Emerson launches reliability management consulting service to confront expensive downtime losses in industrial process establishments
At a recent press conference in London Emerson announced that they are now going to tackle the costly downtime losses in industrial process facilities, to be more precise in the priority sectors of oil and gas, chemical, refining & power. They are approaching what is probably the greatest cause of excess operational cost and unrealised profit for the process industries
Peter Ullmann reports:
It seems a good idea, let’s face it down time results in high cost loss of production time which in turn upsets customers and not unusually the loss of customer supplies and/or services. So what are Emerson talking about and on what basis do they believe that there is good reason to move in this direction. Well, according to their calculations these 24/7 operations, which routinely suffer 5 to 7 per cent unplanned downtime losses due to poor maintenance practices can, with reliable management consultancy, turn these losses into profit – how?
By reducing scheduled and unscheduled downtime according to Solomon Associates, a leading benchmarking company in the process industries that tracks companies’ performance based on reliability and maintenance metrics. Solomon Associates say that this can save 50% or more maintenance spend – Um!
Sceptical? No not really because the obvious answer as SA know, is optimisation – increased condition monitoring and analysis-based maintenance activities. It’s logic, programmes based on consistent regular systems and equipment maintenance embracing all aspects of the plant such as health & safety, energy saving, environmental compliance etc , ensures that unplanned downtime is less likely – therefore increasing production and reducing costs.
Until 6 months or so ago, Emerson did not have the resources to move into this area, I’m not saying that they don’t offer maintenance systems to their customers, of course they do, but they did not have an in house established global consultancy. Nor am I saying that making this move was a “knee jerk” decision, because of course it wasn’t – it’s not the way Emerson operate.
In order to expand their portfolio of reliability-focused services they acquired a leading management consulting firm with 28 years of experience improving reliability in industrial manufacturing, namely Management Resources Group, Inc. (MRG). Robert DiStefano – the founder and former CEO of this company now heads up this new division of Emerson. Emerson says that this strategy now compliments its existing lifecycle services (mentioned earlier)
As well as their leadership in ‘pervasive sensing’ which provides manufacturers with more operational insight through greater sensor-based coverage of their plants and assets. Robert DiStefano explained that if a company is not a top-quarter performer, it is losing millions in revenue and spending millions on unnecessary maintenance costs, every pound, euro or dollar goes straight to the bottom line – it’s money lost and shareholders don’t like that…
As an example of the benefits Robert took a programme that MRG undertook for Corbion, interestingly a global food and biochemical company with plants in many countries. Having implemented standardised best practices of reliability over several years (4-6) and reduced its total maintenance costs by one third – impressive, profits are up and increases in capacity and production increased. Assets look good on the end of year figures – maintenance costs don’t… Steve Sonnenberg, president of Emerson Process Management says
“Chief executives are seeing the need to better manage physical assets for improved profitability and suggests that with the right strategy, the typical billion dollar USD plant can save 12 million dollars or more annually in maintenance costs – not including the corresponding operational and production benefits from reduced downtime. Extended across a corporation’s network of facilities and soon reliability becomes the number one strategic lever for a safer, more profitable enterprise”
There can be no argument that on the face of it that this is the way for the industry to go, saving time and money and improved performance is what every process plant desires – especially in the boardroom and of course among the shareholders- but how does this sit with the process engineering teams! Will they have more involvement with the directors and in decisions, will there be enough support from the shareholders, 4 – 6 years of cash going out could, if there are hiccups along the way, increase the time scale and increase the costs – could this be a risk factor?
Without naming the company Robert DiStefano told me that a multimillion global company pulled out of a potential contract due to the length of time involved and the cost commitment of 30 million dollars. Emerson have their initial target markets among the obvious “high rollers” , it makes sense, they have the greater need and have the deepest pockets, but interestingly the “case study” that Robert DiStefano gave as an example that is mentioned earlier is a Food and bio-chemical company – so perhaps Emerson also have smaller “fish to fry”….and why not as Robert says
“Our approach is to help companies dramatically reduce downtime and enhance safety and compliance, increasing the stature and reputation of a company and ultimately provide better value for shareholders”. So ultimately could it be more the merrier?
Why have Emerson made this move?
Simply because it makes sense – maintenance (and I use the term intentionally) is BIG business, call it what you want it is the most important consideration for any process industry plant, a failure can be catastrophic. But there is more to this than might meet the eye! Emerson, just like their competitors have realised that process manufacturers no longer accept the annual introduction of the “new” version DCS, economics have the final word these days, so where do suppliers go?.
The all important maintenance schedule – make it more sophisticated, make it profitable, make it more attractive to the boardroom and yes, the shareholders. So now it’s ASSET MANAGEMENT and make no mistake this is a new Business division for Emerson and for them and their shareholders and those of their customers who are seen to be investing for the future, it makes them more attractive to Wallstreet and the London Stock Exchange etc…
When investing large sums of money over 4 – 6 years before any real return is achieved, doesn”t necessarily suit all UK companies, they are in many instance traditionally cautious, investors here like to see real profit shown on the end of year figures, the US market is more adventurous and richer – it could have influence over Emerson’s UK approach to existing and potential customers. It could be that universally Emerson have stolen a march over their competitors – time will tell, but surely there will be reaction – let battle begin.
Emerson Automation Solutions
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