Insights, Challenges and Opportunities for CIOs in Capital Intensive Industries Kieran OConnor, SAP – Moderator Vivek Bapat, SAP Pat Kennedy, OSIsoft Paul

Insights, Challenges and Opportunities for CIO‘s in Capital Intensive Industries

Kieran O‘Connor, SAP – Moderator Vivek Bapat, SAPPat Kennedy, OSIsoftPaul Kurchina, KurMeta

© SAP 2008 / Page 2

1. Introduction

2. Vision of the Perfect Plant

3. Energy Management

4. Asset Management

5. Closing

6. Q & A

Agenda

© SAP 2007 / Page 3 / Kieran O’Connor - Process Industries

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IntroductionIntroduction

Perfect Plant BlogsBPX.SAP.com

Book Informationwww.PursuitofthePerfectPlant.com

Perfect Plant BlogsBPX.SAP.com

Book Informationwww.PursuitofthePerfectPlant.com

Chapter Outline – “ In Pursuit of the Perfect Plant” Book

Vision of the Perfect Plant

Vivek Bapat

Vision of the Perfect Plant

Vivek Bapat

Static Business Models are challengedSupply Chains evolving to Supply Networks

Globalization Demand Driven Supply

InnovationDemand-Driven

Contract Mfg

Outsourcers

Suppliers Customers

Mfg

New Customers

3PL’s

New Sales Channels

New Suppliers

Shared Services

Co-Innovators

New Products

Connect & Collaborate

End-customer demand

Chaos-Tolerant

Responsiveness

Deliver Efficiency and Responsiveness:Continuously Sense, Evaluate, & Respond to Network Dynamics

From “Chain”

Control & Command

Intermediate customer order

Chaos-Intolerant

Efficiency

To “Network”

SENSE

EVALUATERESPOND

“The 2010 organization will be more dependent on the flow of data between

different locations inside and outside the boundaries of the organization”

Contract Mfg

Outsourcers

Suppliers Customers

Mfg

New Customers

3PL’s

New Sales Channels

New Suppliers

Shared Services

Co-Innovators

New Products

Economist: Business 2010

Connect & Collaborate

End-customer demand

Chaos-Tolerant

Responsiveness

Deliver Efficiency and Responsiveness:Continuously Sense, Evaluate, & Respond to Network Dynamics

From “Chain”

Control & Command

Intermediate customer order

Chaos-Intolerant

Efficiency

To “Network”

SENSE

EVALUATERESPOND

What’s NeededProcesses: Flexible, Extendable

Visibility: Network Wide

Contract Mfg

Outsourcers

Suppliers Customers

Mfg

New Customers

3PL’s

New Sales Channels

New Suppliers

Shared Services

Co-Innovators

New Products

The Corporate IT Challenge:Bring together Processes and Information

Su

pp

ly

DemandStable Unstable

Str

uctu

red

Uns

tru

ctur

ed

Visibility

Aut

omat

e

Bui

ld

Responsiveness

InformationInformation

Collaborative Network

Efficiency

ProcessProcess

Coordinated Network

Information + ProcessInformation + Process

Collaborative Network

Coordinated Network

Local Execution

Source: Aberdeen, 2006

BIC

All Others

Reduce Inventory Costs

Shorter Lead Times Required

Increasing Demand Uncertainty

Increasing Product Mix

Shrinking Product Life Cycle

Global Coordination

Source: AMR Research, 2006

Number of Plants

More than 40

21-40

11-20

6-10

2-5

1

The Impact on Manufacturing:M&A, Heterogeneity, Fast Moving Products

High supply network inventories

Poor asset utilization

Delayed product introductions

Increasing defects, high WIP

Poor compliance, recalls

Missed customer due-dates

Operations Production

Local Execution

Source: Aberdeen, 2006

BIC

All Others

Reduce Inventory Costs

Shorter Lead Times Required

Increasing Demand Uncertainty

Increasing Product Mix

Shrinking Product Life Cycle

Global Coordination

Source: AMR Research, 2006

Number of Plants

More than 40

21-40

11-20

6-10

2-5

1

The Impact on Manufacturing:M&A, Heterogeneity, Fast Moving Products

High supply network inventories

Poor asset utilization

Delayed product introductions

Increasing defects, high WIP

Poor compliance, recalls

Missed customer due-dates

+ +

Information & Process

Source: MESA Metrics Survey, 2006

IT Functions or Software Applications in Use

SpreadsheetsERP

ISO and Document Mgmt.Labor/T&A

EAM or CMMSData Collection – Bar Coding

Production DispatchingProduct Track & Trace

Work Instruction DeliverySPC/SQC

Process ManagementMES

Plant DashboardsResource Allocation & Status

CAPA and WorkflowAdvanced or Finite Scheduling

PLM/PDMRFID

High TCO- multiple systems

Multi-plant deployment difficult

Data redundancy and latency

ITOperations Production

SAP Manufacturing PlatformDelivers Information and Process Integration

PLAN MAKE DELIVER

Operations

Production

Responsiveness

EfficiencyMAKE

IT

Execution

Coordination

SAP Manufacturing PlatformDelivers Information and Process Integration

PLAN MAKE DELIVER

Operations

Production

Manufacturing Platform

Responsiveness

EfficiencyMAKE

IT Integration/Intelligence

Mfg Composition Environment

ReusableComponents

Execution

Coordination

Inspection/Equipment Testing

Weigh Scales

SCADA / DES

HMI

Plant DataCollectionRFID Sensors

PLC

Device IntegrationEnvironmentalBuilding Management

Plant Historian

Integration/Intelligence


ReusableComponent

s

ERP SCM PLM

MII

SAP Manufacturing Platform: 1. Network Wide Visibility

Distributor ProcessesSupplier Processes

LOB

Devices

Contract Manufacturer

Enterprise

Inspection/Equipment Testing

Weigh Scales

SCADA / DES

HMI

Plant DataCollectionRFID Sensors

PLC

Device IntegrationEnvironmentalBuilding Management

Plant Historian


ReusableComponent

s

SAP Platform: 2. Process Continuity

Distributor ProcessesSupplier Processes

Contract Manufacturer


ERP SCM PLM

MII

business process platform

SCM

ERP

PLM

MFG

SAP Platform: 3. Process Composition

Restart Production

Redesign SKU

Replenish and Replan

Update BOM’s

Produce new revision of the SKU

QA Identifies Lead in

paint on a product

Stop all production

Notify Suppliers

Notify Customers

Check Warranty

Compliance Notice

Identify range of defective lots

Hold defective lot(s) in warehouse

Identify all shipments

Recall all Shipments

SCM

ERP

PLM

MFG

SAP Platform: 3a. Design New Processes across silos

Restart Production

Redesign SKU

Replenish and Replan

Update BOM’s

Produce new revision of the SKU

QA Identifies Lead in

paint on a product

Stop all production

Notify Suppliers

Notify Customers

Check Warranty

Compliance Notice

Identify range of defective lots

Hold defective lot(s) in warehouse

Identify all shipments

Recall all Shipments

SAP Platform: 3b. Save Process into Repository

SAP Platform: 3c. Re-use Process

IT Integration Platform


ReusableComponents

PLAN MAKE DELIVER

Process Continuity

Operations

Manufacturing

MAKE

Lean Production

But, Platform is not enough: Planning, Execution, & Assets must be aligned

Perfect Plant Components & Influencers

The Perfect Plant

Responsive Planning Adjustments are not driven

primarily by unplanned events in manufacturing but rather by

demand shifts and other factors. Manufacturing is able to mange these changes more rapidly and

reliably.

OperationalPlanning

Efficient Execution is monitored and nearly event free due to proactive monitoring and automated event handling that is tightly coupled with EAM and the

enterprise

Manufacturing Execution

Asset Performance and Utilization are monitored and

events are triggered automatically. EAM processes are optimized and all asset content is available in a single

source. EAM process are tightly linked to Manufacturing Processes

Asset Performance

Your Perfect Plant with SAP:Efficiency combined with Responsiveness

Shop Floor Process Control

Connectivity, SCADA, HMI

ExecutionExecution

PlanningPlanning

CoordinationCoordination

Asset MgmtAsset Mgmt

EnterpriseSAP Business Suite

EnterpriseSAP Business Suite

Inside Plant (MOM) : APO, LPO, Visiprise

Partners

Inside Plant (MOM) : APO, LPO, Visiprise

Partners

Inside Plant (Automation) : Partners

Inside Plant (Automation) : Partners




ExecutionExecution

PlanningPlanning





ReusableComponents




ExecutionExecution

PlanningPlanning



Co-Innovation EcosystemComposites

Equipment status visualization

Order GANTT Chart

Production Line Visualization

Production Order Details

xMII Integration Templates

PP, QM, PPPI, IDOC Templates

ISA 88, SP 95 Spec Sheets

Sample Projects



ReusableComponents

SAP Value: Orchestration, Composition, Execution



ExecutionExecution

PlanningPlanning


Intelligence / IntegrationIntelligence / Integration

Manufacturing Data Services

Business Logic Services


1Operations

Single Vendor Solution

Connect End to End Processes Mergers and Acquisitions

Design, Mfg, Build anywhere Compliance across value chain

Enterprise Standardization

IT

2 Standardization across plants

Open, customizable applications Balance Central/Local Control Credible Solution to Plant Floor

Empower Plant Personnel

Production

3 Autonomous operation

Integrated in ERP/Automation Reliable, 24x7 decoupled ops

Flexibility with upgrades

Orchestration

Composition

Execution

Energy Management

Pat Kennedy

Energy Management

Pat Kennedy

Perfect Plant – A Definition

Three Flows (Energy, Mass, Info) Emmanuel Savas (1965)

“Computer Control of Industrial Processes"

Maintained, Monitored, Actionable Self Healing

Future Proofed Plant

Minimized Footprint Financial, Environmental,

Profitable & Sustainable

Today’s Energy Context

Significant increase in energy prices in the recent years Petroleum1, 30 to 40% in 3 years Natural gas1, 20 to 30% in 5 years Coal1, 5 to 10% in 2 years Electricity, 3 to 10% per year

Direct effect on production costs Heating/Cooling operations Steam production Operation of heavy equipment and motors Material movements

Cannot overcome “laws of thermodynamics1 Source - USA Energy Information Administration http://www.eia.doe.gov/

Energy & Environment

More energy = more emissions

Outside US World (Kyoto): 6% reduction of the greenhouse gases

between 2008 and 2012 Based on 1990 levels

• Carbon Credits Relate - Business – Energy – Environment

“Industrial greening” is not business as usual

Significant Unprecedented Global

Business Opportunity to “Perfect Plants”

Energy ManagementEnergy ManagementIn the Perfect PlantIn the Perfect Plant

Energy ManagementEnergy ManagementIn the Perfect PlantIn the Perfect Plant

Kodak Case StudyKodak Case StudyKodak Case StudyKodak Case Study

Kodak Park

Largest Manufacturing Sites Located in Rochester, New York Referred to as a “City Within a City” 1300 Acres (5,200,000 sq m) 150 Buildings Nearly 30 Miles of Roads 11,000 Employees Operates Its Own Fire Department, Railroad & Water and Waste Water Treatment

Plants Operates Two Power Plants

Utilities Consumption

• 125 MW Electrical Demand• 35,000 SCFM Compressed Air Load• 80,000 Tons Refrigeration Capacity• 2,000,000 lb/h Steam Load• 30,000,000 g/day Process Water

Keeping Track of Consumption / Utilization

• 600 Electric Distribution Meters• 600 Additional Distribution Meters for:

• Steam, Chilled Water, Brine, Compressed Air, Process Water, Nitrogen, Natural Gas, etc.

• Significant Metering Used within the Power Houses to Manage the Generation Side

• 100 000 Measurement points• 125 concurrent users/180 + views • 27 Systems interfaced

Kodak Park – Data Sources

BAS (Building Automation System)

Rosemount - Fix 32Siemens - ApogeeEmerson - Delta VSQL Based Historians

DCS (Distributed Control Systems)

Fisher ProvoxWestinghouse WDPFWestinghouse OvationTaylor Mod 300Emerson DeltaV

Harvest Time

The Energy Information System (EIS) has been an essential tool to help us reach our goal of “One Powerhouse for Kodak “One Powerhouse for Kodak Park”Park”

Collectively these efforts have yielded savings > $20 millions annually

“ We are identifying savings opportunities on a regular basis. OSIsoft products have exceeded our expectations. They are viewed as critical tools to help us assess and meet our very aggressive site energy reduction goals that amount to several million dollars annually ”

James Breeze, Engineer and Project Leader, Eastman Kodak

Energy ManagementIn the Perfect Plant

Energy ManagementIn the Perfect Plant

How to pursue the “Perfect Plant”How to pursue the “Perfect Plant”

Team Energy

Lessons Learned at Kodak

• Capital Spent on Faith• No BIG BANG – 1000 little bangs• Continuous Improvement Process• Combined Capital and Intelligence Operation• Infrastructure Approach • Lowers the Cost of Curiosity• Culture Change

Top Questions for Energy Management

Asset Management

Paul Kurchina

Asset Management

Paul Kurchina

“ Plant Ecosystem ”

Plant Personnel

IT Personnel

Business Personnel

Production Execution

Materials Management

Asset Management

Engineering and Design

Technology Platform

Business Systems

Plant Operations

Environment Health & Safety

Energy Management

Clean

Safe

Profitable

Secure

Operate

Maintain

Plant Stakeholders and Values

Asset Management Challenges

52

Physical and Digital Plants

Tools required to enable Hammers Wrenches Saws Welders Meters Etc.

Tools required to enable

Data historians

Document Management Systems

Maintenance systems

Reliability-centered maintenance

Mobile devices

Etc.

Digital PlantPhysical Plant

53

Plant User Experience and Integration

Real Time Data Foundation

Wireless Sensors

RFID Tags Wireless Warehouse

Mobile Rounds

MaintainenceATM

Enterprise Asset Management and

Analytics

Fleet-Wide Monitoring Monitoring and Diagnostics Centers

Wireless

Predictive Analytics

Journey to the “Perfect Plant” – Example

StandardsBOM’S

Data HistoriansWIFI Network

Pilot TestsIT and Plant Collaboration

Vision

EAMMaintenance ATMsWireless Sensors

Predictive AnalyticsWireless Warehouse

Mobile Operator RoundsTool Management

RFID

DashboardsEnergy

Management3D Models

Real Time KPIsVoice Activation

Create the

Desire

Leverage

Technology

Dare to Dream

Fix the Foundation

Plant to Fleet – Data Foundation

Discrete data Limited value

Actionable Information

Distributed Control Systems (DCS) Distributed PI Historians

Large Population of Data

DCS, PLC & PI

Bus IntelligenceReliability, 4-Block

Outage & De-rate (UCF)Maintenance & Market

Analysis Framework (PI, ProcessGuard, SAP, UCF, P3M,

Predictive Monitoring, NeuCo, LIMS, Plant View ..)

KPI’sDashboards

Fleet Optimization

Process Costs, Asset Health,

Operational Performance, Market Value,Fleet Optimization

WEB Visualizing Plant Alarm, DCS Real-time WEB Graphics

Easy Access to InformationWEB Visualization

System Dashboards

Subject Matter Experts

Engineering Applications PMAX, Digital Fuel Tracking, Fuel Cost Framework

Process Discrete to Data

PMAX, DFTS, eNote,Fuel Cost Framework,Alarm Management

Expert SystemsPredictive Monitoring, Optimization Equipment and Process Monitoring

Closed Loop Process Optimization

Top Questions for Asset Management

Closing

and

Q&A

Closing

and

Q&A

Conclusions

• The pursuit of the “ Perfect Plant ” is a Process, a Journey• Solutions from SAP and the Partner Ecosystem are available

today to enable the " Perfect Plant "• “People” are the main actors in a “ Perfect Plant ” – Business

and IT• “ Perfect Plant ” is socially & environmentally “Responsible

Business Entity”• “Perfect Plant” knows it Performance in Real Time• Resource Management requires Cultural Change including

Business and IT as “ One Team”

© SAP 2008 / Page 59

Questions ?

Vivek Bapat - SAP [email protected]

Pat Kennedy – OSIsoft [email protected]

Paul Kurchina – KurMeta [email protected]

www.PursuitofthePerfectPlant.com

Business Process Experts Community BPX.SAP.com

Vivek Bapat - SAP [email protected]

Pat Kennedy – OSIsoft [email protected]

Paul Kurchina – KurMeta [email protected]

www.PursuitofthePerfectPlant.com

Business Process Experts Community BPX.SAP.com

Documents

Insights, Challenges and Opportunities for CIOs in Capital Intensive Industries Kieran OConnor, SAP – Moderator Vivek Bapat, SAP Pat Kennedy, OSIsoft Paul