Savings as a service cuts operating expenses with no CapEx investment required
By Bob Karschnia
Manufacturing companies are under constant pressure to cut operating expenses, and the capital needed to make these improvements is often very limited or nonexistent, even for those investments with quick payback. Many companies also do not have personnel time available to make sure their investments yield the projected returns.
To deal with these issues, some suppliers are offering "savings as a service," a platform where monthly reductions in operating expenses exceed the monthly fees charged for the services. This approach does not require any capital expenditure (CapEx) funds from the manufacturing company, and requires significantly less time from their busy plant personnel. It also does not require any increases in operating expenditure (OpEx) budgets, because operating expenses are cut by more than service fees.
This is a low-risk approach because the manufacturer is not making a large capital investment up front, combined with training on a new technology, but is instead just paying a monthly fee for a service. The payments are not only spread out over a few years, but they are also less in total than the amount that would be required upfront for a purchase.
The service in question can and often does include equipment and components installed on the premises of the manufacturing company, with these items installed and maintained by the supplier. Data from these items is sent off site for analysis by the supplier, so internal plant personnel are not burdened with extra work. The only activity required of plant personnel to realize the savings is implementing the recommendations of the analysis, which can often be done as part of regular maintenance activities.
An example of the savings-as-a-service concept can be found at the Denka resin and polymer chemical plant in Singapore. The plant uses Emerson's remote monitoring service to monitor its steam traps. With this program, Denka did not have to purchase or install any equipment because it was included in Emerson's service contract. Wireless acoustic transmitters were installed on 148 of the plant's most critical steam traps. Critical steam traps are defined as those with a high throughput of steam, operating under very high pressure, or integral to the operation of key equipment.
The data from the wireless transmitters is sent to on-site gateways via a wireless mesh network, and from the gateways to data analysis software residing in a Microsoft Azure cloud. A 3G mobile network router is used to transmit the data from the gateway to the cloud, so no on-premises networking infrastructure is required.
Emerson analyzes the data and sends summary reports to Denka every month. Daily reports list which traps have failed and need to be replaced, and a monthly report lists estimated steam savings and reduced CO2 emissions.
After installation, 33 of the 148 traps were found to have failed. These were repaired or replaced by Denka, leading to a 7 percent drop in steam consumption after three months of operation. This has allowed Denka to reduce its steam trap failure rate to well below the industry average. Additionally, having better steam quality in the plant has allowed Denka to improve the performance of its operations, an important benefit.
Steam trap repairs and replacements are a routine activity commonly performed by Denka's maintenance personnel, so no special tools or training were required to do this work. The difference is that steam trap maintenance is now directed by data analysis and performed proactively and only as needed, as compared to prior methods that were not as precise and required periodic manual inspection.
Before installing the remote monitoring service, traps were surveyed once a year. With continuous remote monitoring, failed steam traps are replaced much sooner than in the past. Traps blowing steam are arrested earlier-improving plant performance, reducing steam consumption, saving energy, and reducing carbon emissions. Other steam system issues are also identified, such as improperly opened valves and other leaks.
The savings from this program exceed the monthly fee paid for the service, resulting in a net reduction of operating expenses with no capital investment required, nor any plant personnel training on these new wireless and data analysis technologies.
Now that the wireless gateways are in place, with 3G links to the cloud, activating new wireless instruments is simply a matter of installing each instrument and automatically connecting it to the appropriate gateway via the existing wireless mesh network. Denka is currently investigating the expansion of the existing wireless infrastructure and the service agreement to include monitoring fans and fan motors. Due to the success of the steam trap remote monitoring pilot, the company expects this monitoring program to yield additional savings.
Manufacturing facilities contemplating these types of savings-as-a-service investments can lower risks by implementing this type of service. They can further reduce risks by first addressing areas where the greatest savings are expected, and then expanding the program to other areas as results are proven.
Manufacturers need to cut operating expenses, but often face constraints on capital investments. They also often do not have time available for plant personnel to learn, apply, and realize value from these investments. Savings as a service eliminates required upfront capital investments, along with plant personnel implementation and operational obligations, and also improves the OpEx bottom line by cutting operating expenses by more than the monthly service fee.