special report reader research
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Digital technology could help automate many monitoring and communication tasks on the modern chemical plant
Rich pickings lie
within easy reach
Although new digital technology is now available, few companies are using it to
improve their plant operations, as a recent ICIS/Accenture survey discovered
john baker london
T
he possibilities offered by digital and
internet technology ought to be driving up the operational performance of
chemical plants, increasing onstream
availability, making them more energy and
materials efficient and improving safety.
The rewards to the bottom line are significant. But many, if not most, companies are
lagging in their implementation of digital
solutions or are not ambitious enough when
they do adopt what is available.
This gap emerges from a reader survey carried out in March this year by ICIS, in association with international management consulwww.icis.com
tancy Accenture, to discover how companies
are investing in this area of plant technology.
At the same time, it points to opportunities for
capturing value on a significant scale.
Asked to estimate the potential impact on the
bottom line of “operational perfection” from digital plant solutions, 50% of respondents, all senior
managers, indicated that it would be worth
between 4% to 10% on the bottom line – with an
average figure over all respondents of 7.6%.
lost profitability
Given the profitability of the $5.2 trillion turnover industry, says Rich Clos, Accenture’s
Chemicals and Natural Resources Digital Plant
Lead for North America, this a staggering $50bn
in potential profitability for the industry, assuming an average industry margin of 12%.
The process industries have invested in digital
process control at the plant level for many years,
which makes it a bit surprising that newer digital
technologies have not received more interest.
Perhaps it is because technologies such as the Industrial Internet of Things and device mobility
largely enable improvements to business and
work processes, such as predictive maintenance,
emission monitoring and safety practices, rather
than the physical processes where traditional
digital process control has been applied.
But there is a desire to do something about
plant performance. The top priorities for the 750plus companies that responded to the survey ❯❯
11-17 May 2015 | ICIS Chemical Business | 27
special report reader research
WHAT ARE THE TOP FIVE, AND THE TOP, PRIORITIES FOR THE COMING FIVE YEARS
FOR YOUR COMPANY?
Improving procurement
efficiency and costs
53%
12%
Reducing plant operations/costs
Developing sound revenue and
income growth business plans
Improving plant reliability
32%
Reducing impact of volatility/
unplanned market events
24%
5%
Building new capital assets
on-time/within budget
2%
0%
9%
WHAT ARE THE THREE MOST IMPORTANT
SUCCESS FACTORS IN IMPLEMENTING
NEW OPERATIONAL TECHNOLOGIES
9%
1%
24%
SOURCE: ICIS/Accenture
15%
1%
21%
Greater than
10% earnings
improvement
Top 5 priorities
Top priority
22%
5%
Cutting overall headcount
Closing capacity
25%
4%
32%
8% to 10%
earnings
improvement
3%
Reducing selling, general
& administrative (SGA) expenses
21%
4% to 7%
earnings
improvement
34%
6%
Reducing supply & distribution
expenses
Plant security
42%
9%
3%
1% to 3%
earnings
improvement
43%
8%
Improving customer interaction
processes
Improving shipment reliability
46%
22%
Improving product quality
Less than 1%
earnings
improvement
52%
18%
IF YOU COULD ACHIEVE OPERATIONAL
PERFECTION, WHAT WOULD THAT MEAN
TO YOUR COMPANY’S BOTTOM LINE?
3%
Proper training
70%
SOURCE: ICIS/Accenture
WHAT ARE THE TOP THREE PLANT OPERATIONS PRIORITIES FOR THE COMING FIVE
YEARS FOR YOUR COMPANY?
Reducing energy consumption
43%
Increasing throughput
Reducing product variability
(scrap/waste product/off quality)
37%
65%
Correct
implementation
methodology
56%
Plant worker
support
48%
32%
30%
Improving raw material yield
The right vendor
of software
18%
28%
Improving asset/equipment reliability
27%
Improving labour productivity
Reducing maintenance expenses
23%
The right vendor
of hardware
2% 12%
SOURCE: ICIS/Accenture
21%
Reducing cost volatility
Improving plant safety performance
21%
Reducing plant emissions
Improving plant physical security
Upper
management support
10%
4%
SOURCE: ICIS/Accenture
❯❯ cluster around reducing plant operational
costs, improving procurement efficiency and
costs and at the same time developing sound revenue and income growth. In other words, achieving both top- and bottom-line growth.
Plant security came very far down on the
priority ranking, showing clearly that it is not
seen as a big issue.
financial drivers come first
On plant operation, the main priorities are
reducing energy consumption – still a clear
leading concern after decades of effort –
increasing throughput and reducing product
variability/increasing product quality. Again,
improving plant safety performance and plant
physical security were well down in importance, along with reducing plant emissions.
The drivers here are clearly financial rather
than EH&S-based.
This is reinforced by the answer to the question, what would drive your investment in lead28 | ICIS Chemical Business | 11-17 May 2015
ing operational technologies? Holding down
operating costs was the key driver – cited by
39% of respondents. This is followed by a cluster of drivers all at between 25% and 30%,
based on improvements to process innovation,
plant reliability, product quality and product innovation, and maximising throughput.
There is plenty of scope for putting new
technologies into action. A third of respondents indicated they are investing right now in
new production capacities, and a further 40%
have plans to make investments in the next
five years. And a full 70% of those replying
“This indicates that
training is the biggest
hurdle to implementing
new technologies”
rich clos
Chemicals and Natural Resources Digital Plant Lead
for North America, Accenture
said their company did have a strategy or plan
in place to achieve operational excellence.
But when it comes to investing in new
capacity expansions and actually doing something about enabling leading performance,
only a quarter of respondents said they would
describe their approach as “industry leading”,
while a majority – 55% – indicated they were
happy to make “incremental improvements”
and close to 20% admitted they aspired to
nothing more than the “status quo”, with
highest priority given to installed cost and
minimal start-up risk using proven process
technology and controls/automation.
This is despite the fact that no less than 88%
of those replying to the survey said that it was
extremely important or important to be a leader in the industry in operations performance
for survival over the next 10 years. Industryleading in this context was defined as giving
highest priority to long-term competitive position using a mix of proven and unproven technologies – with a higher level of risk accepted
to achieve step change improvement.
So just what are companies doing on the
digital plant front? The answer is not a huge
amount and certainly not much in the way of
ground-breaking technology.
www.icis.com
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quotes from the survey
Most significant trends and challenges to
business in terms of operation:
■ “Reliability is significantly reduced due to
giving more and more money to shareholders instead of maintaining assets”
■ “Need for state of the art technology
and processes, in combination with the
right talent management”
■ “Attrition, as it is hard to keep good
people”
■ “Getting the right balance between quality, cost and price of the end product”
Camera and video monitoring around the
plant was viewed as the most important “new”
technology that might be implemented, by
43% of respondents, and in fact 42% said they
were active in this area. The second most important (36%) was given as leak detection
equipment – but only 25% were actively installing this at present as part of an advanced
digital plant operational programme.
WHAT WOULD DRIVE YOUR INVESTMENT IN LEADING OPERATIONAL TECHNOLOGIES,
SUCH AS MOBILITY, ROBOTICS AND CLOUD/REMOTE SERVICES?
To hold down operating costs
39%
To encourage process
innovation
30%
To better manage
in unpredictable markets
28%
27%
To improve plant reliability
26%
To improve quality
To encourage product
innovation
25%
To maximise asset throughput
24%
To improve production
scheduling/planning
21%
To maximise labour
productivity
15%
To improve safety
15%
To improve delivery reliability
10%
Shortage of talent
10%
To reduce emissions
7%
To improve regulatory
compliance/reporting
4%
SOURCE: ICIS/Accenture
WHAT NEW HARDWARE/TECHNOLOGIES DO YOU CONSIDER MOST IMPORTANT FOR
DRIVING OPERATIONAL EXCELLENCE AND WHICH ARE YOU IMPLEMENTING?
43%
42%
Camera/video monitoring
RFID uptake still low
The least important areas of interest included
wireless technologies to eliminate “blind”
and “dead” zones around the plant, cloud
computing and radio-frequency identification
(RFID) technology, with uptake of the latter
two reaching just 15% and 11%, respectively.
The low uptake of RFID is particularly surprising given the maturity of the technology.
Wearable computing, wearable air quality
monitors and communications gear and augmented reality were all seen as of lower importance, despite safety benefits.
What is most revealing, however, is that no
less than a quarter of all respondents said they
were doing nothing in terms of implementing
advanced digital technologies.
In terms of the critical success factors for
implementing new operational technologies,
a large proportion of respondents pointed to
proper workforce training (70%), and senior
management support (65%), with plant worker support also a key element (56%). Software
Leak detection equipment
25%
Wireless technologies for
visualisation, eliminating blind zones
Wireless technology for
communications, eliminating dead zones
Cloud computing
17%
22%
22%
11%
Wearable computing
19%
11%
19%
15%
17%
Vibrational sensing on equipment
Wearable air quality monitors and
communications gear
Augmented reality
6%
9%
10%
4%
Most important
Implementing
12%
None
24%
SOURCE: ICIS/Accenture
and hardware vendors were not seen as a crucial aspect of successful implementation.
Most of the operational challenges, says
Clos, centre around talent as the biggest issue,
in terms of training, quality and availability.
“This indicates that training is the biggest
hurdle to implementing new technologies.”
Control over the harnessing of digital tech-
high level response to survey
www.icis.com
28%
15%
reader research john baker london
The ICIS/Accenture Digital
Plant survey was conducted in
March and attracted over 750
replies from senior industry
executives around the world.
Replies came from the petrochemical and polymer sector
mainly (48%), with specialty
chemicals (14%) and fertilizers
30%
20%
RFID use
Other
36%
(11%) and inorganics (10%)
also well represented. In terms
of revenue, 11% of companies
had turnover of above $10bn,
and 24% had sales between
$500m and $5bn. Average
turnover was $2.64bn.
A quarter of respondents
were vice president/executive
vice president level and above
– with another quarter at general manager level.
Respondents did business
mainly in Asia (75%), Europe
(42%) and North America (28%),
with the Middle East and Africa
at 27%, indicating a good global
spread of markets served. ■
nologies at the plant resides mainly with the
engineering department, yet the impacts are
largely going to fall on business and work processes that lie outside the normal domain of
engineering organisations.
talent and training are key
The key take-aways from the survey? Most
participants recognised the importance of the
digital plant and the benefits increased operational performance can bring – but there are
not many early adopting, leader companies
out there right now.
Problems around implementation are
largely rooted in talent and training, but
there are many small steps that companies
can make to start taking advantage of the financial rewards that digital plant capabilities have to offer. ■
For more information on Accenture and its
expertise in the chemicals area, go to
accenture.com/us-en/industry/chemicals
11-17 May 2015 | ICIS Chemical Business | 29