Break the Replacement Cycle

June 14, 2016
The second in our four-part series on increasing the return on automation investments explains how to get away from simply replacing your old system with another one just like it, and instead achieve the value of optimization that new technologies afford.

There’s nothing more permanent than a temporary fix. Companies spend many thousands of dollars every year just to stay in the same place. They might first spend too much time and money mending a legacy system piece by piece, just trying to keep the system operational.

But even when the decision is made to bring in a replacement, too often the goal is to simply create a newer version of the old—ignoring all the capabilities that have been rolled out to industry in the 25 or more years since the legacy equipment was first purchased. As a result, manufacturers spend money for an upgrade that doesn’t get the job done any better than the old system, and the CFO isn’t impressed with the idea of doling out money for an operation that doesn’t show any special return on the investment.

Too many manufacturers are not using the full capabilities of their technologies, says Tony Jacobsen, business development manager for Canadian system integrator Autopro Automation Consultants, a member of the Control System Integrators Association (CSIA). “They want to keep using legacy technology, even though new equipment would have been half the cost and easier to support,” he says. “What they don’t realize is that they’ll spend more money by delaying than it would have cost them to modernize.”

Breaking that pattern might take a generational change and a new way to structure incentives, according to Chris Noble, senior district sales manager for Aventics Pneumatics. “Companies can get locked into an annual or semi-annual maintenance schedule, which tends to consume most of the budget,” he says. “To change that, you have to realize that just replacing components is not going to get you a better system.”

Setting aside a certain portion of the budget every year for optimization projects allows you to get started. “While it’s important to keep things up and running,” Noble says, “it’s just as important to incentivize a mindset for innovation and optimization. Installing systems that give you better diagnostics on your operations can be invaluable. Better information can spark a forward-looking attitude and a whole range of useful new ideas from employees.”

Find the optimal solution
Deciding on a path forward for modernization typically involves a range of options. And, of course, the optimal solution often comes with the biggest returns. In many cases, the money spent on developing a system that’s truly optimized will come back in spades.

CSIA member RedViking was asked by a helicopter OEM to come up with a better solution for its laser radar measurement and robotic trim cell, which uses a portable laser measurement stand that gets wheeled to the aircraft and placed inside the frame to measure the hatch or door opening. The resulting point cloud data is then transferred to the robotic trim cell, creating a cutting path for the door.

“They were spending a lot of time hand grinding parts to make them fit, which meant huge amounts of labor, handwork, and trial and error,” says Mark Sobkow, vice president for manufacturing solutions at RedViking. “They had considered two choices: continue to measure by hand and automate the trimming process, or automate the measurement and continue to trim by hand.”

In fact, neither of these options achieved the best results. “Because they were willing to consider something other than a straight replacement,” Sobkow explains, “we were able to design and build a system that allowed them to automatically measure and trim the fit. Now they’re doing the job in seven hours instead of 70, and will achieve significant savings in the first year.”

Get everyone involved
It’s important that everyone understand just what the modernization will look like, notes Robert Darling, group migration specialist at Siemens. “While maintenance may have identified the problem, modernizing requires a bigger conversation that must involve more people across multiple functions and levels to agree on the needs and financial factors, as well as the operational benefits,” he says.

Get your partners—whether vendors or integrators—involved early in the planning process. Rather than dictating to them a duplicate of your previous automation system, you’ll achieve much bigger ROI if you let them help you see how new automation technologies can better address your manufacturing needs.

“If we just receive a specification sheet from a customer, we’ll never be able to optimize the process,” says Roger Freeman, vice president of project services development for Emerson Process Management. “But if we understand their objectives, we can help them apply our technology in a way that enables greater savings.”

As an example, Freeman points to a project in which Emerson deployed electronic marshaling and wireless technologies. By installing smart junction boxes that greatly reduce cabling, only one control cabinet was needed compared with the traditional approach requiring 20-30. “This solution also saved $14 million in E&I [engineering and inspection] costs, which is more than they spent on the automation,” he says.

Early engagement in the design of an offshore separator manifold resulted in a more compact design, occupying less space and weighing considerably less. “We saved 15 square meters of space and 18 tons of weight, which is a big deal on an offshore platform,” Freeman says.

It’s critical to understand a company’s culture and strategic objectives before the start of a project, says Frank deJong, vice president of global projects at Emerson. “The processes used by some companies are so complex or restricted by the laws of physics they can only be improved at the margins, while other companies are looking for a transformation,” he says. “Project teams need to know what’s achievable, and our experts can help them document it and show what other customers have achieved with similar projects.”

Leverage new technology
Every day, automation suppliers introduce products with new capabilities that offer opportunities to solve long-standing problems. Taking advantage of these technology advances can make it easier to achieve your vision for the future.

“Aging technology forces companies to look at their automation, which is the perfect time to evaluate advances in technology and how they can help pay for a project,” explains Randy Otto, vice president of business development for ECS Solutions, a CSIA member. “In nearly ever instance, companies are able to realize a greater annual return than the cost of the entire automation project.”

Southwest Baking Co., in Tolleson, Ariz., took the opportunity provided by a failing computer loaded with proprietary batch management software to replace it with new Rockwell Automation software and an HMI system for the controller. “We didn’t change any hardware except the computer,” Otto says. “It was just software that took advantage of the technology they already had in the controller.”

With the new system, equipment performance improved more than 30 percent, downtime per event dropped from 4 hours to 3 minutes, and material variances were reduced from 5 percent to less than 0.05 percent. Material savings will be $500,000 annually, and project payback was achieved in a matter of months.

“Without capitalizing on technology improvements, replacement just becomes a one-time cost with zero return,” Otto says. “It’s one of the reasons companies often cut replacement projects from the budget and do whatever possible to purchase based on low price.”

The growing use of consumer technologies that make it easier to collect, store and visualize data has increased capabilities in automation products as well. “Which means companies can achieve their goals with lower engineering and capital costs,” says Charlie Norz, I/O product manager for Wago. “The question is always which technologies will best improve performance and reliability, because that’s how you’ll achieve the greatest return on investment.“

Capitalize on opportunities
Downturns in specific industries—such as how low prices are affecting oil and gas—can also create opportunities to change the status quo.

As sinking oil prices lead to major declines in infrastructure spending, Autopro’s Jacobsen sees priorities changing. “The industry is circling the wagons, waiting to find out where prices are going,” he says. “Automation projects, once approved in the field, now have to go up to the executive level. You have to have a compelling reason for why a company should spend finite capital on automation.”

Downtime—which can cost a facility $500,000 a day—gets the attention these days, Jacobsen says. “Shrinking margins mean managers want their equipment to run 24/7 for five years without shutting down for maintenance. When obsolete equipment is no longer being supported, optimization becomes the key method to increase reliability.”

Cutting waste is another big opportunity to gain ROI. Its value in improving product quality and reducing material usage has long been recognized, but there are other areas where companies waste money that could be better spent on increasing efficiency.

“One of our large customers has multiple plants around the world, and thought they had a tightly run ship,” says John Riess, global marketing lead for Integrated Architecture at Rockwell Automation. “In evaluating their installed equipment base, we found they were wasting a lot of money buying spares for equipment they were no longer using, on the order of nearly $500,000 every year. In spite of that spend, they weren’t certain they were properly covered. We’re now helping them modernize the process by centralizing spares at a single hub.”

Look beyond the buzz
Although the Internet of Things (IoT) and other trends might seem like just a lot of industry buzz, there are cases to be made that present plenty of automation ROI opportunities.

“If you dig deeper, it’s not about the futuristic cool factor. It boils down to increasing efficiency and lowering costs,” says Eddie Lee, director of global industry marketing at Moxa. “It’s about dollars and cents because the executives who make the funding decisions ultimately have to answer to Wall Street and investors. The automation industry is pushing the concept of IoT because it can provide companies with a sound financial model of their operations.”

Your business case needs to be couched in terms of increased revenue and productivity, “because that’s the language executives understand,” Lee contends. “To do this, you have to be able to measure the benefits of process improvements with numbers, like reduced downtime, OEE and lower costs, because you’re being graded on the KPIs.”

The power of data to reveal what’s happening in industrial processes is just beginning to be understood, he says, pointing to its usefulness at a wastewater treatment plant. “They’re literally able to collect water quality data that tracks visitors to a hospital to identify their impact on bacteria counts in the water. Now they can fine-tune their treatment process as needed to stay within water quality regulations.”

Are your eyes on the prize?
Engineers might be attracted to the latest shiny object, but staying focused on business objectives leads to better decision-making.

“Clients often say they want to use a specific hardware vendor,” says Steve Malyszko, president and CEO of CSIA member Malisko Engineering. “We try to be vendor-agnostic from the start and focus on what they want to do and why they want to do it. The hardware then just falls into place. One client had heard about a new processor with an amazing scan time. We pointed out that the valve in question took a second to open, so why would they need a processor with a response time in microseconds?”

Will Aja, vice president of customer operations for CSIA member Panacea Technologies, agrees. “The conversation at bid meetings can get bogged down in hardware, software versions, I/O counts and vendor selections,” he says. “This will guarantee that the delivered solution matches a spec sheet, but it speaks nothing to functionality. A higher level of conversation on automation philosophy, expansion plans and desired capability should be had first. Once standards are defined and the function of the system is clearly detailed, the other items fall into place.”

Access the other installments in this 4-part series on the value of automation:

About the Author

Jeanne Schweder | Contributing Editor, Automation World

Jeanne Schweder has been writing about automation and manufacturing for more than 25 years. As a contributor to Automation World and its sister publications since 2012, she has interviewed hundreds of manufacturers, machine builders, system integrators, and automation suppliers. Her work has appeared in nearly every industry publication. A former newspaper editor, Jeanne has also worked in public relations at major corporations and advertising agencies.

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