How to Control Profitability

Aug. 15, 2018
Industrial automation engineers understand how to deal with real-time control. With business variables changing at near real time, it’s time for automation to focus on controlling profitability as well.

It was at a media dinner at a Schneider Electric event maybe four or five years ago that Peter Martin first ran me through his ideas about how the industry was looking at control all wrong, and how the control system needed to be layered with profitability. He grabbed a loose sheet of paper and began scrawling a chart to try to explain it to me. I had at least—just barely—enough brain capacity to comprehend the significance of what he was telling me.

In the years since, Martin, vice president of marketing and innovation at Schneider Electric, was often the sole voice advocating this idea of building the value of automation into the system and bringing those insights down to the operator level. It’s only been within the past year, in my estimation, that the idea has become more widespread, with more automation suppliers speaking of enabling operators by giving them the tools they need to see how their day-to-day decisions impact the business overall.

Profitability was at the forefront of Martin’s keynote presentation as he quickly paced the stage at the Foxboro User Group conference in San Antonio, Texas, last week.

The automation industry has long let the discussion of technology be about the technology itself. In many ways it was necessary because the technology was so complex. But it’s time now for that to change, Martin said. “We believe technology has reached a point where we can actually stop focusing on the technology itself and start focusing on profitability.”

The capabilities of control systems are substantial, and using them to drive value brings incredible results, he said. “We’ve got to change our point of view on technology in order to drive value,” he added. “The speed of industry business continues to increase. We’ve got to reveal what our role is for automation within our business.”

We’ve watched the Industrial Internet of Things (IIoT), for one, go through a transformation of technology for technology’s sake to a greater focus on how these connected technologies can actually improve business outcomes. On this point, there’s still work to be done. But at least the conversation has migrated away from this: “If you connect all the stuff in the plant together, something good is bound to happen. We actually thought that way,” Martin mused. “But it has no value unless you solve a problem.”

With critical business variables changing in real time—the price of electricity changes every 15 minutes, for example—automation engineers are in a good position to control not only the manufacturing space, but profitability itself. “We are the people who understand how to deal with real time. So our job changes. We have to start talking about controlling profitability,” Martin said. “Digitization should drive value and it can drive value.”

Automation personnel have been focused more on driving down cost; making the components cheaper. “Yes, we should drive cost down. Yes, we should make it simple. But we also need to drive value,” Martin emphasized, outlining three key ways to achieve that:

• Activate the workforce. “For years, we’ve been trying to cut the workforce out of the process,” Martin said, referring to the concept of lights-out manufacturing, which he contends is the wrong way of thinking. “It’s not replacing the people; it’s using people.”
• Optimize assets. Take an asset-centric view. Though maintenance typically takes an asset-centric view, control’s view tends to be process-centric, Martin said. “Change that to process within assets. Then we can go after new ways of optimizing assets.”
• Extend control. If you can measure reliability risk in real time, Martin said, you can control it. The best way to control and manage plants better is to expand control right at the asset level, he added.

Increasing asset performance, Martin noted, is not just about efficiency; it’s about profitability and safety. “We do impact profitability and we do impact safety, but we’re not proving it,” he said.

Martin touched a couple times on the progress of autonomous vehicles in the consumer market and how industry needs to be taking advantage of the same sorts of technologies to create autonomous industrial assets—with both moving and stationary equipment. If we can make autonomous vehicles that can drive on dumb streets, we certainly ought to be able to create autonomous assets in a more controlled industrial environment. “It’s real-time control. What are we? We’re a real-time control industry. We’ve got to start capitalizing on what we’re good at,” he said. “We should be able to do similar things with industrial assets—make them autonomous and self-optimizing. That’s what control is all about.”

But the workforce behind everything is still key. And the knowledge to run the business needs to be brought further down to the plant level. “As the speed of business gets faster and faster, the decisions that used to be made by the business manager month by month need to be made faster,” Martin said. “We need to move decision rights down to the operators.”

This thinking runs counter to the existing culture in process manufacturing, however. “I think we’re still, in many ways, stuck in the first industrial revolution,” Martin said, in which the emphasis is on laborers not doing anything that might screw up the process. It’s operation by exception, he explained. “Don’t touch the operations unless there’s an alarm and you have to deal with the alarm.” It’s an environment in which the newspaper is the operator’s most important tool—so the operator has something to do in between exceptions.

But it’s the wrong way of thinking. “We’re talking about an experienced workforce. They’re making decisions and they don’t know the impact of the decision,” Martin complained. “It’s not that they want to do a bad job; they want to do a good job. They just don’t know what good is.”

Your industrial automation investments can become the profit engine of your business if you think about automation a little differently, Martin emphasized. “We’re closing the loop on the business. And that’s what we should be doing,” he said. “It’s not going to be done by IT. It’s got to be done by control engineers.”

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