If your plant is aging, you have a choice: migrate specific equipment or modernize to realize the value of new technologies.
A significant number of manufacturing plants are more than 20 years old, with legacy automation systems reaching predicted end-of-life.
Are you one of those plants?
If you are, then it’s time to consider how your organization will address obsolescence risk and meet the increasing demands of the one billion* new middle class consumers who will add $8 trillion to consumer spending by 2020.
In those conversations, if you’re using the terms “upgrade” and “modernize” interchangeably, we should talk about the differences: because knowing what you need, and when you need it, might make the difference between meeting your productivity goals or experiencing prolonged downtime.
- Upgrade: Focus on a specific machine or line to address outdated technology. Usually a smaller investment that provides a one-for-one replacement of aging products for a modern versions.
- Modernization: Applying contemporary technology to address obsolescence, improve productivity and setting the foundation to meet both current and future business objectives. Typically a larger investment with a higher return over time.
*According to McKinsey
Is Modernization Right for You, Right Now?
If you’re contemplating whether to upgrade or modernize, ask:
- Are we able to meet continuously changing consumer demand? (Modernize)
- Do we need to cut operating costs, improve productivity or reduce downtime? (Modernize)
- Do we need to have end-to-end visibility of our operations to be more responsive? (Modernize)
- Do we want to access to data to identify process improvement opportunities? (Modernize)
- Is our manufacturing systems able to meet the challenges of modern manufacturing? (Modernize)
- Do we need to migrate from a discontinued product to reduce risk? (Upgrade)
Justify the Cost
Because it’s a larger (and often longer-term investment) you might meet some resistance to the costs of modernization. And you’re not alone. Those who manage the numbers can fall on the side of upgrading because they have not quantified the benefits of modernization.
There’s a three-step strategy for determining what’s right for your operations that also helps you justify the investment:
- Collect information and assess your current state. Inspect the application, machine, line or plant through an Installed Base Evaluation (IBE), which is a cost effective way to identify obsolesce risks
- Analyze. Determine where you can make the biggest impact. Identify your most critical equipment, biggest risks and options
- Plan. Define your scope based the application requirements, opportunities for productivity improvements, schedule, budget and ROI based on long-term business objectives. A Front End Engineering Design (FEED) can help define answers to these questions and plays a critical role in preparing for a successful project
In fact, benchmark studies show benefits up to 30 percent reduced cost and shorter project execution time when a FEED study is performed. If capital investments budgets are limited, a FEED can be used to plan your modernization project into phases to reduce initial cash flow, maximize productivity and minimize risk.
Prove the Value
Kraft Heinz is a great example of a company that used productivity improvements to justify the price tag of modernizing an aging control infrastructure. Using model predictive control they expected to increase yield/capacity by 5% and instead doubled that number to 10%.
Look at the outcomes you want to achieve and work backward. Are you trying to accelerate productivity and efficiency? Do your legacy systems have the precautions in place to protect intellectual property? And if they don’t, what’s the risk? What is the true cost of downtime?
Based on your current state, upgrading might be the answer. For others, modernization is the better long-term investment.
Guest Author: Cory Garlick
