Economy Vs Ecology – Role of Automation
Published on : Tuesday 02-05-2023
Are our industries ready for a massive business transformation, asks Vinayak Marathe.
The world is going through a fast transformation in the last 15 years. Emergence of Shale gas in North America, massive ups and downs in crude oil prices, 2008 financial crisis, increasing awareness for global warming, global concern for plastic waste, and top of everything Covid paralysing the world for over 2 years. Experts call it the VUCA world – Volatile, Uncertain, Complex, and Ambiguous. Navigating through the VUCA world to sustain the business and continue to grow is a challenge for everyone. Survival of the fittest is an old saying but in the VUCA fittest is just not doing the right things but also doing the innovative things. IT (information technology) has changed the world in the past decades, and the change has touched every single person on this planet. In the manufacturing world the fittest are going to be those who adopt the technology transformation for the massive automation. Digitisation and AI are two of the most important mega trends of the VUCA world.
India is targeting a 5 trillion-dollar economy that it will definitely achieve by 2027 as per IMF projection and the current state of economy. This will make India the 3rd or 4th largest economy but India’s rank in GDP per capita will continue to be >100. This means ‘India is a poor country where rich people live’. In India lower per capita income is in agriculture which is almost one third of manufacturing per capita income. Agriculture contributes <20% to the GDP but employees >45% of the working population. In most developed countries agriculture GDP contribution and workforce employed in agriculture is almost the same. In the US, agriculture contributes 1% to the GDP and only 1% of the working population is engaged in agriculture.
India needs to migrate a minimum 10-15% of the working population from agriculture to manufacturing and for this to happen, India needs a massive growth in manufacturing to emerge as a global manufacturing powerhouse. Factory work will help lift Indian youth out of poverty. India badly missed the industrial revolution of the 70s and 80s, when most Asian countries developed during these decades with large scale manufacturing plants. Free trade, high capital cost, raw material import dependency, high energy cost and most importantly, meeting the target of ‘net zero’ are the challenges ahead. India is the 3rd largest emitter of carbon dioxide although on a per capita basis India’s rank is >100 in emissions.
The energy demand is ever growing in India. Crude oil consumption is expected to grow from 5.2 MBPD to 11 MBPD by 2040. Petrochemicals consumption is expected to increase from 23 MTPA to 70 MTPA by 2035 (see Table – India’s energy basket projections). Both private and public sectors in India are making big investments in renewable sources of energy. Hydrogen, biofuels, CO2 to chemicals, etc., have a huge future potential to reduce India’s dependency on fossil fuel and also contribute in a big way towards net zero. However, the challenges of technology, scale, and economics will have to be overcome. It will take time to overcome these challenges but the dream of a 5 trillion-dollar economy, increase in energy demand and upgrading the standard of life cannot wait. Hence, while India continues to develop the renewable sources of energy, it should modernise its existing assets and at the same time plan for massive spending on the new assets. Deep penetration of Manufacturing Automation is one of the most important solutions to maintain the balance between economy and ecology.
The World Economic Forum report on digital technologies promises the value at stake from 1.6-19 trillion dollars depending upon the adoptability of various digital solutions. Initial benefits of USD 640 bn distributed between benefits to the customers, improvement in productivity, reduction in water usage, and lowering the emission. The report further indicates the potential of a USD 2.5 trillion impact when constraints are relaxed for futuristic technologies such as cognitive computing. The report further promises anticipated reduction in CO2 of 1300 MMTA.
Following are the high maturity, high certainty, quantified digital initiatives and technologies:
i. Autonomous robots
ii. Remote operations centres
iii. Predictive maintenance
iv. Operation optimisation
v. Connected workers
vi. Real time supply demand balancing through 3D printing
vii. Digital customer services, and
viii. Consumer energy choices.
As per a report from ASM (Abnormal Situation Management) Consortium, causes of abnormal situations and upsets:
i. People and work context factors: 35%-45%
ii. Equipment factors: 30%-45%, and
iii. Process factors: 5%-35%.
Technological advancement with high maturity and high certainty technologies can promise the following improvement:
i. Increased capacity – 5%
ii. Improved capacity utilisation – 3%
iii. Decreased unscheduled shutdowns and slowdowns – 50%
iv. Improved productivity – 10%
v. Reduced fixed cost – 15%, and
vi. Improved energy utilisation – 5%.
Although technologies are matured and certain improvements are promised, case studies are available but the bigger question is are our industries ready for a massive business transformation? Do the industries consider spending on digital solutions as investment and not expenditure? Are the existing assets of industries able to adopt advanced automation? Do industries have enough competencies to adopt and customise the technological advancement? The first step to answer all the above questions is the maturity survey (level of maturity – Basic, Intermediate, Emerging and Advanced) for following smart maturity components:
i. Mobile applications
ii. Predictive and perspective analysis
iii. Smart/integrated fundamental physics-based modelling
iv. Interconnected business (plan, schedule, forecast) and shop floor control application
v. Digital performance dashboard, KPIs, digital workflow
vi. Paperless operation/workflow
vii. Smart instrumentation, and
viii. Networked/connected equipment.
Automation initiatives will largely depend upon industries’ smart manufacturing current status and willingness to achieve a minimum basic level. Automation initiatives with a bottom up approach often give much better results than a top down approach. Bottom-up approach will help prioritising the areas for automation, assessment of data required for application, assessment of competency required and available, and the realistic cost-benefit analysis.
Do organisations consider digitisation as investment or expenditure? If it is considered as expenditure then the vision of the organisation is too narrow to achieve the real benefits. When digitisation is considered as an investment then all spending is done by looking at the IRR. Investment in digitisation will give the fastest payback as compared to any investment in building new assets by adding the assets in the existing facility. The best approach to the investment is starting from the basics. ESSA approach is the best approach, ESSA is defined as below:
E – Eliminate – every organisation has a number of non-value-added activities, get rid of those with thorough evaluation.
S – Simplify – There may be too many complex processes where a large number of steps in the process do not add any value. If such processes are digitized things will go from bad to worse.
S – Standardise – Standardisation will ensure there is no duplication of activities and also it will help to follow system/process-based approach rather than a person specific approach
A – Automate – When the simplified and standardised processes/systems are automated no rework is required and the outcome is always positive.
Here are some examples of automation which has helped industries get the investment paid back in days or months:
1. Use of robots and drones for inspection especially in the shutdown
2. Use of robots for catalyst loading under inert atmosphere
3. KPI based plant monitoring process
4. Asset performance management though advance tools/software for availability and productivity
5. Automated operation management program
6. Connected processes
7. AI based models for furnace tube run length predictions
8. Enhanced safety integrity level – smart instrumentation to minimise the human errors
9. Automated process for competency management system
10. EHS management platform for workers safety and availability
11. Augmented and virtual reality for better risk assessment and training, and
12. Connected processes.
These are only a few examples. The list is very long. Progressive management will never do the automation in piecemeal; they will follow the fully integrated Business Transformation approach with the belief that any Automation Initiative can never be expensive.
Vinayak Marathe, India Business Head, Phillips Townsend Associates Inc., Houston – USA, is engaged in freelance consulting for O&M excellence, HSE and biofuels. He is also Advisor to L&T HE, and to the board of Aset Lux – a Luxembourg based start up. His last role in Reliance Industries Limited was heading R&D Planning & Strategy and large, first to the world biofuel sites of Reliance Industries Limited. Marathe has total 40+ years’ (33+ years in RIL) experience in Operation, Factory Management, large green and brown field projects – from technology selection to commissioning, evaluation, customisation and implementation of world class safety and operation risk management systems, and HSE leadership.