One of the highlights in SA Instrumentation and Control this month is an interview we did with Invensys’ Dr. Peter G. Martin at the recent X-Change 2012 User Conference held at Sun City this year. As head of the company’s group for strategic ventures, his responsibility is to identify the medium and longer term growth opportunities and technology platforms that will steer Invensys profitably into the future. Martin’s keynote presentation highlighted that production costs, traditionally fixed on an annual basis, can now vary almost by the minute, the two most obvious being energy and raw materials. We asked him about the real value of automation and its role in the real-time process based accounting systems that he believes are the key to unlocking future production value in this kind of dynamic manufacturing environment.
Based on research and experience gained over the last 20 years, it turns out that there is more potential for payback and profitability improvements at the process level than from anywhere else in the plant. In fact, on projects where engineers and IT people collaborate on solving a business problem, 100% ROI can often be achieved in as little as six weeks. Not only can this be achieved, but if the proper accounting measures are put in place, it can be achieved in a way that allows the CFO to measure the portion of positive profit impact directly attributable to the automation system.
The philosophy is based on developing a plant-wide system based on accounting measures, not KPIs, which shows the contribution to the production value of each of the different units in the chain. Boiling it down to equations an accountant can validate is vital to show the financiers the contribution to profitability that automation can add when the technology is optimally utilised. Now the question becomes how to make these equations reflect what is truly happening on the plant? The answer lies in incorporating all the sensory data from the processes: temperatures, pressures, flows, levels, and using this information as input for the real-time accounting models. Once the accountants have helped to set up the equations then you pull the engineers in to model them based on the physics, chemistry and biology of the processes. Also, one cannot lose sight of the fact that the organisation’s profitability vectors can only be maximised to a point that does not violate the plant’s operational safety requirements.
What Martin’s research has shown, is that once a plant’s engineers have been given the right foundation, they can be very successful at building the real-time profitability accounting models directly into the control systems. When these have been implemented, it then becomes possible to start feeding back via dashboards the effect on overall profitability (in a monetary sense) of all the individual operator decisions, like altering a set-point at shift change for instance. This is real value add from an automation system designed to maximise profitability through real-time activity based accounting linked directly to the process control parameters. According to Martin the method is so successful because most operators understand money very well indeed and are motivated to perform the best they can in response to this type of feedback.
The group for strategic opportunities at Invensys has identified profitability growth through dynamic real-time accounting measures as a formula for continuous improvement. When the operator and the automation system are tuned to deliver maximum positive cash flow, the benefits to the bottom line can be staggering – more in ‘What is the value of automation’.
In closure this month congratulations to Marthinus Venter, winner of the Endress+Hauser iPad that was up for grabs in a previous issue.
Steven Meyer
Editor: SA Instrumentation & Control
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