Continuous sharing of DX achievements, including oil refining processes
Voluntary participation of members leading to widespread adoption across the entire value chain
GS Caltex, which has advanced its process capabilities since its establishment in 1967 and posted total sales of KRW 58.53 trillion last year, is accelerating digital transformation (DX) to change the organization's DNA in line with changes in the external environment rather than focusing on its current core competencies. The idea is to spread DX across the entire value chain, rather than simply relying on the existing capabilities of importing, refining, and selling crude oil. GS Caltex's DX strategy includes:
1. The company gradually gained internal consensus on DX by using agile methods to validate the effectiveness of digital technologies, including piloting projects and completing prototypes within three months.
2. Increased productivity and improved profitability by implementing DX at the Yeosu plant, which is the center of the value chain and generates the most data.
3. Focused on reskilling employees to improve their digital capabilities, including full-time collective training, excluding them from their current work, to create an environment where DX can be spread throughout the company through the voluntary participation of employees rather than a small group of IT professionals.
In the first half of this year, GS Caltex completed a 59-day turnaround (TA) at its Yeosu plant. TA is regular maintenance work carried out at refineries and chemical plants, involving collectively inspecting and repairing areas that are difficult to diagnose and take action on while the plant is in full operation within a deadline. Global refining and chemical companies, including GS Caltex, which has a 6 million-square-meter Yeosu plant nearly twice the size of Yeouido, regularly conduct TA. The temporary shutdowns that occur during TA have a significant impact on oil supply and oil prices.
Artificial intelligence (AI) and robots were at the center of attention in this TA, which was the largest ever held with a budget of KRW 315.8 billion, double that of the previous year. AI CCTV detects when workers working at heights do not wear seat belts and automatically sends a warning message to the speaker. Additionally, robots are used for dangerous tasks such as installing scaffolding to inspect the outside of the facility and conducting air pressure testing in case of an explosion.
GS Caltex's increased utilization of AI and robots is part of its digital transformation (DX) program, which it has been pursuing since 2019. GS Caltex is a blue-chip company that has advanced its process capabilities since its establishment in 1967 and currently has a refining capacity of 800,000 barrels per day. It generated a total of 58.53 trillion won in sales in the refining, petrochemical, and lubricant sectors last year. However, rather than focusing solely on its current core competencies, the company is making new changes with its DX strategy, which embeds digital DNA into the organization to keep pace with changes in the external environment. Instead of settling for the existing business of importing, refining, and selling crude oil, the company plans to secure future competitiveness through deep transformation that spreads DX throughout the entire value chain.
GS Caltex has been implementing DX since 2019, and the results are gradually being realized. As a result of installing a driving automation system at its Yeosu plant and implementing more than 50 AI and machine learning projects, the company has realized more than KRW 15 billion in profitability improvements and cost savings. In addition to the financial benefits, the company has also increased worker productivity. By applying digital technologies such as AI and dashboards to product production planning, the company has reduced the time involved by 30%.
Transforming a large, established company is often more challenging than transforming a smaller organization, such as a startup. Their decision-making systems are complex, and they have a long history of building on existing business lines and strengths, so there is often a lot of internal resistance to changing their strategic direction. The risks of failure are also high. Despite these adverse conditions, GS Caltex has been continuously promoting DX since 2019, and the results are coming in. How has GS Caltex been able to engage employees and embed digital DNA into the organization? DBR analyzes GS Caltex's DX strategy based on interviews with officials from GS Caltex's DX Center and Yeosu plant.
This content was translated into English by AI (using DeepL) from an article that was originally written in Korean in the DBR (Donga Business Review). Therefore, please understand that there may be some awkward expressions.
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