Create value with automation: Redesign processes first
Automation profitability tutorial: As controls and automation address the world’s greatest challenges, don’t just throw new technologies at tired processes. Redesign processes first for the greatest value, said Dr. Peter Martin, vice president business value consulting, Schneider Electric, at the 2015 CSIA Executive Conference. Control system integrators need to make value measurable, help industry focus on value, use automation to drive value, and consider automation’s real value. See related video: "Redesign processes first, then apply automation to solve problems."
Automation and control engineering experts are the most valuable people this industry has, said Dr. Peter Martin, vice president business value consulting, Schneider Electric, at the 2015 CSIA Executive Conference. To get more value from automation, Martin said: 1) Make the value measurable; 2) Help industry focus on value; 3) Help others know automation can drive great value; and 4) Consider the real value automation experts can provide. See related video: "Redesign processes first, then apply automation to solve problems."
Martin's presentation, "The Future of Automation: Meeting the World's Greatest Challenges," noted with some irony that among the greatest challenges is to help those involved understand the tremendous value that automation and related technologies bring. His edited comments follow.
Get past cool features
After interviews with plant managers at 20 sites, most liked the control system and loved the graphics and configurator, but no one understood the business value of the automation installed or could say whether or not the plant was running better than it had 20 years prior, with pneumatic-based automation.
"If fundamental business isn't better with the installed technology, then we have a problem. How can we get the value from the automation?" he posed. Additional interviews with more than 2,000 executives provided insight that those involved generally believed that technology was the solution, but there was no clear understanding of the problem or of the value that technology could offer.
Solving big problems
Technologies are available to solving the world's big problems, such as those in energy, water, food, health, environment, or life needs, and it's time for engineers to take these on, Martin said.
Low-cost critical energy would help resolve daunting challenges. With economical energy, clean water issues are resolved, preventing a half-million babies from dying each year because of lack of fresh water or use of tainted water. There's no excuse for this. We know how to desalinate but need low-cost energy. Dubai uses 50 million gallons per day to water a golf course. If we can do this, we can create gardens where needed, Martin said, to provide nourishment as needed.
Better tuning, negative carbon impact
A nicely tuned automobile will perform better. "Our jobs are to keep plants tuned."
In India, Martin said, the largest integrated refining plant is so large it has 220 km (about 137 miles) of roads in the plant. Yet the plant has a negative carbon impact because it runs well, owners built a mango forest in the plant, and it is now the second largest mango producer in world. Mango trees are very efficient in capturing carbon. "Don't forget what we exist to accomplish. If we recall and think that we can do so, the world can be a better place."
Value perception, measurements
Value perception varies by responsibilities. Executive management sees profitability; operations management sees production; maintenance management sees availability and cost; project management measures on time, on budget, and risk metrics; operators see alarms and throughput; plant engineers look at efficiency and safety; and environmental health and safety (EH&S) personnel look at safety and environmental issues.
The best talent in industry work at system integration firms and their client businesses, Martin said, but because "we're not measuring the right things, we get the wrong results."
Often there are no common definitions, and measurements misalign. A common example is when the next shift changes alarm settings because they have different metrics.
"Everyone must be aligned on critical performance measures. This is YOUR problem," Martin pointed to the audience, "though you didn't create it."
Lack of ROI understanding
How do you know when the control system is undervalued? A danger sign is that it takes 30 years to replace. With a project value model, there's always some measurement of return on investment (ROI). Cost of the investment is one measure over the lifecycle (beyond price). Benefits should continuously improve over the life of asset.
When a project began, there was a stated ROI. When the new specification is based on replacing the functions of the old system, those involved don't see the value. If no one figures ROI regularly, then the chief financial officer thinks there's no ROI, no value, in the control system.
Without measurements, someone might think there's more ROI available by buying storm windows for a plant in Minnesota.
Control systems are designed to improve efficiency. Plants are in control, but profitability is out of control, because no one has any real-time clue about profitability. No one knows when there's a bad month until five days after closing the quarter, and we're always surprised. Running the plant efficiently is necessary but is not enough anymore. A business profitability value model is needed.
Today's plant cost accounting systems are monthly, a default from the industrial revolution, and it wasn't a problem then because variables seldom changed. Now, variables change faster. Profits are a control loop.
Four value blockers
There are four value blockers, and none are your fault, Martin said, but we need to understand them to do our jobs well. "Every one of them is your problem," he told the automation system integrators in the audience. They are:
- Technology focus
- Replacement automation
- Project team approach
- Business measures.
Go to the next page (click the link at the bottom) to learn more about what Martin had to say about the four value blockers and how to overcome them.
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