“How does this make us money?” When a new and interesting technology is offered, any business that wants to stay in business has to ask this question. It might be extended to ask, “How does this save us money,” since reducing costs can be just as important as creating an income stream. Both deliver a return on investment (ROI), which is what everybody wants. A company introducing as many new products and technologies as Emerson must be able to answer these questions for virtually every customer and prospect. Nobody these days buys technology for its own sake.
One area where this discussion comes up again and again is condition monitoring. Users ask, and rightfully so, “How does adding IIoT-based components save money?” Shane Hale makes a clear case in his article, Build an Effective Condition-Monitoring Program, in the May, 2019, issue of Chemical Processing. “Effective” in this context means a program capable of delivering a solid and measurable ROI. Defining and quantifying the ROI often ends up being the difficult part because companies aren’t always sure what they’re looking for or how to quantify the results. This doesn’t mean projects don’t deliver ROI, but you have to know where to look to find it.
Unfortunately, hurdles can arise in financially justifying a monitoring project because its expected ROI isn’t always clear; mechanisms for improving asset performance by condition monitoring focus on cost avoidance rather than creating an income stream. Implementing asset monitoring using IIoT concepts doesn’t help to directly increase production in all cases, at least not by changing capacity in any clearly quantifiable way, but often raises availability. For the most part, asset monitoring reduces the amount of maintenance and repair along with associated costs.
Shane considers an example of a centrifugal pump installation common to most chemical processing plants. Many pumps run to failure and are then fixed. He points out how costly this approach is, a fact not always recognized by users. Running to failure is invariably more costly than stopping before problems advance too far, and monitoring is necessary to determine when it’s time to stop.
These are the kinds of costs that asset monitoring can avoid or at least mitigate. More importantly, though, monitoring increases production by raising availability and avoiding unscheduled outages. The ability to boost production by even a fraction of a percentage point over the course of a year can pay for a lot of monitoring equipment. However, again, this can be difficult to quantify in dollars because it’s tough to determine how much overall availability will increase.
Fortunately, Shane is not the first person down the ROI trail. He cites an industry-shaping document, the “RAM Study” produced by Solomon Associates in 2013. It examined two key factors: how much a plant spent on maintenance and how much availability (i.e., production) was lost to outages. Subject companies were divided into four quartiles based on those metrics.
The differences in performance are dramatic. For maintenance costs, first-quartile companies spent less than one-third of those in the fourth quartile and less than half of third-quartile plants. More-effective maintenance planning based on gathering of performance data certainly pays off. As for mechanical availability, top-quartile performers had 4% higher availability than average performers. What is the value of increasing plant or unit output by 4% without a major capital expenditure project? Probably quite a bit.
You can and should try this with your plant or facility. Shane suggests launching a monitoring program by looking for low-hanging fruit—finding some production asset that causes production interruptions or claims a disproportionate amount of maintenance attention and cost. He offers a few likely possibilities and explains how two plants undertook a program to determine how much money they saved on various projects by using WirelessHART-based sensors. One of the critical tools is a data gathering and analysis platform, such as Emerson Plantweb Insight Applications. This industrial analytics solution offers instant visibility to key assets, enabling better and faster decisions to improve operations.
You can find more information like this and meet with other people looking at the same kinds of situations in the Emerson Exchange 365 community. It’s a place where you can communicate and exchange information with experts and peers in all sorts of industries around the world. Look for the Condition Monitoring and IIoT Groups, and other specialty areas for suggestions and answers.
In reply to Jonas Berge:
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