BAKER HUGHES OPERATIONS REPORT

BAKER HUGHES OPERATIONS REPORT

MODULE: BUSINESS OPERATIONS AND IMPROVEMENT

PART I: Introduction

Industry

Baker Hughes is a company limited by liability founded in 1999. It operates in three industries. They include the gas and oil industry, the mining and quarrying, electricity, gas, and the water supply industry (Gateways, 2020).  The main activities in the gas and oil industry include onshore services that deal with chemical and oilfield services. Additionally, the Company operates in offshore services specializing in gas and oil exploration, rig operations, and drilling of natural gas and crude oil.

The Company also undertakes engineering activities, mainly geophysics. Notably, consulting services also form part of its operations in the gas and oil industry (Gateways, 2020). Under the electricity, water, and gas supply industries, Baker Hughes undertakes production and distribution of power. As for the mining and quarrying industry, the main activities revolve around the extraction of natural gas and crude petroleum.

Products and Services

Baker Hughes deals with a variety of products and services. The products and services are divided into two broad classes, firstly, evaluation and drilling—secondly, production and completion services and products. The drilling and evaluation consist of product lines such as wireline services, drilling fluids, drill bits, and drilling services (Gateways, 2020). On the other hand, completion and production deal with product lines such as upstream chemicals, intelligent production systems, wellbore intervention, and artificial lift as well as complete systems.

Notably, the Company offers digital solutions, oilfield equipment, turbomachinery along with process solutions, oilfield services. The turbomachinery and process solutions enable the successful production of both onshore and offshore Liquefied Natural Gas (LNG), petrochemical refining, and gas and pipeline processing (Gateways, 2020).  Its digital solutions, especially sensor Technology, offer creative avenues for monitoring, inspection, and controlling activities in actual time. Notably, the Company also deals with software and analytics services in addition to oil and gas consulting services.

Geographical Area of Operation

Baker Hughes operates on several continents. For reporting purposes, it has categorized the regions into five segments. They include Europe, North America, South America, Africa, the Middle East, the Caspian Sea, along with Russia, Indo- Pacific as well as industrial services.  Its headquarters for oilfield services is in Houston, Texas. Aberdeen, Scotland, serves as the oilfield equipment headquarters (Gateways, 2020). London serves as the main office for digital solutions, while Florence serves as the main office for process solutions and turbomachinery. The Company’s operations are classified into broader categories of about 23 geographical markets across the world. The geographic markets consist of local teams that undertake market surveys to understand customer needs and coordinate the delivery of Baker Hughes products. The Company operates in more than 120 countries globally.

Financial Performance and Company Outlook

Critical milestones in financial year-end 2019 results saw the Company score huge orders in Turbomachinery and Process Solutions (TPS) as well as 12% growth in oilfield equipment orders (Bloomberg, 2020). After Launching Company’s new brand after divesture from GE, it was an essential success story for the year as a stable competitive position. The highlight for the year was a free cash flow of $ 1.2 billion. The Company also has invested a considerable amount of funds to Microsoft for the Artificial Intelligence (AI) solutions, as well as leading cybersecurity providers such as Tripwire Inc. and Trend Micro, a cyber-security leader in IoT space.  According to Bloomberg (2020), as of 2019, the Company’s critical wins in its operations included the Ichthys gas field located on offshore Australia as well as the balder X project in the North Sea. In addition to that, the Company is the leading in the production of Liquefied Natural Gas globally, winning all major LNG project sanctioned contracts in 2019.

However, the performance of the first quarter of 2020 has been abysmal owing to the Corona Virus outbreak. The Company recorded a reduction in quarterly orders by 20% down to $ 5.5 billion (Bloomberg, 2020). It also marked an operating loss of $16 billion for the quarter. Diluted loss per share for the first quarter of 2020 was $15.64, as well as weak cash flows compared to the fourth quarter 2019, illustrates the effects of the outbreak on share prices and business operations as well (Bloomberg, 2020). It is important to note that it is the pioneer oil and gas company in Oman to achieve an American Petroleum Institute (API) specification Q2 certification for Quality Management System (Gateways, 2020). The Company ranks number 119 on the Fortune 500 list of companies.

 Objectives of the Operations Report

This report aims at highlighting key factors to consider for successful operations management of a company. Additionally, the study will contribute literature material for further analysis of companies’ operations management in related fields or even more in-depth analysis of Baker Hughes Company. The report aims to shed light on the importance of critical risk management as well as innovative operations integration for increased profitability and cost-cutting. Through discussing on crucial aspects of the Baker Hughes Company, the report will be in a better position to conclude and recommend policy issues and strategic areas that the Company needs to evaluate for policy implementations in the future.

PART II: Content and Analysis

Integration of Operations Management

Operations integration simply put refers to the collaboration of resources focused on production efficiency. That is the integration of people, information technology, policies, and procedures as well as work processes to make smart decisions (Reid and Sanders, 2019). Baker Hughes has extensively integrated its operations. The integration has resulted in Health Safety and Environment strategy as well as the global compliance program. Additionally, the People, Principle, and Planet scheme aims at integrating its operations following set guidelines for effective and efficient production.

A key aspect of operations management integration is through the use of the e-commerce platform. E-commerce can be defined as marketing, selling, delivering products, and processing receipts from online transactions via the internet (Valera et al., 2017).  It enables the Company to boost its supply chain and offer a quick and efficient medium for customers to shop online (Reid and Sanders, 2019). Additionally, the platform provides a direct connection with customers and an easy way of collecting feedback. Such feedback is rich in user experience for a variety of the products that the Company offers.

Baker Hughes is a leader in offering digital solutions to a variety of problems, has invested in its e-commerce platform. The Company expanded its e-commerce platform global.shopbakerhughes.com portal, which provides more than one thousand six hundred products as of 2016 (Mulhall, 2016). These products are similar to the one the Company uses in its oilfield services. It also availed in the website additional products ranging from artificial lifts, Drill Bits, production chemicals, and reservoir software. The product’s prices also factor in taxes and part of the shipping cost. It will significantly help to improve the order follow up and management online. It is because monitoring of all the order processes from booking to processing to packaging and delivery is done over the accounting software.

Additionally, the e-commerce platform is a good avenue for internal channels of branding and product advertisement, which comes at no cost (Valera et al., 2017). As per the Company’s website, the products will also offer manufacturing and engineering quality. Other product lines also provided to include the drilling and completion fluids, completions, and wellbore intervention as well as wireline services and product lines.

The platform has revolutionized the purchasing process as it has reduced costs borne by the customer. Additionally, it has increased efficiency on the part of the Company as it can analyze its operating performance and evaluate its activities against the standard policies. According to Valera et al. (2017), e-commerce improves the accuracy of operational reporting to the management for decision making and operations review.

The platform operates around the clock and presents a broad scope of payment choices, including credit cards and visa cards (Mulhall, 2016). The lead time is hugely economical as shipment of items within seven working days from the purchase day. Shipment tracking and customer update on shipment progress via mail is a unique feature. According to Mulhall (2016), the Company has earmarked to improve the website user interface to make product selection more accessible, improve user experience, and functionality.

In addition to e-commerce, Baker Hughes has rolled a strategic scheme called Customer Solution Centers (CSC). It is a workshop fitted with advanced technology that offers customers a great experience in the product portfolio of the Company. The solutions offered installed in the CSC and fully functional (Reid and Sanders, 2019). Demonstrations and customer testimonials are critical features of the CSC program. CSC cuts across the operating regions.

Process Design Evaluation and Facilities Layout of the Company 

Process Design

Process design involves the determination of workflow structures, tools, equipment needs, and the implementation feasibility for specific processes (Tayal et al., 2017). A background study in the evolution of the Company’s operations and strategies is paramount to understand best` the operations process of the Company. Acting Vendor in Oilfield services, digital systems, and products given to global gas and the oil industry, the Company has transformed immensely to gain a competitive advantage over its competitors (Gateways, 2020). All of Baker Hughes’s operations employ innovation and automation. Its long-term vision is to become the leading energy technology company that designs and manufactures transformative technology that takes energy forward. To achieve such feat, it has undergone several transformations in terms of acquisitions and mergers intending to revolutionize operations.

A critical merger in the history of the Company includes the merger between Hughes Tool Company and Baker International. The Company also engaged in a joint venture with Schlumberger for six years.  The Company has extensively used acquisitions in expanding operations and gaining competitive advantage. They include Elder Oil Tools, CTC, EXLOG, Brown Oil Tools, Milchem and Newpark, Teleco, Eastman Christensen and Drilex, Centrilift, Western Atlas, among others (Gateways, 2020).  All the above mentioned acquired companies have specialized in a wide range of operations, including mud logging, completions, diamond drill bits along with directional drilling, artificial lifts, distinctive chemicals, drilling fluids, basaltic exploration along with well logging as well as directional drilling and diamond drill bits.

Before 2017 the Company was registered as Baker Hughes incorporation before an amalgamation with GE Oil and Gas. It was registered as Baker Hughes, a GE company (BHGE), in the same year. The Company then plundered from General Electric In 2019 and became an independent company. It was then registered as Baker Hughes Company to the present day. Such acquisitions, mergers, and joint venture operations show the level of aggression and business commitment the Company has.

Currently, the Company has structured its operations by integrating engineering, data, and scientific techniques in its production and manufacturing frontiers. To achieve that, it recently restructured its operations and senior management (Petrole, 2020). Firstly, it has centralized the design of its regional services into a single global process. It has also incorporated its Global Products and Services (GPS) organizations and technology into a separate operational entity. Such organizational structural changes aim to deliver exceptional operational performance, outstanding sales, and service delivery at the best possible profitability position. The Organization’s restructuring focused on strengthening the Company’s technology business as well as attracting strategic investors and business partners.

At the management level, restructure has seen top-level management reshuffled to different positions. Former deputy president of the Company and head of the alliance task force serves as president of universal operations. On the other hand, Art Soucy, former president of the EARC region, serves under the capacity of president, products, and Technology (Petrole, 2020). Notably, Richard Williams currently handles the chief advisory role to Company’s administration team. He was formerly president of the North America region. Finally, Derek Mathieson, former vice president as well as Chief Technology and Marketing Officer, will serve under the capacity of Chief Commercial Officer.

Smarter ways strategy entails the people, planet, and principles commitment. Strategic achievement is possible through operations supremacy, innovative economic activations, continuous employee engagement, and key partnerships and community participation (Lam, J., 2014). Also, this design has caused optimization in the supply chain as well as improved asset management practices.  Customer focus has been a vital step in operations restructuring (Gateways, 2020). Efforts aimed at business process re-engineering have led to the automation of production processes. For instance, the expansion of the e-commerce portal has automated supply chain management. Baker Hughes’ approach is reflected by the pursuit of its mission statement of becoming a leading company in oil and gas through technology.

Investment in technology includes Artificial intelligence, machine learning, as well as an edge in cloud computing—additionally, elevation in additive manufacturing, investment in patent rights, the launch of their commercial application reliability. The application was made possible by a partnership with Microsoft and C3.ai alliance offering AI solutions for the energy industry via the Microsoft Azure (Gateways, 2020). It will lead to customer adoption of scalable AI solutions. Other technological investments include cybersecurity solutions from Tripwire Inc. and Trend Micro.

It has resulted in a disciplined approach to product development. Its investment in technology and digital solutions has led to Baker Hughes becoming a premier consultant in the oil and gas field. Additionally, it has led to the Company’s manufacturing high-quality products for the oilfield equipment and turbomachinery. The numerous mergers, acquisitions, and joint venture businesses under the diversified Company’s portfolio have led to the improvement of the Company’s technical knowhow, improved business operations as well as employee skill training and exchange resulting in a highly skilled workforce who offers exceptional services (Shalley and Gilson, 2017).  Further, it has fortified the Company’s digital footprint against cyber-attack, especially its industrial cyber-security control systems and the operating technology surroundings.

Facilities Layout

According to Saylordotorg (2014), facility layout refers to the Organization of resources in a company to optimize productivity. It entails individuals and other resources, such as equipment as well as machinery. Classification of office designs includes the product, fixed position, and process along with the cellular plan. The Company has employed a mixture of different layouts. For instance, process layout is used in the division of the various company headquarters. According to Saylordotorg (2014), process layout entails grouping together individuals undertaking similar activities. On the other hand, its plants have process layout for easy assembling of equipment from an engineering process. The assembly line is grouped into phases of production.

Baker Hughes has quite a high number of employees globally. Different offices of the Company employ different office layouts. To accommodate all employees while offering a spacious room for both personal spaces as well as a collaborative atmosphere, the Company has extensively used mediascape layout in its operations field offices. It allows for the Company to optimize its real estate by cost-saving while having a transformative idea of a workplace (Saylordotorg, 2014). The adoption of a mediascape layout has resulted in participative and inspiring workplace culture. The design is employed in the Billerica gas division of Baker Hughes. The main advantages are that mediascape design greatly fosters an inspiring workplace culture.

Figure: Mediascape Office Layout (Source: red-thread.com)

The collaborative culture has substantially defined office layout for Baker Hughes. The Company has maintained the same cultural taste in its Chiswick Park in London with a balance of a cellular design (Rose, 2017). In collaboration with Peldon Rose, a leading workspace consultant, they created a 25, 000 square foot space with community areas. It features a reception area, a large breakout area, and client meeting spaces. Besides, the office interior is sleek and borrows a minimalist concept. A huge focus has been made on the community space to foster staff welfare and happiness. The office aims at promoting smart working as well as a social experience. According to Rose (2017), the park holds an impressive boardroom with the latest communication technology, an extended kitchen structured with communal eating benches for a less formal experience and interactions.

Figure: London Office Boardroom (Source: PeldonRose.com)

Process Flow Chart and Process Map  

Classification of business operations in Baker Hughes features three primary industries upon which the Company conducts its business. Primary categories include gas and oil industry, mining and quarrying, electricity, gas, and the water supply industry.

Oil and Gas Exploration Simplified Process Flow Chart

Firstly, the oil and gas industry-main activities include onshore services, which deal with chemical and oilfield services (Qi et al., 2017). Additionally, the Company operates in offshore services specializing in gas and oil exploration, rig operations, and drilling of natural gas and crude oil. As such, the business operations in this industry can be summarized in the process flow chart, as shown below.

Harvest of

Resources.

More resources

Accessible & Known

Economic Field Size

Figure: Flow chart indicating the fossil fuel exploration process.

Liquefied Natural Gas Processing Flow chart and Process Map

Figure: LNG Supply chain Distribution (source: Researchgate.net)

Figure: LNG Process Map (source: Researchgate.net)

Monitoring, Inspection, and Control Activities Flowchart and Process Map

Its digital solutions, especially sensor Technology, offer creative avenues for monitoring, inspection, and controlling activities in actual time.

NO                                                                                                                                                 NO

YES / NO

YES                                                                                                                         YES

Figure: Monitoring Process Flowchart

Simplified Crude Oil Refinery Flowchart

Removal of corrosive

Salts and suspended solids

Separation into major

Distillation fractions

Change of molecular

Structure of hydrocarbon

Molecules

Denitrogenation/

Desulfurization /

Demetallation.

Figure: Simplified Crude Oil Refinery Flowchart

Desalting serves to remove any salts present in the crude oil ahead of embarking on other processes. Blasting water into the stream of oil helps with the process. The procedure eliminates salts as well as impeding corrosion (Fernandes, Relvas, and Barbosa-Póvoa, 2013). On the other hand, the distillation process comprises the substantial crude oil separation in hand with the boiling point scope and hydrocarbon compounds classification. It is made possible by the fractionation process in the vacuum and the atmospheric distillation chambers. The process is free of chemical reactions.

Splitting of the crude oil compound alloy into different fractions is achieved through the process of atmospheric distillation. Atmospheric distillation is only feasible at low boiling ranges and atmospheric pressure. Kerosene, heavy naphtha, diesel along with gas oil are components of the output. Vacuum distillation, on the other hand, removes atmospheric debris and is purified, resulting in lube oil base stocks, vacuum gas oil, and asphalt (Christopher, 2010). Downstream processing and purification are used to convert heavy raw material from the distillation process into output ideal for cooking units.

Supply Chain Flowchart, Process Map, Supply Chain, and Logistic Management

According to Christopher (2010), SCM is defined as downstream control and upstream connections among the customers as well as suppliers. The process aims at providing high-quality goods and services that a customer values at a low cost to the supply chain.

The layout of the supply chain consists of several firms undertaking different functions. Downstream, midstream, and upstream activities form the categories of the supply chain. Tasks in the upstream scope involve exploration and extraction functions. Midstream functions include infrastructural transportation and storage of crude oil into tanks, which links with the refinery via pipeline (Fernandes, Relvas and Barbosa-Póvoa, 2013). Downstream features include the processing of crude oil, transportation, distribution, and marketing of stock of the finished product through distribution centers. Delivery is mainly through a pipeline, rail, or ship. Trucks operate from the loading point to the retailer.

Supply Chain Flowchart

Upstream

Functions

Material                                                                                              Information

Flow-Flow                                                                                             Flow

Midstream

Functions

Downstream

Functions

With competitive challenges in world oil markets, fluctuations in demand and prices for oil and gas, supply chain and logistics management is essential for any company (Henriques and Sadorsky, 2011). Baker Hughes, having globalized its operations, relies on sound supply chain management practices due to the requirements of the United Nations relating to sustainable development goals as well as integrated Corporate Social Responsibility requirements of the supply chain. Supply chain management is essential for a profitability position as it can result in huge operations costs. The petroleum industry is material flow comprehensive. As per estimations, the supply chain amounts to around forty percent of the refining and distribution charges (Qi et al., 2017). On the other hand, logistics management is the assurance of availing the right quantity of a product in perfect condition at the required place to the right customer and the exact cost.

Figure: Supply Chain Management Process Map (source: Researchgate.net)

Risk Management

According to Lam (2014), risk management is the process of identifying, forecasting, evaluating, and arranging risks on a priority basis for selecting appropriate steps to avoid, mitigate, control, and monitor risks. From the Company’s annual reports, material risks include factors affecting demand for oil and gas, periodic detrimental weather conditions, and changes in oil and gas prices. Additionally, terrorism, geopolitical risks, as well as competitive markets, affect the Company’s operations.  Other hazards include health and safety risks, compliance risks, talent management, and the planet and principles.

Seasonal adverse weather conditions might affect the Company’s operations in the mining and extraction of gas and oil, as well as the production and distribution of electricity operations. Tornadoes and hurricanes affect the exploration and production of fossil fuels. Fundamental structures such as oil rigs and power lines are susceptible to the above risks.  It results in damage to oil rigs, delayed onshore extraction, power line fires, and increased utility outage rates, respectively.

Demand for oil and gas and changes in their prices go hand in hand. The degree of petroleum exploration, the amount of sunk cost invested, development, and production expenditures incurred. Recoupment of such spending is from the sale of hydrocarbons, primarily with the prices and demand for hydrocarbons presenting a huge operational risk. Notably, other activities such as drilling activities and drilling permits and regulations for the shelf and deepwater drilling, as well as excessive production capacity, also present such risks.

These risks have hugely affected the Company during the Corona Virus pandemic. According to Hampton and Singh (2020), Baker Hughes has incurred losses of $ 10 billion in the first quarter of the financial year 2020. Such damages result from the fall in oil prices by 80% leading to relatively low oil prices. Reduction in demand results from lockdown restrictions by governments in measures to curb the Corona Virus epidemic. With the storage capacity of most petroleum companies at maximum levels, most of the companies have halted their drilling activities, and Baker Hughes is understood to have scaled-down such operations.

Geopolitical and Terrorism risk factors can be attributed firmly to energy wars. According to Klare (2014), fossil fuels are the primary triggers of global conflicts. Regarding Iraq and Syria, the South China Sea, as well as Crimea and Ukraine conflicts, are founded on the desire to govern gas and oil fields. Such drives picture as a sense of national power. Terrorism attributed to oil and gas deposits is evident in Nigeria with Boko Haram (Klare, 2014).

Additionally, ISIS relies on revenues from fossil fuels to finance its operations. Such a state of affairs poses a danger to invest in such conflict-prone areas or their neighboring countries (Klare, 2014).  Civil unrest and security conditions in the operations blocks, whether petroleum-producing or petroleum is consuming affects business operations.

Potential risks to Baker Hughes are mainly economic, cybersecurity, and political risks. Changes in the economy and political outlook can adversely affect its operations. Financial risks include changes in interest rates, inflationary pressure, a decline in credit availability, economic sanctions by the government, and other regulations. An increase in Interest rates for loans will directly result in reduced earnings. Adverse changes in market prices of products with the fixed cost of production will lead to less profitability (Hampton and Singh, 2020). Taxation is a huge economic factor. The introduction of new taxes will further reduce the earnings after tax deductions of the Company. Risks arising from the cost of materials are fundamental in a manufacturing company. Costs and prices are a result of market forces. In a competitive market, costs will always increase, resulting in low profits as the purchasing power of the consumer has not necessarily increased. A decline in credit availability affects global economic growth as well as the demand for oil and gas.

Political risk factors such as regulations, sanctions, and other government actions may result in an influenced change in the socio-cultural environment, quotas on the import quality and quantity of products, and trade control. Additionally, lack of good governance can result in increased corruption levels, which would result in an unfavorable business environment (Klare, 2014). Expropriation of assets by government action and competition regulation aimed at protecting local manufacturers can lead to stringent measures on foreign companies’ operations, thus reducing their production capacity and profitability.

Cybersecurity is a global threat to the advancement in technology. Targeters hack in organizations’ websites and supply chain due to the presence of digitally connected infrastructure such as the e-commerce platform (Williams and Ciepiela, 2019). It is mainly motivated by geopolitics, ransomware, and espionage. The possibility of bandwidth limitations and unencrypted communications are some of the potential risks facing the Company.

The Company, in its aim to prevent or mitigate such risks, it has established an Enterprise Risk Management (ERM) scheme.  Risk classification anchors on severity and possibility basis. Data collection is enabled universally by a separate entity in assistance with ERM governing committee. The executive is responsible for the scrutiny of significant risks and actionable plans to mitigate the risks. The risk management plan supervision is executed by the audit committee, whereby meaningful risk evaluation is performed on an annual basis (Gateways, 2020). Normal risks are evaluated by the specific committees which have specialized their oversight in that particular line of actions. Such committees are members of the Baker Hughes Board. The committees receive periodic updates during committee meetings from the executive on the specific risks. The risk management and reporting framework are hugely guided by the Committee of Sponsoring Organizations (COSO).

Corporate Social Responsibility

Corporate Social Responsibility (CSR) is a crucial position for the gas and oil industry in Oman. The main sectors of the society that the CSR events occur are health, social activities, and technological, legal, economic, environmental, and political aspects. With CSR being a developing interest in Oman, new CSR guidelines and programs are underway. Due to the centralization of group operations and globalization of group strategic plans, Baker Hughes Oman does not entirely operate on its terms but as an essential part of the restructured process of centralized activities (Gateways, 2020). However, Baker Hughes Oman still undertakes CSR activities in the local community following governmental and organizational guidelines.

For instance, part of the Company’s social corporate responsibility program is to fully implement its employee recruitment plan based on the diversity and inclusion focus. The process will create employment opportunities for the local Oman community (Gateways, 2020). At the same time, also it ensures that the Company improves its competitive advantage by adding highly-skilled expatriates as part of its diverse workforce.

Globally, through the Baker Hughes Foundation, the Company has established training programs to empower young leaders with leadership skills. Additionally, the Company has invested in public health and safety as well as the sustainability of local communities (Gateways, 2020). Sustainability was achieved through community service, charitable donations, and domestic investment. The Company has highly facilitated support of educational progress, particularly in subjects such as Mathematics, Sciences, and Engineering. Also, both Lecturers and Students have been given access to tools and technology for academic skills advancement.

The Company also believes that smart energy solutions offer a sense of responsibility to society by creating shared value. Baker Hughes’s contribution to a sustainable environment cannot be underestimated. In its fight against climate change, the Company has embarked on a journey to reduce the net carbon emissions from its operations, thus protecting the environment (Liang and Renneboog, 2017). It’s most significant achievement was recorded in 2018 when it achieved 153 clean Health Safety and Environment (HSE) days. According to the Company, a perfect Health Safety and Environment day are free of abuse, harm, or accidents to the surrounding environment. Such a feat is made possible through a culture of compliance, quality, safety, and integrity.

Such efforts are attributable to the role of oil and gas companies in solving the energy sector’s challenges. Climate change has been a global challenge, especially with some considerable impact resulting from the energy sector concerning hydrocarbons (Liang and Renneboog, 2017). Production of safe energy with little or no carbon emissions is part of the restructured efforts of the energy industry globally with aims of contributing a safer environment for sustainable community development.

Impact of CSR in Company Operations

As part of Baker Hughes’ attempt to follow the United Nations sustainable development plans, Corporate Social Responsibility reporting is a fundamental perspective for the Company. Each year, the Company shall be reporting on its CSR activities with a letter from the CEO describing how well the Company was able to achieve its target to meet CSR endeavors (Liang and Renneboog, 2017). Additionally, CSR has seen the Company hugely incorporate responsible manufacturing and production efforts (Qi et al., 2017). Schemes such as the People, Planet Principles Strategy are part of the internal struggles of socially responsible production. Measurement of Health Safety and Environmentally (HSE) safe days of creation with no harm to the environment are significant aspects of social responsibility incorporated in production and manufacturing. Additionally, part of the Company’s principles is to conduct business practices ethically and responsibly. The presence of an ethical supply chain has facilitated the protection of human rights.

PART III: Conclusion and Recommendation

Conclusion

From the content analysis part, it is significant to say that Baker Hughes has significantly structured and integrated its operations. For instance, the expansion of its e-commerce platform global.shopbakerhughes.com has helped cut on costs and facilitate its supply chain efficiency. The platform also improved shipment and delivery tracking, improving customer satisfaction (Mulhall, 2016). Other aspects of operations integration, such as the Customer Solution Centers (CSC) provides the customer with experience of available digital solutions and customer testimonials.

The Company’s process design is influenced by the technique benefits gained from the several strategic mergers, acquisitions, and business joint ventures with leading companies in different operations of the company business portfolio. Such events have slowly led to the Company’s evolution as the leading producer of oilfield equipment and oil and gas production (Lee, Pati, and Roh, 2011). Additionally, the Company’s massive investment in technology has defined how the Company designs its operations (Shalley and Gilson, 2017). To be the leading producer of technological energy solutions. The results have been tremendous with increased service delivery in consultation, digital solutions, software, and analytics provider, among other services.

From the facilities layout, it is paramount to note that the Company supports a collaborative office layout that promotes smart working and takes care of the social needs of its workforce. The mediascape layout can acknowledge attention to workforce social needs in its field operation. Such a design also saves on real estate costs.

Process Flow Chart and Process Map shows the various processes that help in production operations and supply chain management of Baker Hughes Company. Each process is well structured to ensure high-quality products and to eliminate mistakes at each level of production (Qi et al., 2017). With globalized operations, the Company relies on sound supply chain management practices due to the requirements of the United Nations about sustainable development objectives as well as integrated Corporate Social Responsibility requirements of the supply chain processes (Lee, Pati, and Roh, 2011). Sound production process management and supply chain management is essential due to competitive challenges in world oil markets, fluctuations in demand and prices for oil and gas.

Risk management is a huge factor in the success of any business concern. Baker Hughes faces many risks in its business operations. For instance, financial, operational, reputational, and strategic risks. Material risks include factors affecting demand for oil and gas, periodic detrimental weather conditions, and changes in oil and gas prices (Henriques and Sadorsky, 2011). Additionally, terrorism, geopolitical risks, and competitive markets affect the Company’s operations, including potential threats to the Company, including but not limited to cybersecurity, economic, and political risks. However, the Company has exhaustively employed Enterprise Risk Management to curb such risks.

Corporate Social Responsibility is a huge aspect of the Baker Hughes business concern. The Company has health, social activities, and technological, economic, and environmental elements.  Through the Baker Hughes Foundation, the Company has established training programs to empower young leaders with leadership skills. Impacts of CSR activities to the business operations include CSR reporting, adoption of smart energy solutions as well as employee recruitment plan based on the diversity and inclusion focus is part of internal efforts of CSR (Gateways, 2020). Incorporating responsible manufacturing and production efforts with schemes such as the People, Planet Principles Strategy is part of the internal energies. Additionally, measurement and tracking of Health Safety and Environmentally (HSE) safe days of production where there was no harm to the environment are significant aspects of socially responsible manufacturing.

Recommendations

Corporate Social Responsibility

Some of the challenges in CSR in Oman are lack of awareness and problems in gaining excellent support. Additionally, the decrease in CSR engagement as social entrepreneurship is attributable to the high level of youth unemployment. Continued ethical practices in the supply chain through risk mitigation management are highly recommended, ensuring transparent carbon reporting as part of the Carbon Disclosure Project for transparent accountability.

Risk Management

Despite an effective Enterprise Risk Management (ERM) program, the Company has failed to mention a top-level manager in charge of Risk management. There seems to be a lack of designated department for risk management and compliance. Instead, the Baker Hughes Company heavily relies on the Audit and Compliance department and committees to identify and mitigate risks in each line of production. The establishment of a risk management department is recommended with the overall responsibility of oversight placed on an individual for accountability purposes. Additionally, The Company should increase the reserve funds for contingent liabilities. Continued investment in a digital security system, should be promoted as cybersecurity is a significant threat.

Production Process and Supply Chain

Having a dynamic supply chain process management will be helpful during times of economic and sociopolitical uncertainties. At such times it is difficult to predict the future outcome of events. Planning for a high degree of risk will ensure the company operations are still on profit positions despite market trends. Activities such as the Corona Virus outbreak have led to plummeting of business operations for Oil and Gas Companies. Continued investment in technology, ingenious solutions, will be helpful in e-commerce as well as logistics.

Process Design and Facility Layout

The Company has undertaken a considerable process design structure to be able to position its product competitively. It is encouraged to keep on implementing its technology investment in the production process as well as digital security as it has not adequately secured its operation against cybersecurity threats. The Company has highly approached office designs to aim at employee collaboration and smart working. The Company highly relies on innovation in its production process hence the need for a collaborative workplace. The Company should adopt a zonal office layout. It is flexible as it has a focus zone, collaboration zone, communal zone, client zone, as well as a mind-opening zone. Cellular Facility layout should be adopted because all aspects of production can be evaluated and solved at the right moment resulting reduction in defective products.

Integration of Operation Management

The Company’s business process re-engineering is founded on technology to offer high-quality technology products and solutions. It should strive to improve its e-commerce platform, increase the number of Customer Solution Centers (CSC) globally to reach a more extensive customer base. Operations management cuts across all aspects of the Company. Baker Hughes should execute an operations feasibility study for all its activities to corrective measures of operations management.

[Total Words 6134]

Reference

Books and journals

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