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June 29, 2012

Growing interest in sustainability from asset intensive organizations - Part 2

This post is in continuation of our earlier discussion (Growing interest in sustainability from asset intensive organizations - Part 1) with Bob Ferrari, the Executive Editor of the Supply Chain Matters Blog, on "Growing interest in sustainability from asset intensive organizations". I, along with Joanna Karlic, an Infosys intern (Infosys Global Internship Program - Instep) I am mentoring, have been looking at what the main pain points are in this area. We reached out to many of our Infosys colleagues to get their views on the scope of sustainability within asset intensive organizations. We spoke to many sustainability and business domain experts who have wide expertise working within asset intensive organizations like Power Generation, Utilities, Oil & Gas, Telecommunications and Transportation. We further substantiated their view points with our research from various other forums.

Our first obvious impression was that though the sustainability scope is wide and limitless, so far the main focus for industries and organizations is on energy savings in buildings. Much has been done in this area - from installing smart meters and sensors for monitoring and controlling energy used by devices, to improving HVAC systems in order to make them more energy efficient, to using more natural light in buildings thereby removing the need to use electricity for lighting. In fact, Infosys itself has done significant work in this area and has adopted many innovative technologies in its own buildings (Going green: A little disruption can go a long way).  Similar processes and technologies are being put into place to reduce water usage in buildings. This is certainly an exciting area, and one that is starting to mature, but from our Asset Management centric perspective we realize that the majority of the work around making buildings "smarter" is being done by manufacturers of sensors and devices and by software application developers of building management software systems, such as IWMS (Intelligent Workplace Management Systems) and RESP (Real Estate and Space Planning). We do think, however that the EAM packages may serve as the glue that holds it all together. In fact, EAM packages would work as one of the pillars or foundation of the whole sustainability theme, as the whole story revolves around assets, meters and sensors.
 
As our main focus was towards asset intensive organizations, we looked more into Oil & Gas, Utilities and Manufacturing and Transportation industries. Advancement in technology is bringing an ability to directly monitor assets' performance through sensors, cameras, meters, and SCADA systems. These measurements can then be compared to OEM guidelines or an established baseline or benchmark. From our experience in these industries it's clear that this kind of actual and benchmark data is available but it is spread through numerous points and systems. An integrated or consolidated view of that data is rarely ready and available. It therefore seems that there is a tremendous scope for weaving this data together and converting it into one piece of intelligent information, based on which informed and smart decisions can be taken. Such a resulting "big picture", created out of multiple small data points, would allow for more highly informed decision making. A further benefit of integration of these many systems is to allow organizations to effectively report on their sustainability metrics. This requires accurate, measured reporting of a wide array of information. As more and more organizations realize the benefits of participating in initiatives such as the Global Reporting Initiative (GRI) there becomes a greater need to develop systems that allow for this.

Though we are still at an early stage of our research on asset heavy industries, we have identified some ideas for how these industries can use Asset Management systems for improving sustainability goals:
• Power Generation organizations need systematic and regular energy audits to benchmark, and thus improve efficiency and minimize losses.
• Telecommunications companies have a strong focus on monitoring and controlling the radiation emitted from cellular towers, especially in residential areas. With a reliable means of measuring this radiation, communities can be kept as safe as possible.
• Oil & Gas and Utility industries are subject to stringent safety regulations, compliance and procedures; however in most cases these are still being done manually. Developing reliable automated processes for handling safety matters would bring benefit to all stakeholders.
• Transportation industry can have a close eye on resource consumption, including the fuel burned by the vehicle or the electricity and water used by passengers in aircrafts, trains, ships and coaches.

Our research also indicates that there are many other practices, common across industries, which will have a significant impact on sustainability:

• In almost all industries preventive maintenance is a key to keeping assets productive, efficient, and most importantly safe, for both people and the environment. Using an asset management software application allows for more reliable and thorough preventive maintenance scheduling. Such maintenance results in more efficient asset operations and prolonged life - both positive effects on sustainability.
• Asset disposal can often be more hazardous than operating the asset, thus using a system to track the decommissioning and disposal of a large asset can ensure that correct safety measures are taken to minimize risk and that the effects of the disposal are tracked and reported. Though there has been lots of discussion around this area, asset management software applications still do not provide a feasible and working solution to tackle this issue.

These are just a few of our preliminary ideas. Our research will continue over the next month and we expect to see many more opportunities for bringing sustainability ideas into asset intensive industries.

 

June 26, 2012

Growing interest in sustainability from asset intensive organizations - Part 1

Guest Post by

Bob Ferrari, the Executive Editor of the Supply Chain Matters Blog, and a periodic guest blogger on the Infosys Supply Chain Management blog.

Increasingly, it is noticed that while discussing asset management, clients are expressing new interest in sustainability. Hence the aim of this two part series is to explore further on sustainable operations and client pain points. The first part in this series has views from Bob Ferrari, Founder and Executive Editor of the Supply Chain Matters Blog and featured guest blogger on the Infosys Supply Chain Management Blog. Based on this, in the second part, Praveen Agrawal from Infosys will further list down the areas in which asset intensive organizations are going to focus more on sustainability based on the current research which Praveen and his team are doing.

 

1. Praveen Agrawal: Asset intensive organizations, which have traditionally been focused on maintenance, inspection and regulatory compliance, seem to have reached maturity in these areas. Do you see the industry starting to shift its focus to sustainable operations and green assets? If so, how are they going about this?

Bob Ferrari: In my view, asset intensive organizations will continue to shift their focus to sustainable operations, but I believe more education and changed cultural thinking needs to occur. This segment, which is the umbrella for companies that operate in the energy, oil and gas, pulp and paper, and utilities sectors have the productivity and efficiency of all assets as a key determinant of profitability. In that light, the ability to monitor real-time asset performance data and leverage smarter means of consuming energy and resources helps asset intensive companies move to the next dimension of efficiency and opens up new opportunities for industry competitiveness.
In light of the increased concern regarding our environment and consequent sustainability concerns among consumers and customers, companies within multiple industries are increasingly placing additional emphasis and increased visibility on green-related initiatives. The most obvious visible aspect of the increased emphasis is certainly related to the continuing trend of higher costs and decreased supply availability of fossil fuel based energy. Concerns in long-term availability among other key resource areas such as water, minerals and rare earth materials also add to the need for higher levels of sustainability practices. Increasing population and extraordinary climate change, declining natural resources and increased regulatory guidelines add to the need for organizations to adopt sustainability practices not to demonstrate commitment but and continue to be more efficient and cost competitive in overall asset and value-chain resources.
A growing core of what the Financial Times recently described as "belief system" companies have concurred that sustainability practices add to positive customer buying perceptions as well as bottom-line results. They have publically declared quantitative as well as qualitative milestones for their companies and their supporting value-chains. Manufacturing companies such as Coca-Cola Company, Dow Chemical, Dupont, Nestle, PepsiCo, Procter and Gamble and Unilever are quite active in this area. The Times also described the category of "sustainability capitalists", companies that view sustainability ventures and practices as a means to either branch out into new business opportunities or become more efficient in their value-chain and operating practices. 
Asset intensive industry players have the unique opportunity to shift asset management to a new dimension of efficiency and also be viewed as an environmentally responsible supplier.


2. Praveen Agrawal: There has recently been a lot of discussion around new concepts such as smart buildings, control automation, smart sensors, etc. Can we realistically expect these high end technologies to become widely adopted? Are organizations ready to spend the money required? Is there a real business case?

Bob Ferrari: I believe that there are certainly opportunities related to smart sensor and building technologies, but like any new advanced technologies, the economics and the business cases have to align. This may take more time for broader adoption, but early movers where the economic and business benefits are more obvious, can be the likely first-movers in this area. Cooperative efforts and partnerships among government and industry will also help in the learning in these efforts. The utility industry is a likely candidate for first-mover since governmental regulations and mandates drive the current economics and business cases.
Wider-scale adoption is dependent on consistency in regulatory policies and guidelines across local and national governments, the availability of incentives to accelerate industry-wide adoption efforts, and more education as to benefits for consumers and businesses. There have been some initial negative aspects to smart sensors monitoring energy use within household environments which must be addressed by added education and demonstration as to the benefits for consumers themselves. Smart buildings in industrial and commercial sectors has more positive uptake.


3. Praveen Agrawal: Along similar lines there is also a growing trend into greening of data centers and other IT assets; what trends do you see here and do you think asset management systems will have a big role to play in making IT more sustainable?

Bob Ferrari: In an August 2011 research study, Professor Jonathan Koomey of Stanford University estimated that electricity used by data centers worldwide in 2010, likely accounted for 1.1 to 1.5 percent of total electricity use. That consumption was reported as 1.7 to 2.2 percent of U.S. electrical use.  Those numbers represent a considerable opportunity for smarter asset management and green data center practices to provide positive benefits in multiple dimensions. With the current explosive growth of data consumption and Internet use, the opportunities are obvious that green IT can make a quantifiable difference in overcoming excessive carbon and greenhouse emissions. More efficient IT equates to lower costs.
As Praveen Agrawal noted in a previous Infosys blog commentary, there is a scope of "green" virtually everywhere- offices data centers, vehicles, and buildings. Power consumption among data centers themselves has long been identified as a prime opportunity, and server hardware manufacturers and service providers have come together in forming the Green Grid, a non-profit consortium whose mission is "To become the global authority on resource efficient data centers and business computing ecosystems."
The critical need to cool data centers can represent up to half of energy consumption associated with data centers with the other half obviously associated with the server equipment itself.  Opportunities exist to couple real-time energy consumption of these assets in a central application to determine energy consumption patterns and opportunities. This same information can be tied to energy optimization methods to make decisions related to energy management and efficiency.  Heat regeneration or even data center consolidation are also opportunities for more efficient use of energy. Like most decisions, more-timely, up-to-date information can help teams determine if assets are performing to optimal parameters or if alternative actions need to take place.


4. Praveen Agrawal: Broadly speaking, where do you anticipate the biggest progress to happen for asset heavy industries when trying to become more sustainable?

Bob Ferrari: I anticipate that that sustainability progress for asset heavy industries will come from two areas.
First, asset manufacturers, sensor automation and control providers need to continue with efforts to incorporate features where assets provide real-time sensing data as to energy consumption, efficiency, and performance. Smarter, more energy efficient assets that can communicate their status allows other software technologies such as centralized asset management to harvest important trending, real-time usage, and savings opportunities. Manufacturing assets that incorporate precision control options and historian databases are the basis of a more intelligent asset, one that can modified and controlled as required with day-to-day production or energy requirements.
The second aspect of this relates to how asset-intensive firms view the performance of their assets.  Traditionally, financial measures such as return on assets or return on invested capital have led to asset-scale philosophies of operating assets for the maximum amount of available time at the highest output levels. Many asset-intensive firms find themselves in what Mercer Management Consulting initially described as a "cost/price treadmill", unable to break away from existing industry players. Merger and acquisition activity involving other companies to gain industry leverage adds to the asset management challenge. Larger, optimally efficient plants sometime exclude niche or other ad-hoc business opportunities.
A philosophy of re-shaping product portfolios and/or business opportunities, where smarter more flexible assets are leveraged to meet the needs for revenue, cost, efficiency and sustainability objectives, adds a different dimension for industry competitiveness. A good example of this has been Dow Chemical's product transformation and its description of "Moving at the Speed of Small".

The notion comes down to thinking a bit differently, that smarter asset management, real-time monitoring, coupled with sustainability and product objectives opens up new opportunities to compete for business and revenue growth.

June 25, 2012

TOC for Electric Utility industry.........................Part 1

Being a big fan of Dr. Eliyahu Goldratt's philosophy of Theory of Constraints, I always thought, how effectively can we apply the concepts of TOC to the Utility industry Asset management? As illustrated by Dr. Goldratt in his best seller novel 'The Goal' (novel for a management philosophy sounds abnormal but it is a novel), the ultimate objective of any organization is to make money now and in future. Here in relation to an electric utility industry I would like to modify it to say that its goal is to make money with minimum additional capital investment (I guess that would be true for any other industry as well). An electric utility industry being an asset intensive industry the focus of TOC would be more on to reduce the equipment down time to increase the total throughput of the system rather than just adding the extra capacity. This is just not applicable to the Generation side of business but also relevant for the T&D business functions.

The revenue that utility earns is through the power and services that it provides to its customers. No doubt with combined T&D and power trading these organizations are able to sell all that they have generated. But this means for a utility to grow it would need to increase its generation capacity while it is trying to grow on customer base. This would bring it back to the volume game which is prevalent everywhere which satisfies one part of its Goal to make money but does not guarantee  the higher return on investment. To achieve this goal the utilities are already focusing on the asset management which will minimize the down time thereby increasing their efficiency.

The basic philosophy of TOC is to identify the system constraints, help the organizations to remove the constraint thereby helping them to achieve the overall organization objective or Goal. The constraint can be a machine, human resource, process or a procedure which restricts the throughput of a system.

This is where the thought process begins to effectively use the TOC management techniques to identify, exploit, subordinate and elevate the constraints to achieve the ultimate organizational goal. The objective of all other improvement initiatives like TPM, RCM, Lean or even Six Sigma is to improve your system efficiency thereby increasing the throughput. And to achieve this improvement no single strategy is sufficient but its intelligent mix of these improvement initiatives across the different functions.

One of the important maintenance activities in utility world is the generation plant overhauls. These events are to be planned to the minutest detail and executed with utmost supervision to successfully complete the activity and make the plant ready for power generation, but I am not sure if TOC was ever applied to a plant overhaul activity or if it can be applied or not. TOC however has been demonstrated to bring in good improvements in such big maintenance programs. The theory helps in identifying the constraints and planning around it to exploit the constraint without piling up the excess inventory for the repair work. These programs may start with disassembly of various units of power plant and unintentionally push the parts for repair to the repair shops without considering the resources (material, tools, services and manpower) availability for completing the work. Though the plant overhaul is a planned activity it brings lot of surprises in terms of addition of new repair work which was not anticipated by the planner. This is where planning and scheduling around the constraint resources is important to avoid overshoot of overhaul activity and excessive inventory piling. The entire overhaul activity is quite huge activity and has different processes involved in it. First step of TOC is to identify the constraint in the system. There is at least one or at most times multiple constraints in the system. TOC provides different tools and techniques to derive the cause and effect relationship which help the TOC champion to arrive at the real root-cause that affects the systems throughput. This overhaul is managed as a Project and hence each project should have a critical path which if impacted could increase or help decrease the overall project duration. This critical path can be analyzed using TOC's critical chain concept to identify the weakest link in the chain. If a utility is able to identify its constraint in the plant overhaul process it would be able to reduce the effective system downtime or at least be able to avoid the delays that are anticipated in the process.


More in next blog

June 21, 2012

Face book, Twitter and Asset Management

Last month, we were discussing our new Maximo Utilities Amplifier Solution with Ralph Rio, Research Director, ARC Advisory Group (http://www.arcweb.com/analysts/pages/ralph-rio.aspx). This Amplifier solution would help Electric Utilities clients in better realization of their work management goals in the area of Capital works, Budgeting, Work Scheduling, Regulatory compliance and Customer Self Service. It also brings in the much required process automation and adherence, thereby ensuring a robust process adherence and control mechanism.

 

While Ralph was quite appreciative of our thought process and efforts, he also brought a new dimension to Customer Self Service. Ralph gave it a name "Crowdsourced-Driven Reliability", where the people who are near the assets, can sense the problem in advance and report to maintenance department for a preventive action; thus prevent the asset failure.

These people could be the operators who operate those assets or users using the assets or even citizens walking on the streets and finding out a water leak or reporting a pothole. Ralph's report further mentions about a software company CitySourced (www.citysourced.com) offering Smartphone applications which can be used by citizens to report these kinds of problems. These reported problems would further go to maintenance planner and schedulers for their daily/weekly planning, work & labor assignments for job completion. Ralph further linked it to social networking such as Facebook or Twitter where assets could be friends, asset classes could be groups and so on. News feed and comments would become work log or history, covering a good amount of Asset Management gamut.

This whole new lateral thinking generated lots of interest within our Infosys' Asset Management Community and two of our experts (Gopi Krishnan GR, Practice Manager - Business Application and Services - Retail CPG, Logistics and Life Sciences and Rejeesh Gopalan, Consultant - Asset Management - Energy and Utilities) had their further opinion on this.

Gopi Krishnan -
As regards operator driven maintenance, I see examples of the self-service concept here. And why not? Self-service has become all pervasive in service-heavy industries, especially in economies where labor costs tend to be prohibitive - like the banks putting in ATMs making end-users like us do more and more banking tasks to home improvement industry encouraging more of Do-It-Yourself tasks. If one goes beyond "reporting an issue" to "doing first level repairs", the caveat I see is that many a time, warranties become null & void, if a "non-authorized" person touches any equipment. So that needs to be factored in the crowdsourced maintenance discussion as well. Many large product/equipment vendors make more money through warranties and repair, especially when these happen onsite, so there could be some resistance there.

The Facebook parallel is a great example of lateral thinking - of applying concepts learnt in one place to a totally different context. Where I am still a bit of the skeptic is the idea of replacing people in facebook with assets and its friends. It might be possible for assets to auto-publish their assets and for their "friend" assets to figure out what those statuses are sometime in the future, but for now, I'm guessing it's the operator who has to feed these into an internal facebook (read: something like salesforce.com's Chatter) equivalent. That would mean a clear reason for incentivization - what would motivate an operator to spend his precious shift-time to update asset status on a regular basis?

Rejeesh -
My early days as heavy equipment engineer gave me an opportunity to witness an "operator driven maintenance" pilot program targeted toward a fleet of the company's equipment operating on remote gas pipeline Right of Way. The equipment worked in harsh conditions and demanded an enhanced and frequent maintenance. Ironically, the equipment was less service due to their remote locations, causing many failures. This was when they realized a need to delegate "must-have and less skill" tasks to the operators by providing them basic training. Having the first hand information on a specific equipment condition; which could potentially lead to a failure, the operators were able to provide the required first aid before the maintenance crew reached the work site.  This helped in reducing the failure rates, maintenance cost and loss in production time.

EAM can often become a tedious exercise for a public organization due to its inherent nature of spread and unavailability of dedicated workforce for continuous monitoring of Assets. Citysourced, with the CDR innovation, extends the IT enabled EAM to the general public. By offering a platform via smartphone apps for an easy incident reporting and a channelized routing of the issues to respective responsibilities, it enables a fast tracking of information exchange and resolution process. As Gopi indicated, for the crowdsourced maintenance to be a success there needs to a motivation to encourage participation to contribute directly to the company's work management. Talking about motivation, for an equipment operator, it could come from sense of participation and ownership of task at hand and most importantly an enhanced profile. Rewarding points per issue reported though CDR and redeeming them for a reduction in my utility bill, I would certainly love it!

Ralph's EAM - Facebook model is an emphasis on an effective information exchange in work management space. Information capture mechanism from various sources would form an excellent front end to the underlying EAM programs which can interpret and convert them into meaningful maintenance programs.  The highlighted work accountability factor can be addressed by auto assignments and related notifications taking it a long way in ensuring a controlled work management.

June 12, 2012

Multi - channel commerce in Europe - the next frontier for Retailers?

Retailers worldwide have tended to move steadily towards a more integrated and unified strategy around Multi-channel from the Bricks and Mortar model, moving through a Multi-channel Operations mode with channels in silos to a more integrated Multi-channel Commerce mode. The only issue has been the speed of adoption by retailers globally.

EMOTA has just released figures noting that Europe has overtaken the US as the largest e-commerce market in the world with an estimated total value of €246bn which puts the online retail sales now accounting for more than 5% of the total value of the retail market in Europe.

This shows the growing importance of non-traditional channels in Europe. Customers now expect more and more seamless interaction across all channels (Social, Mobile, Web, Store and Call Centre). This is triggering a lot of activity among the European retailers to deliver a more consistent experience to their customers.

A number of retailers like Dansk Supermarked A/S are re-platforming themselves to be able to increase their customer base through improved customer experience, increased assortment across channels while improving operational efficiency and  reducing costs. You can read more about thier cross - channel commerce program here.

While retailers would face some unique challenges in the European region - Cross-border trading, Multi-currency trading, Delivery optimisation and the lack of infrastructure in some of the less developed areas of Europe, none seem to be un-surmountable in their quest for a larger piece of the customer's wallet.

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