Aberdeen. Knight continued supervising the initiative by

remotely joining Wireline Services’ weekly follow-up meetings in Stavanger. They devoted these meetings to planning and implementing action items, and validating their achievements.

In October, Knight visited Stavanger again. “It was like a different place,” he says. “Positive cultural change was evident everywhere. People were communicating and double-checking each other. They were executing work flawlessly. It was a dramatic turnaround from what I had seen four months earlier. It was certainly evident from Wireline Services’ diligence that they didn’t need our assistance anymore. We, in turn, were delighted to accept their new found conviction of confidence” His mission accomplished, Knight handed oversight of the remaining Quality Initiative to the Wireline Services people in Stavanger.

By the first quarter of 2015, the Wireline Services team had completed well over 90 percent of their action items and was working to complete the remaining elements.

“I witnessed the degree to which a strong desire to improve, given guidance, empowers people to transform their situation,” Knight concludes. “They owned the process. That was a huge ‘lesson learned’ for all of us.” Q

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The Team could now see what had previously been obscure. It was now clearly evident what actions they needed to take to improve performance to achieve a higher level of quality.�

FEATURE SSR CERTIFIED

QUALITY: IT’S ABOUT SUPPLIERS, TOO Baker Hughes’ pioneering Supplier Self-Release Program extends BHI Quality standards to suppliers BAKER HUGHES TOOLS AND EQUIPMENT can be made only as reliable as the parts and materials from which they’re built, a significant risk faced by virtually all companies. To mitigate this risk, BHI has traditionally ensured part quality through rigorous receiving inspections. It’s a huge task because the Company receives over a million various parts from more than 8,000 suppliers. When items arrive at BHI, Quality Inspectors ‘red-flag’ noncompliant parts, and report these occurrences – requiring Supplier Quality Engineers to spot patterns and take action with suppliers whose quality falls short.

However, the BHI Supplier Quality Team has developed an alternative to receiving inspection under Baker Hughes’ pioneering Supplier Self-Release (SSR) Program. “It’s a first in the oil and gas industry,” says Nancy Grant, Program Manager, Global Supplier Quality. “It’s a game-changer.”

Instead of catching defective parts at BHI’s receiving docks – standard industry practice – “we’re driving responsibility back onto our suppliers to deliver high quality parts,” Grant explains. “We’re going to the source. Participating suppliers must implement the same intensive quality standards, processes and procedures that we do. They must practice and share our Quality beliefs and values. So when an SSR Supplier releases their parts for shipment to us, these items will be as defect-free as we ourselves would make them.”

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8,000 SUPPLIERS

1,000,000 PARTS

MANY SUPPLIERS ARE NOW ENSURING THEIR QUALITY PROCESSES MATCH BHI’S.

FEATURE SSR CERTIFIED

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TODAY, MORE THAN 100 SSR CERTIFIED SUPPLIERS PARTICIPATE IN THE PROGRAM AT 12 BHI MANUFACTURING FACILITIES WORLDWIDE. DRIVING QUALITY UPSTREAM The SSR Program replaces traditional inspections with a much deeper, more durable solution: eliminating the need for such inspections. SSR extends BHI’s Quality principles “upstream” through the supply chain by evaluating processes of participating suppliers, then certifying them. “While individuals are ultimately responsible for quality,” says Grant, “the right processes enable and empower them to meet this responsibility. Quality processes plus a universal Quality mindset together make a strong combination.”

Is it possible to ensure that suppliers maintain quality processes to BHI’s high standards throughout their own operations? “Absolutely,” asserts Grant. “Results of our SSR Program give us convincing evidence.” For example, she reports, supplier “Escapes” – instances of defective parts that have made it to the customer – have seen dramatic declines. More than 60% globally in the last 3 years.

Baker Hughes launched the Supplier Self-Release Program in 2012 at three BHI manufacturing facilities with about 20 of the most frequently used suppliers. Today, BHI has more than a hundred SSR Certified Suppliers, in 16 countries on five continents, reducing BHI’s cost of inspection by 90%. And the list of SSR Certified Suppliers keeps growing. “We’re shifting our resources from detecting product non-conformities to preventing them,” Grant says.

“Through collaboration, we’ve made these suppliers accountable for their quality processes and performance. It’s a quality development

program, driving continuous improvement.”

She points to an SSR Certified Supplier that substantially improved both product quality and on-time delivery under the program. (See sidebar, “A Supplier’s View.”)

She adds, “Receiving quality product on time prevents supply chain disruptions. It means we can meet our own commitments to our customers more effectively and make these commitments with high confidence.”

WHAT’S NEXT FOR SSR? According to Grant, Baker Hughes will continue adding suppliers to the program. (See sidebar, “Steps to SSR Certification.”)

Within BHI, SSR will expand to include additional manufacturing plants, Operations Regions, Assembly-Maintenance-Overhaul (AMO) facilities and Distribution Centers. The Supplier Quality Team will also seek ways to improve the program’s own processes.

The Supplier Quality Team has an ultimate vision: to integrate SSR quality processes throughout the supply chain, from every supplier source to Baker Hughes and from Baker Hughes to every customer. “That,” Grant says, “would be unbeatable.” Q

STEPS TO SSR Baker Hughes’ Supplier Self-Release Program consists of five stages: 1. Selecting. An SSR team collaborates with other Quality Organization teams and with Procurement and Strategic Sourcing to identify candidates for the SSR Program.

These teams pursue a careful vetting process before engaging a supplier to join the program.

2. Assessing. Once a supplier accepts the offer, a BHI Supplier Quality Team performs an assessment on site at the supplier’s facility, essentially a detailed audit of quality processes and performance.

3. Improving. BHI teams collaborate with the supplier to reduce risk by correcting any quality gaps discovered in the audit. Teams create and implement corrective action plans; results are verified by BHI. 4. Certifying. BHI approves the supplier in a three-phase certification process involving final verification. BHI then formally notifies the supplier of approval to become an SSR Certified Supplier.

5. Monitoring and Sustaining. BHI’s Supplier Quality Teams periodically monitor the SSR Certified Supplier’s quality data, ensuring that the supplier continues to maintain the quality performance requirements.

BHI Supplier Quality (SQ) Teams identify potential SSR Program participants based on criteria such as capability, quality history and BHI’s product-line business needs. Once a supplier is invited to participate, a Baker Hughes SQ Assessor Team performs an intensive two to three-day assessment at the supplier’s site. As with quality audits inside BHI, this assessment – consisting of more than 240 questions – aims to identify risks.

SQ Assessors document all their observations and findings.

Collaborating closely with the supplier, a BHI SQ Assessor then coordinates the supplier’s remediation efforts, partnering with the supplier as an advisor to help implement corrective actions and thus mitigating identified risks. This phase can be a lengthy process, depending on the complexity of required corrections.

Once, the supplier becomes SSR Certified, they maintain quality performance standards that Baker Hughes knows they can rely on.

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SELECTING ASSESSING IMPROVING CERTIFYING MONITORING & SUSTAINING =

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A SUPPLIER’S VIEW A midsized US based supplier of machined parts began the Baker Hughes’ Supplier Self-Release (SSR) Program in July 2013 and became SSR Certified approximately 10 months later. The company’s senior quality manager shared his view of the SSR experience and its impacts.

We already had good quality-management and process control in place before joining the SSR Program. Judging from key metrics, however, this program has taken us from “good” to “outstanding”.

We’ve reaped a number of benefits from gaining BHI SSR certification and, perhaps more important, from undergoing the certification process itself.

Prior to joining, our QA was based on a number of informal processes. Now we rely on solid, formal quality systems and processes.

Results are clear. For instance in 2013, before entering the SSR Program, we received ten customer complaints that entire year. In 2014, with the program in place, we had no complaints whatsoever. Not one! Thanks to our new, formalized QA processes, we expect to maintain that zero incidence rate, ongoing.

At the same time, our on-time delivery rate has risen nearly fourfold. We went from 25% on-time in 2012 to 95% in 2014. Further, our customers can now receive product quicker because we deliver dock-to-stock instead of going through a thirdparty inspection group.

One more thing: these improvements have enabled us to gain ISO 9001 certification, which makes us more competitive.

As a result, we couldn’t be more pleased with the SSR Program. The impacts have been major and measurable. We’d recommend it to anyone.

FEATURE BHOS AFRICA

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BHOS MAKES GAINS IN AFRICA A six-country training and awareness initiative more than doubles BHOS utilization

“YOU’LL FIND IT IN BHOS!” echoed across East South West (ESW) Africa as Baker Hughes Operating System Managers and Trainers fanned out across the continent to grow BHOS utilization. In eight months, they made over 20 “BHOS Open House” presentations in six countries spanning 3,000 miles, raising BHOS awareness and competency for more than 300 people. These efforts more than doubled the BHOS access rate in ESW Africa.

Before this initiative began, recalls EuropeAfrica-Russia-Caspian (EARC) Region BHOS Manager Stephen Ballard, ESW Africa had been under-utilizing BHOS. “The petroleum industry there is highly dynamic, emerging and evolving with incredible speed. We often have new people in various roles, and new countries are opening up. It means we must be proactive about keeping BHOS awareness foremost in mind – and also up to date, because BHOS itself is evolving and improving.”

GeoMarket Managing Director Cedric Rouatbi inspired the ESW Africa initiative and Ballard led it as part of an EARC region-wide initiative. Overall, EARC scores the highest BHOS utilization of any Baker Hughes region globally. “BHOS contains the process documentation and how-to information BHI people need,” Ballard says. “Using BHOS ensures quicker, more efficient and higher quality work. The system walks people through processes, step by step. Yet not everyone is fully aware of all the ways BHOS can speed up and simplify tasks in virtually any process, whether it’s in administration, sales, manufacturing, logistics or delivering services.”

BHOS offers an extraordinary range of resources. In March 2015, for example, BHI’s ESW Africa’s most frequently accessed BHOS topics and processes included risk management; inspection/measuring/test equipment calibration; customer data and property control; performance management; chemical management; naturally occurring radioactive materials; dropped objects; and health/safety/environment.

“We’re always adding features and providing quicker, easier ways to access information and navigate the system,” says Ballard. “If you haven’t updated your BHOS Competency in a while, you may be missing out on opportunities to improve your knowledge and performance.”

Ballard attributes the BHOS Initiative’s success partly to strong, visible support from senior management. “When our people see senior-level commitment,” he says, “it gets their attention.” For this reason, each BHOS Open House event featured a BHI Country Manager or other BHI Senior Manager. Between May and December 2014 these BHOS events were staged in eastern and southern Africa – in Uganda, Kenya, Tanzania, Mozambique and South Africa – and, to the west, in Ghana.

Raising BHOS utilization, as reflected in access rates and other metrics, enables Baker Hughes to maintain its competitive position, Ballard points out. It promotes global standards, supports ISO Certifications, helps ensure regulatory and contractual compliance, and reduces non-productive time caused by varying from prescribed procedures.

He quotes Baker Hughes CEO Martin Craighead: “Our ability and desire to adapt to change – and to dictate change, to innovate, both in terms of technology and in terms of business processes – are becoming our most critical advantage.”

What does it take to maintain this advantage?

“BHOS is how we disseminate change to tens of thousands of BHI people all at once. BHI EARC continues to be the highest BHOS utilization of any BHI region globally,” says Ballard. “Only by using BHOS can Baker Hughes people keep up with change and deliver the performance our customers deserve and require – as well as what we at BHI demand of ourselves.” Q

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COUNTRIES

MILES

PEOPLE

RISK MANAGEMENT | INSPECTION/MEASURING/TEST EQUIPMENT CALIBRATION | CUSTOMER DATA AND PROPERTY CONTROL

PERFORMANCE MANAGEMENT | CHEMICAL MANAGEMENT NATURALLY OCCURRING RADIOACTIVE MATERIALS

DROPPED OBJECTS | HEALTH/SAFETY/ENVIRONMENT

BHOS TRAINING PARTICIPANTS SHARE THEIR VIEWS “ We learned how to conduct an advanced search and were amazed at the variety of options that came up.”

– Wireline Services “ Sometimes we’d search the shop for a hardcopy manual. Now we access all procedures in BHOS, a real time-saver.” – Tubular Running Services “ We weren’t sure about the process for recalibrating our lab equipment. We learned it’s all there in BHOS, so now the process is routine.” – Cementing “ Setting up our global fleet traceability project was difficult. In BHOS training we were able to walk through the entire process, a tremendous help.”

– Completions

FEATURE MANAGEMENT OF CHANGE

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MOC: PREVENTING UNWELCOME SURPRISES BHI Management of Change procedures mitigate risks, help save lives

IT HAPPENS WITH VIRTUALLY ANY CHANGE IN ANY INDUSTRY: potential risks increase. It can occur with a change of personnel, procedures, materials, equipment or operating conditions.

Regardless: whether in the field or in the plant, change entails risk. That’s why Baker Hughes employs a comprehensive Management of Change (MOC) process.

MOC ensures that teams identify risks that stem from unplanned changes, assess each risk, decide how to mitigate it, and follow up to make sure individuals take action – before a change can bring unwelcome surprises. It’s a powerful way to sustain BHI product and service quality, by preventing problems instead of fixing them after the fact. That’s why MOC is part of Baker Hughes’ Culture of Quality.

Through the Baker Hughes Operating System (BHOS), users can quickly access all MOC procedures, online forms and documentation.

Further, suggests Darrel Monroe, MOC Manager, “If you’re offshore or at a remote location with limited BHOS access, contact your Operations Coordinator with the appropriate change information so they can initiate the process.”

Customers today expect service providers like Baker Hughes to use an MOC process to manage change – to help protect people assets and investments while complying with regulations plus industry standards such as API Q1/Q2. “Managing change does more than just safeguard health and safety,” Monroe says. “Sometimes it makes the difference between winning or losing a contract. Further, it helps ensure that people involved in a change make the right decisions, for the right reasons, by managing the risks.” Monroe offers these examples:

PERSONNEL CHANGE: GOING FISHING Fishing is the process of retrieving lost or stuck downhole equipment. It’s a painstaking process that requires tremendous expertise.

A successful fishing job can save a well, potentially avoiding millions of dollars in losses.

A BHI customer working a well in the Gulf of Mexico found that a tool had become stuck at depth; it would have to be fished. Baker Hughes had an expert available who had 17 years’ experience. However, his knowledge and skills were not fully documented via BHI’s Competence Management Program (CMP).

Still, the customer’s contract required full documentation before they’d allow anyone to attempt a fishing job.

Baker Hughes’ Operations Coordinator initiated an MOC and put a team to work on it. They researched and documented the BHI expert’s work history, which included an extensive list of successful fishing jobs. With credentials in hand, the Ops coordinator was able to certify this expert’s competence to the customer’s satisfaction. And, as Monroe recalls, “His fishing job saved the well.”

OPERATING CONDITIONS: SOUR GAS Some geologic formations contain concentrations of toxic, corrosive hydrogen sulfide gas (H2S). These “sour” environments demand special measures to protect on-site crew and equipment.

A rig drilling in Angolan waters off the West African coast encountered rising levels of H2S, posing risks to the crew and equipment.

It triggered initiation of an MOC. Working closely with the drilling crew, the MOC Response Team assessed a variety of risks.

Could H2S weaken a wireline cable, causing it to snap, sending a tool plummeting to the well bottom? Could toxic gas infiltrate into recovered drilling fluids, posing a hazard to crews at the well site?

This team determined that alloys used in the cable and equipment could withstand anticipated H2S exposure levels for the expected period of service. However, the team put a variety of protective measures in place to help prevent equipment problems.

For instance, they prescribed intensive visual inspections of cabling whenever the crew ran it to the surface, so crew members could spot telltale discoloration or pitting – early signs of corrosion. Further, the response team ensured that H2S alarms were in place at the surface.

The alarms would sound if they detected H2S fumes, warning the crew to evacuate to protected areas.

With precautions like these, the rig was able to complete its assignment without excessive risk to people or equipment.

While all change entails risk, the risks aren’t always obvious. That’s why Baker Hughes requires all personnel to be trained in MOC procedures and to use of the process conscientiously. “It’s an important way we manage risk to achieve flawless execution,” says Monroe, “and to reinforce our Culture of Quality.” Q

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MOC identifies risks that can result from changes, assesses each risk, decides how to mitigate it, and follows up to make sure people take action – before a change can bring unwelcome surprises.

FEATURE GLOBAL AUDIT

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YOUR PERFORMANCE IS BECOMING MORE IMPORTANT With new BHI Global Multisite Certification, everyone’s performance could affect Baker Hughes ISO 9001 certification worldwide

BAKER HUGHES CUSTOMERS NEED PERIODIC REASSURANCE that BHI quality processes and performance are moderating risk on customer projects, especially high-dollar and high-risk projects. BHI provides this evidence through annual quality audits, recertifying company sites according to ISO 9001 standards. To perform these site audits, independent accreditor Bureau Veritas (BV) examines BHI’s Quality Management System and any nonconformances – that is, findings of variance from quality processes required by the International Standards Organization (ISO).

Until recently, each BHI site underwent its own audit and stood on its own merits for recertification. Nonconformances at one site didn’t affect ISO recertification at other BHI sites, and “lessons learned” weren’t always communicated throughout the Company.

That’s changed. Working together, Baker Hughes and BV are pioneering a Global Multisite Certification program. Within this program, the number of required BHI site audits is plummeting. Before, more than 200 annual audits were required, one for each site, at a cost to BHI of $1.1 million a year. In 2015, however, BHI will need to undergo only 36 site audits companywide.

This change is made possible by intensive documentation integrating BHI sites into a handful of ‘groups’ – each containing, on average, several dozen sites. By special arrangement with ISO and BV, each group of Baker Hughes sites is now subject to a single “umbrella” audit process, requiring only a few site audits per group.

In 2016, the umbrella concept will expand

even more: all 200+ Baker Hughes sites around the world will be combined in a single, unified BHI Global Multisite Certification requiring just 17 individual site audits per year.

As a result, Baker Hughes will annually save $1 million in site audit costs. But there’s more to this change than significant cost savings. The global audit program reinforces BHI’s Culture of Quality by making each site, and every person, more directly accountable for quality performance – and for resulting impacts on other BHI sites. Additionally, sites will meet consistent quality standards, because they will all use the same BHI Quality Management System processes.

From job delivery to continuous improvement, Baker Hughes teams and sites have always been interdependent. Global Multisite Certification now intensifies this reality. “Before, nonconformances affected only the site where they occurred,” says Phil Kurkoski, Director, Quality Compliance. “Soon they’ll affect us companywide.” Because of the global audit, nonconformance at any one site could affect ISO recertification of all BHI sites.

This historic evolution carries major positive implications for BHI’s ever-growing Culture of Quality and the industry as a whole. For each BHI person, it means greater responsibility to support quality by adhering to prescribed processes. ”Everything you do affects the whole,” Kurkoski says. “That’s always been true, but now the broader impacts are becoming more direct than ever before.”

In addition, Global Multisite Certification demonstrates how the BHI is furthering its commitment to continuously improve quality

to BHI’s customers. “As the first of its kind in the oil and gas industry,” says Kurkoski, “this program sets a new, unique competitive standard, giving Baker Hughes an advantage when soliciting client contracts.”

Opportunities don’t stop there. BHI Global Multisite Certification, combined with the Quality Management System in the Baker Hughes Operating System (BHOS), will make it easier to share “lessons learned” companywide.

“It accelerates our continuous improvement,” Kurkoski points out, “and it makes us more responsive to customers’ evolving quality requirements.”

BHI’s Quality Organization has been working to prepare various global BHI sites for their new, more comprehensive audit process. Quality Teams are conducting internal “pre-audits” and addressing any nonconformances found.

Kurkoski observes, “Every site on the certificate must ensure they are following the required processes and procedures documented in BHOS.” In addition to local site management reviews, ISO’s Global Certification Program requires a minimum of one annual review by the company’s senior management – the CEO and Executive Leadership Team. Says Kurkoski, “It’s another way we demonstrate to our customers and our own people that strict attention to quality starts at the very top and runs throughout the organization.” Q

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FEATURE PRODUCT DESIGN MANAGEMENT

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BHI QUALITY DESIGN HELPS PEOPLE PERFORM BETTER Product Design Management makes Baker Hughes products and services more reliable, and avoids errors

BAKER HUGHES’ CULTURE OF QUALITY iisn’t only about field operations: it’s also crucial to product design at BHI engineering facilities.

BHI Design Engineers employ quality processes every bit as rigorous and challenging as those on oil rigs. That’s because Product Development Management (PDM) affects field crews’ safety and performance.

“Through PDM, we focus on prevention to reduce the need for after-the-fact corrections,” explains Randolph Phillips, Reliability Technology. “By ensuring that our products perform as intended, PDM can prevent harm to people and the environment. It also helps avoid operational complications and resulting costs.

And it strengthens Baker Hughes’ reputation among customers for quality, reliability and providing a new service that’s done right.”

“While every BHI individual is responsible for their own performance, product design could either allow mistakes or help prevent them,” says Phillips. He offers an example. “We’ve seen costly well problems where crews cemented liner hangers upside down. Our simple fix: adding a label that shows which end is up.”

Phillips, himself an engineer, came to BHI from an industry where companies aim to boost product reliability and avoid human error.

He applies ‘lessons learned’ there to PDM at Baker Hughes. “We’ve made our downhole tools more reliable by making their internal electronics more rugged – more shock-, heatand vibration-resistant,” he says. “On some hardware, we’ve eliminated bolt-down hatch covers, replacing them with a sleeve design

that’s more efficient and less prone to mistakes.

We’ve improved insulation in various motors.

And we’ve improved our submersible pumps, for instance – making the ‘plug’ more robust, so it’s harder to inadvertently pull out.”

While quality product design requires investment, its cost is much lower than “consequential costs of failure to operations in the field,” Phillips says. “That’s how PDM ultimately enhances the company’s profitability, while making us more competitive, with higher satisfaction among our customers.”

“PDM reaches far beyond product design,” he adds. Virtually every change in a product triggers a flow of documentation and process changes, all of which must be flawlessly executed for a product improvement to have its intended effect. Changes can affect field bulletins, bills of materials for manufacturing, maintenance procedures, operational procedures, the Baker Hughes Operating System (BHOS), training courses, supporting content, certifications, and documentation throughout.

Further, teams must distribute these changes not just to Baker Hughes field people, but also circulate them to all users of BHI Rental Tools and Equipment.

Baker Hughes continues to invest in PDM through more rigorous compliance, balanced scorecards, engineering productivity, simulation tools, and durability and reliability testing.

Through programs such as PDM, Baker Hughes increasingly protects the company’s reputation and cost-effectiveness, the environment and, most important, our people. Q

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FEATURE GUARDIAN

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GUARDIAN ADDS IMPACT TO OBSERVATIONS New integrated system adds value to observations in several important ways

BAKER HUGHES HSE AND QUALITY organizations have joined forces to bring you the Guardian observation system featuring quicker, easier, more convenient ways to submit observations regarding quality issues – and ensure they’re followed up on. “This means observations you submit, get the attention they deserve,” says Reggie Kennedy, Senior Director, Global Health and Safety. ”If you see it, share it.”

HSE and Quality rolled out Guardian in North America early in 2015. The new system will be available worldwide later this year.

All observations now become part of quality trend data BHI is gathering worldwide via the Guardian system. Aggregated observations and the trends they reveal help Baker Hughes HSE and Quality teams spot recurring issues that affect health, safety, environment and the quality of BHI’s work. Using powerful methods like root cause analysis, teams can bring about changes to improve Baker Hughes enterprise-wide. “Thanks to Guardian,” Kennedy says, “every submitted observation now contributes to global continual improvement.”

There’s more. These aggregated and analyzed observations show customers that BHI fulfills its promises regarding continuous quality improvement. Customers increasingly review such data. In this respect, says Kennedy, “every observation can help Baker Hughes win customers and keep them.”

ENSURING FOLLOW-UP Alex Guariento, Director, Transportation Safety, notes that Guardian tracks every submitted observation. None escape the system’s notice.

When someone submits an observation, the system starts a timer and automatically issues reminders to

the responsible manager, seeking follow-up. ”This is one of several ways observations get the attention they deserve,” says Guariento. “Guardian has become more than just a platform. It’s now a backbone within our Culture of Quality. In practical ways, it demonstrates that you matter, and so does every observation you make. We listen and take action.”

EASY ACCESS People can access the Guardian system either by connecting to Baker Hughes’ internal web homepage (enter “GoGuardian” in the address bar) or via the Web https://sw-ghs205.swtechhosting. com/BakerHughesProduction/GuardianSL/; a simple fill-in form lets users submit observations.

Observations can be submitted via a PC or Apple iPhone. Printed observation cards will remain available in many work areas.

NEUTRAL APPROACH Angela McKirahan, HSE Systems Lead, points out that observations are neutral and non-punitive. “As always, we’re focused on solving problems,” she says. “It’s about processes, not individuals.”

She adds, “We can improve only when we discover something’s wrong. That is why our observation system is crucial to the company’s overall HSE and Quality success. By freeing people to submit observations, we can see what may need a focused refit.”

ROOT CAUSE ANALYSIS Once someone submits an observation, experts in BHI’s Quality and HSE organizations use root cause analysis to ask, “What went wrong? How did this situation happen?” Typically the root lies in a process, training, or sometimes a physical structure that too easily allowed errors or mishaps

to occur. Usually the answer is to fix the root cause: change the process, improve the training, rework the structure.

Repeated thousands of times, root cause analysis and resulting remediation gradually improve the company’s overall quality. Ultimately it saves money, protects the natural environment and saves lives.

However, every improvement must start with a person making an observation, someone who cares enough to say, “Something may be wrong here.

Please take a look.”

The new Guardian system now makes this first step much easier – and more effective. Q

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All observations now become part of quality trend data BHI is gathering worldwide via the Guardian system. The objective: making continuous improvement more effective.

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