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01 January 2005

A capital idea in process automation

By Mark Taft

Two primary market drivers will cause manufacturers to spend capital expenditure (CAPEX) on automation systems and related applications in the coming year. The first is the drive to continue to increase manufacturing productivity in order to respond to the new manufacturing capacity coming on-line in developing regions. The second is compliance with regulatory and safety requirements.

Opportunities for productivity improvement lean heavily beyond traditional manufacturing process optimization toward business process optimization. This is not new.

The opening salvo from manufacturing process companies to gain better business optimization came in the last decade when they spent billions of dollars to install a new enterprise resource planning (ERP) system. The companies justified these systems on the entire company's need to integrate the business world with the shop floor. In many cases, the project to install and assimilate the ERP system overwhelmed the organization, and total integration never happened. Business process improvement requires the adoption of best-in-class processes and automation and streamlining of those processes wherever possible. Integration of shop floor automation with business systems is a necessary foundation for this to occur.

Legacy integration

Automation users will continue to feel the impact of the need for real integration between existing control systems and the other information sources in the plant, such as business systems.

Take a look at the automation system on the shop floor. It is a collection of aging and disparate, loosely connected systems. That alone can lead to difficulty in getting information from the manufacturing operations to all the people that need it in a timely and usable fashion, and acts as a barrier to increased productivity gains. Meanwhile, manufacturers have invested heavily to install state of the art ERP systems in an effort to improve productivity. Companies have not implemented the integration for myriad of reasons, including project over-runs, lack of resources, and technology barriers. While most of the ERP installations have now stabilized, they are not providing the productivity boost expected due to this lack of integration. And while the new ERP system that should work with plant floor automation systems is not fully integrated, there is pressure to upgrade the aging automation systems on the factory floor to address rising lifecycle costs, risk to operations, and technology barriers to productivity improvements.

Quality time

In the near future, there will be solutions that facilitate true integration and information exchange between these systems, unifying collaborative production management, ERP and other systems so real-time information allows a manufacturer to make choices and decisions that have a positive impact on the business.

Morgan Stanley estimates $65 billion worth of automation systems installed in process manufacturing facilities have reached the end of their traditional lifecycle. This represents a challenge to users. These "closed" systems are a barrier to the integration necessary for business process optimization. The majority of the automation systems installed in North America are mature systems that will need a migration plan or an upgrade to help manufacturers remain competitive. The issue is the investment-intellectual and capital-in these systems is massive. Automation users know they need to move their operations forward, while at the same time get as much value out of their existing investment as possible.

The other area of focus for CAPEX investments in automation is coming from regulatory and safety requirements. Users need to satisfy these requirements in a way that is a natural extension to their automation system. For example, in the life sciences industries compliance with the FDA 21-CFR-Part 11 regulations are driving business process changes and investments.

The emergence of new regulations, the cost of insurance, and the cost of compliance in the traditional fashion with process automation safety requirements is causing customers to look for more effective and cost-efficient methods to protect lives, equipment, and the environment. Users need automation that incorporates the capability to support embedded safety and process control functionality in a single control, operations, information management, and asset optimization environment.

Behind the byline

Mark Taft is senior vice president for systems marketing with the Process Automation business area at ABB Inc. You can reach him at mark.taft@us.abb.com.