Buying automation was a fairly straightforward process, thirty years ago. There were few computer-based controls in manufacturing plants, new technologies showed great promise for improvements, and automation professionals could justify their purchases with a number of different efficiency metrics. One of the most important of these metrics was improving throughput and plant output. In an era of seemingly limitless consumer demand, many automation projects were justified on the basis of increased capacity.
Times have changed. Manufacturing capacity is not the issue it once was. According to a mid-October report from the U.S. Federal Reserve, manufacturing capacity utilization in September was 73.1 percent, as compared to 30-year highs, during 1988-1999, that hovered around 85 percent. Larry O’Brien, research director at ARC Advisory Group, notes “Until plants are at 80 percent capacity or better, you won’t see investment in new U.S. plants or major expansion projects.”
Computer-based technology is pretty common in factories today. In terms of benefit paybacks, the low-hanging fruit has been picked through decades of control system application. In fact, the more common problem is updating and migrating 20- or 30-year-old systems that have run their course, while working under the constraints of reduced capital budgets.
Several other factors have come into play. Manufacturing companies have downsized engineering staffs to the point that there is little local support for automation operations, and corporate staffs are stretched thin. Users are relying more heavily on their suppliers to provide technology expertise, implementation assistance and long-term service and support. And, financial metrics have become much more important—any approved project must withstand the rigors of financial review, including return on asset investment and lifecycle cost calculations.
Certainly, there are many successful manufacturing organizations that have learned how to procure automation systems that drive bottom-line results. Automation World interviewed several industry professionals to share their secrets for success. They include Mike Borders, P.E., supervisor, Plant Engineering—Control Systems with Eastman Chemical Co., a “global” chemical manufacturer headquartered in Kingsport, Tenn.; Francisco Campa, director of engineering for The Dixie Group, maker of floorcoverings, in Calhoun, Ga.; and Larry O’Brien, research director at ARC Advisory Group, a Dedham, Mass.-based research and consulting firm. Here’s what they have to say.
AW: How are automation projects planned, approved and implemented in your organization?
Borders: I work within Eastman’s Worldwide Operations Support organization, which is located at our corporate headquarters in Kingsport, Tenn. Our company plans automation projects to meet process improvement requirements, or to address availability or obsolescence issues, as well as control system capacity constraints, among many other reasons. Recently, we have seen more projects that have been planned because of needed capability that the current system cannot provide, either due to maximized capacity or limited functionality, or concerns over the support of the control system hardware.
In our company, projects are initiated from the bottom-up by a local champion. These projects are put into a departmental list, which is fed up to the division and site level, and are ranked by health, safety, and environmental (HSE) impact and then value in achieving our business goals.
Approvals for the projects work their way upward through the organization, from department to division to site-level management, and up through business unit management. The business goals vary by business unit, and can range from increasing capacity to improving quality.
Implementation varies according to the size and scope of the project. If it’s a large project at a green-field site, for example, we typically go through an EPC firm, for engineering, procurement and construction. This involves an Eastman team to do the automation piece and work with the EPC firm to design the control system architecture and approve the instrumentation specifications. In this scenario, the Eastman team is also responsible for the configuration, programming and start-up of the control system.
For much smaller projects, such as adding a control loop or an instrument, Eastman will usually engineer and construct those in-house or in conjunction with a local contractor. We do most of our advanced control technology in-house, which includes using custom software tools that are layered on top of our control systems. To sum it up, we use a mix of contracting and in-house personnel.
Campa: Five years ago, process engineering was done at the local facility; there was no centralized engineering group. I was with the Carriage Industries segment, which had been part of The Dixie Group for a number of years.
After the successful implementation of a modern process control system in one of our Carriage facilities, the company decided to expand the scope of our local group into a centralized process engineering organization that is responsible for all 11 facilities in the Dixie Group, including plants in Georgia and Alabama.
Today, when planning an automation project, we do so with the following goals in mind: elimination of waste, reduction of process variability, standardization of processes, improved quality and efficiencies and lower costs.
AW: What changes have you seen in the way that companies are planning and purchasing automation systems?
O’Brien: The drive today is toward improving return on assets (ROA) and enhancing the performance of existing plants. In a recent ARC study on purchasing strategies, we asked automation users to rate the relative importance of various factors when evaluating system price. The number one consideration was lifecycle costs, followed by increased plant performance and return on investment.
Paradoxically, users know that lifecycle costs are very important, but they do not have a methodology in place for calculating them. In the group of 100 respondents, just one, a chemical manufacturer, had a formal system in place for calculating lifecycle costs. Most users are relying on what the suppliers are telling them.
AW: How does the automation department work with other departments in the company during the buying process?
Borders: Eastman’s Kingsport site is quite large with several operating divisions. In the 1980s, automation projects tended to center around panel board replacements, where the project team would review suppliers and make decisions primarily based on costs. Once a decision was made, the supplier’s products would usually migrate throughout that division on other projects. What we ended up with was equipment from a lot of different suppliers, and “islands of automation.”
We’ve now developed a concept of “commodity teams” for our supply chain management process. Eastman has evaluated its “spend” and divided that up into various commodity areas. One area is the DCS/PLC team, for distributed control systems and programmable logic controllers; another area is the instrumentation team. These teams are charged with taking a corporate view of managing our commodities.
For example, the DCS/PLC team is comprised of individuals from across our sites in our procurement, engineering and operations departments. I’m the representative on the DCS/PLC team from the Kingsport site. The members of the team, which has been in place for about a year and a half, meet on a monthly to quarterly basis and brainstorm options for how to spend effectively and save the company money. You definitely need management support for this type of effort, because the teams take a lot of time.
One of the really neat things that has come out of the commodity team effort is that we are seeing much better communication among the various Eastman divisions and sites. The process has created a forum for improved corporate communications, as well as enabled each division to take a more corporate view on how it’s running its business.
Campa: At Dixie, the process engineering group is responsible for the buying activities, but we need to sell our solution to both upper management and the plant-floor operators. We’re in the middle of that “sandwich” and the language we use is different for each group. For example, what we sell to upper management is not a control system with better PID algorithms, it’s a solution to a business problem. When we put in our first new process control system, I was very excited and went to management and said, “I’m going to set up a neural network!” They didn’t care. What they wanted to hear is how the new system improves information flow, lowers costs and reduces waste and variability.
On the other side of the sandwich, we need to sell the plant-floor operators on the concept of better controls that allow them to make changes easier and faster. One of our plants uses over 7,000 different recipes in the carpet-making operations. It’s critical to provide Standard Operating Procedures (SOPs) in electronic format so operators can make recipe changes. The enhanced data capabilities also allow us to spot training opportunities for operators who may need some extra help.
We work with the Information Technology group when our systems interface with the Enterprise Resource Planning (ERP) systems. However, process engineering is responsible for everything from the Manufacturing Execution Systems (MESs) down to the plant-floor controls.
AW: Describe the vendor selection process.
Borders: Currently, we have a number of concepts and proposals in various stages, and are considering setting up some preferred supplier guidelines. The advantages of a preferred supplier system are that you get some overall volume leverage on pricing, you have more input into product development, and you have more of an inside track into the suppliers’ engineering and support structures. Another huge advantage is that you can develop standardized ways for programming, configuration and layouts. The disadvantages are concerns over the viability of your suppliers and their ability to keep up with technology changes and meet your needs, long term.
O’Brien: Unfortunately, many suppliers are still using selling strategies based in the 1980s. They must change their business practices to reflect the philosophy that lifecycle costs are often more important than initial purchase prices.
Users should have a limited number of suppliers, with whom they can sit down and deal. This doesn’t mean beating your suppliers up on price. Rather, it’s two-way thinking to see how the supplier can help you improve your manufacturing processes, add value and help you make more money. You want this to be a collaborative, not an adversarial, relationship.
Campa: In 1999, we started to work on the first implementation of a real process control system for one of our Carriage facilities in Calhoun, Ga. At that time, we had some data collection systems, as well as some programmable logic controllers and single-loop controllers. Nothing talked to anything else. There was very little collaboration and communication among the various elements.
We started to evaluate different vendors and looked at some different technologies, with several things in mind. First, we did not want a “black box.” Some of the OEMs (original equipment manufacturers) would supply a piece of equipment that you could not get into to change, modify or expand.
Second, we wanted to use off-the-shelf technology with no custom-made code. The expression that we used was, “We want a high-school kid to be able to fix it.” Even five years ago, we were thinking about Web-based initiatives—applications and browsers—to lower software licensing fees and eliminate special drivers.
Our third requirement was that it had to be easy to implement. Fourth, we had to be able to make changes on-the-fly, with zero downtime. Fifth, we looked at system costs, including costs to upgrade and migrate the technology. And last, we needed connectivity to plant-floor equipment and our business systems.
Ultimately, we chose to standardize on the DeltaV system, from Emerson Process Management, for all new implementations. We were one of the first plants, in 1999, to install Foundation Fieldbus networking. The benefits from this project changed our vendor selection process. Our new criteria are:
* Review technologies offered by different vendors.
* Assess if the technology is proven in our industry.
* Assess if the technology will continue to be supported and maintained by the vendor.
*Use commercial off-the-shelf technology.
* Implement an integrated system that can be connected to other equipment.
* Set up a service contract and demand local support.
* Look at all of the costs of the system, including hardware, software, implementation, maintenance and upgrades.
AW: How do you calculate return on asset investment and lifecycle costs?
Campa: We plan for five years in advance when working on a new project. For our first DeltaV implementation, we estimated a payback of one year. We actually saw a payback in just four months, and had extra capacity for expansion at very little additional cost.
From 1999 through 2002, we’ve realized a savings of $3.2 million from automation efforts. We’ve lowered the unit cost to make product by 40 percent. Of that, half is solely due to automation, the other half is due to changes in scheduling and work processes, which were facilitated by the flexibility of the automation system. We could tackle scheduling of raw materials and reduce defects on some lines by as much as 99 percent. In one process, we reduced the variation in dye application from 38 percent to 2 percent, which resulted in materials savings of $700,000. We now apply just the right amount of dye, no more, no less.
AW: What are the greatest challenges in getting automation projects approved?
Borders: Quantifying benefits is one of our greatest challenges. You instinctively know that when you upgrade your automation system, or put in a new project, you’re going to get benefits. But it’s difficult to calculate that in dollars to determine your return on investment.
I remember when I first joined the company in the late 1980s, it was relatively easy to justify automation because throughput was one of the major goals. If you could increase your capacity utilization, and get more product out with your current assets, then it was pretty easy to justify a project. Today, however, many processes in the chemical industry are not capacity limited, so it’s difficult to justify a project just based on increasing throughput.
Health, safety and environmental regulations are playing a bigger role and you can sometimes justify an automation project based on those requirements. Some of the buzzwords of our time are key performance indicators (KPIs) and calculators. I’m not convinced that you can run your entire process from financial indicators, but there are cases where they’re appropriate.
AW: Do you get assistance in calculating cost justification from the financial personnel within your organization?
Borders: Our finance folks do help us, but I’ve found that there’s a gap in communication. The terms we use are not the terms that they use, and the understanding that we have of the processes and benefits of controls, are not the same that they have.
We’re working through that. I’m trying to learn more about finance and encourage my employees to learn more about finance, also. I see that as a big part of our jobs in the future—learning the lingo of finance and the calculations. Being engineers, we can do the calculations; we just need to know what they are!
There is an entity at Eastman called Eastman University, which handles many of our training needs for general things, such as leadership or finance. They’ll bring in a professor from a local university to do a week-long course on business or financial calculations. There is also a lot of online training available.
Our controls engineers get involved on a day-to-day basis in justifying all of their work. With fewer engineering resources, every employee has to evaluate, every day, whether they’re doing something that’s of value to the company’s bottom-line. Having an understanding of finance helps you work toward that goal.
AW: What are the greatest implementation challenges?
Campa: Installing systems and changing them on-the-fly are our biggest challenges. Often we have only a long weekend to get everything up and running. We can’t afford to shut a line down for even a day.
Borders: Eastman has been very aggressive with control systems over the past 30 years, and because of that, we have some older systems that need to be upgraded and migrated. The challenge is, how do you construct or upgrade a system without shutting down the process? You don’t want to bump the system while it’s running, and have it affect production. To get around this, we’ve done some creative things, such as wiring up everything while the process is still running, and then switching over to the new system. We’ve worked to identify which units can be shut down for short periods of time, or we move just a few I/O (input/output) at a time. Sometimes, a project may stretch out over a year to complete the migration. Simulation can be an important tool in staging and programming a new system.
AW: How are the automation suppliers assisting you in minimizing downtime during project upgrades and migrations?
Borders: Upgrades and migrations are a growth area for the automation suppliers, and they need to have a good solution for the manufacturing industries in order to compete. There seems to be a lot of research and development efforts and dollars being put into that by the suppliers. We’re seeing some innovative ways of not touching the I/O wiring, but rather using flexible connections or harnesses.
One area that has not been addressed very well is the protection and conversion of the intellectual property in our automation systems. We probably have more invested in the development of the graphics, programming and configuration of our control systems than the initial system price-tag. The new hardware and system software is relatively inexpensive, compared to the intellectual knowledge that has gone into the control system that you’re migrating. For example, a batch control system has an intense amount of intellectual property that may have been developed over the 30-year life of the system.
Some of the suppliers have developed utilities to convert databases or graphics from the old system to the new. However, those have been less than satisfactory—roughly 70 percent of the items can be converted, which means that 30 percent have to be changed manually. Another example is, how do you automatically convert a batch program with 3,000 lines of sequence code over to one of the newer IEC programming languages for sequential function control? It’s a real challenge. Suppliers could really help us by coming up with good conversion tools.
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