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ARC’s Larry O’Brien and Craig Resnick’s Business Environment & Trends Workshop @ 2009 ARC Industry Forum Eye of the Storm: The Environment for Manufacturing and Automation in 2009 and Beyond Where are We Now? Current Climate and Outlook for Manufacturing Impact on Emerging vs. Industrialized Economies Current Climate and Outlook for Automation Impact on Emerging vs. Industrialized Economies How are Different Industries Affected? Where are We Going?
Citation preview
Eye of the Storm: The Environment
for Manufacturing and Automation
in 2009 and Beyond
Eye of the Storm: The Environment
for Manufacturing and Automation
in 2009 and Beyond
Craig ResnickResearch Director
ARC Advisory Groupcresnick@ARCweb.com
Larry O’BrienResearch Director
ARC Advisory Grouplobrien@ARCweb.com
2© ARC Advisory Group
OutlineOutline
Where are We Now?
Current Climate and Outlook for Manufacturing
Impact on Emerging vs. Industrialized Economies
Current Climate and Outlook for Automation
Impact on Emerging vs. Industrialized Economies
How are Different Industries Affected?
Where are We Going?
3© ARC Advisory Group
Where are we now?Where are we now?
Recession is global
Recent economic news is pretty much all bad
Manufacturing is being hit hard
Investments still need to be made!
Curbing investment in certain sectors now could have negative consequences down the line
4© ARC Advisory Group
The Global RecessionThe Global Recession
US has been in recession since December 2007
Europe officially fell into recession in November 2008
China economic growth dips below 10 percent for first time in three years
“After years of boom, China's GDP growth has now slowed for the last five consecutive quarters.” –October 2008 Report
“Brazil’s economy may grow as little as 1.5 percent this year as the global recession reduces demand for commodities and curbs consumer spending, said Itau Corretora de Valores SA, the brokerage unit of the nation’s biggest bank.” --Bloomberg
5© ARC Advisory Group
Impact on Manufacturing: A look at Recent PMIs from Around the WorldImpact on Manufacturing: A look at Recent PMIs from Around the World
PMIs, or Purchasing Managers Indices are a good indicator of overall health of manufacturing.
Shows purchasing manager trends in orders for materials.
Number of Below 50 indicates a general contraction in manufacturing.
“At 33.2 in December, the JPMorgan Global Manufacturing PMI posted its weakest ever reading and has sunk to new lows in each month of Q4 2008. Based on the average reading for the headline PMI, the performance of the worldwide manufacturing sector through 2008 is the worst for a calendar year since 2001.”
6© ARC Advisory Group
December 2008 Manufacturing ISM Report On BusinessDecember 2008 Manufacturing ISM Report On Business
Month PMI Month PMI
Dec 2008 32.4 Jun 2008 50.2
Nov 2008 36.2 May 2008
49.6
Oct 2008 38.9 Apr 2008 48.6
Sep 2008 43.5 Mar 2008 48.6
Aug 2008 49.9 Feb 2008 48.3
Jul 2008 50.0 Jan 2008 50.7
Average for 12 months — 45.6High — 50.7Low — 32.4
“Manufacturing contracted in December as the PMI registered 32.4 percent, 3.8 percentage points lower than the 36.2 percent reported in November. This is the lowest reading since June 1980 when the PMI registered 30.3 percent.”
7© ARC Advisory Group
China Manufacturing PMIChina Manufacturing PMI
(Jan1, 2009, CEP News) - CLSA's Chinese performance of manufacturing index grew to 41.2 in December from 40.9 in November, according to Markit.
The index has been below 50 - indicating contraction - since August 2008.
"Chinese manufacturing activity was very weak in December. Output contracted at a record pace, employment fell for the fifth month and work in hand declined,"
said Eric Fishwick, head of CLSA Economic Research. "With five back-to-back PMIs signalling contraction, the manufacturing sector, which accounts for 43% of
the Chinese economy, is close to technical recession," he said.
8© ARC Advisory Group
European Manufacturing PMIsEuropean Manufacturing PMIs
BERLIN, Jan 2 (Reuters) - Collapsing orders sent Germany's manufacturing sector into its biggest contraction in more than 12 years in December 2008, even though a slump in
input costs allowed producers to cut their prices, a survey showed on Friday.The headline index in the Markit Purchasing Managers' Index (PMI) for Europe's biggest economy fell to 32.7 in December from 35.7 in November. The fall took the index deeper
below the 50 threshold separating contraction from expansion.
9© ARC Advisory Group
Industrial Production and Manufacturing Capacity Utilization in the USIndustrial Production and Manufacturing Capacity Utilization in the US
“Industrial production decreased 0.6 percent in November with declines widespread across industries. The drop in output in September was revised down, and the
rebound in October was revised up, in large part because both the decrease due to the September hurricanes and the subsequent partial recovery in October were
larger than previously reported. “ – US Fed
10© ARC Advisory Group
Industrial Production and Manufacturing Capacity Utilization in EuropeIndustrial Production and Manufacturing Capacity Utilization in Europe
Source: Eurostat
11© ARC Advisory Group
Another Key Indicator: the Price of OilAnother Key Indicator: the Price of Oil
Lower prices have stalled capital investment and caused project delays
Long-term demand is still increasing
Lack of capital investment will cause slingshot effect as prices begin to increase again
Pending Legislation in U.S. to Better Control Oil Futures Speculation.
12© ARC Advisory Group
Industry Trends: Oil & GasIndustry Trends: Oil & Gas
Oil & Gas Projects Delayed
Increased volatility and risk
Low price of oil deters investment in alternative fuels, oil sands, etc.
BUT…..
There are still many projects going on –Refiners are making money now!
Upstream oil and gas is still growing significantly
Source: Hydrocarbon Processing
Process plant industry bookings for contractors; manpower requirements grew by over 90% between
the start of 2004 and the end of 2007.
13© ARC Advisory Group
IEA report Shows Long-term Shortage and Supply ConcernsIEA report Shows Long-term Shortage and Supply Concerns
“For the next couple of years, the oil pipeline is well supplied. But that trails off after 2010. By 2015, the world needs to find an additional 7 million barrels per day of oil above and beyond all the exploration projects currently in the pipeline. And to get that oil to market by the middle of the decade, those exploration projects need to get started now. “
According to IEA, massive investments are needed in the global oil infrastructure ($26 trillion).
14© ARC Advisory Group
2009: A Rough Year Ahead for Pharma and Biopharma2009: A Rough Year Ahead for Pharma and Biopharma
To meet the challenges in 2009, the industry needs to improve innovation, introduce new technologies, and ultimately improve efficiencies. Even though 2009 will not be as lucrative as previous years, the industry will continue to be profitable.
Regulation, congressional activities, and innovation will continue to play an important role in the industry for 2009.
15© ARC Advisory Group
Global Recession Curbs Demand for SteelGlobal Recession Curbs Demand for Steel
The global recession has curbed demand for steel, prompting mills in Asia, Europe and North America to reduce purchases of raw materials, including iron ore. Rio has postponed a $2.15 billion expansion of the Corumba iron ore mine in Brazil as part of its plan to cut spending globally by $5 billion.
Source: Bloomberg, IISI, China Metallurgical
16© ARC Advisory Group
Global Automotive Industry on the SkidsGlobal Automotive Industry on the Skids
Japan auto sales seen at 31-year low in 2009
Toyota suspends domestic production
2009 U.S. sales seen at 12.5 million, lowest in 18 yrs
Big three bankruptcy?
Goldman Sachs cuts global auto production, sales forecasts
Domestic and National Auto Production 2007-08Source: Automotive News
17© ARC Advisory Group
How has ARC Revised its Growth Forecasts?How has ARC Revised its Growth Forecasts?
We have cut our growth estimates significantly for 2009
North America, Japan, Western Europe will Contract for 2009-2010
BUT we still expect the global market to grow
Recovery will take place after 2010
Revised DCS Market CAGRs
ConsolidationConsolidation
Suppliers and Users of Automation Have been Consolidating.
19© ARC Advisory Group
End User Industry Examples of ConsolidationEnd User Industry Examples of Consolidation
Exxon and Mobil; Chevron, Texaco, Unocal and Phillips; BP and Amoco, Total acquires 50% of AMSO, ...
Dow Chemical, Union Carbide, Rohm&Haas; SABIC acquires GE Plastics; …
Pfizer acquired Warner-Lambert & Pharmacia; Glaxo Wellcome and SmithKline Beecham merger; Bristol-Myers bought drug unit of DuPont Chemicals; …
InBev acquires Anheuser-Busch; Heineken acquire Drinks Union (Czech Rep); too many to list,…
International Paper Acquires Argentina's Bolsaflex, Stora Enso finalises acquisition of Vinson [Brazil],…
Tangshan Iron & Steel Co., Handan Iron and Steel Group Co. and Chengde Xinxin Vanadium and Titanium Co. will become the Hebei Iron and Steel Group once the merger is complete
Tata Motors acquires Jaguar-Land Rover, Daimler divests Chrysler
… Near misses and speculation
BHP Billiton bids for Rio Tinto Canceled
General Motors and Chrysler?
Bottom line: Newly created enterprises need help to develop strategic plan!
20© ARC Advisory Group
SiemensInvensys
Marcam
Eurotherm
Wonderware
SimSci
APV
Triconex
L&N
SCADA
N-Pignone
SCADA
PacSim
ABB
Cellier
Engineering
Elsag Bailey
(H&B, F&P)
August
Systems
Combustion
Engineering
Alfa Laval
Automation
Honeywell
POMS
Measurex
Allied
Signal
Profimatics
InterPlant
Consulting
P&F Safety
Systems
SACDA
L&N
Walsh
Automation
= Most Recent
Systems Mod.
Dynapro
ETG
Entek IRD
Sequencia
Anorad
EJA
Rockwell
ICS Triplex
Pavillion
Tesch
DataSweep
Eutech
Entrelec
APV (Divest) UGS
CEDESHSB
CMS
Tecnologia Incuity Soft.
DLI Eng.
ORSI
Milltronics
Turbo-Werk
Moore
Compex
Vickers
Danfoss Flow
US FilterTata Hon
Goldstar Hon
Emerson
DMI
Bristol Bab.
Westinghouse
Intellution
(Divested)
Fisher
Kenonics
CSI
HD Baumann
PC&E
Daniel
Saab Marine
Electronics
Orion CEM
Solartron Mob.
Damcos IndXInterCorr
Enraf
PAS APC
MDC
Autom. Grp.
Gepa
Applied Aut.
Robicon
Propack
Samsung
SAT
Quantum
Engineering
Xian Hensheng
Ber-Mac
Kuhlman Elect
Vectek
Electronics
Morgan
Shinwha
BJC
Innotec
21© ARC Advisory Group
The People Challenge: Aging WorkforceThe People Challenge: Aging Workforce
Exodus of Workers is Reducing Companies’ Ability to Sustain Operational Excellence
0
10
20
30
40
50
60
70
80
1900 1920 1940 1960 1980 1990 2000 2010 2020 2030
Mill
ion
s o
f P
eo
ple
Year
People Over Age 65
Source: US Census
-10%
21%
52%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Number of People 35 to 44 Number of People 45 to 54
Number of People 55 to 64
Changing Workforce Demographics from 2000 to 2010
Source: US Bureau of Labor Statistics
US Bureau of Labor Statistics
• By 2010 more than 25% of working population will reach retirement age
• Trend will continue into foreseeable future
Globally – Workers are Getting Older
• Largest Group of Workers – over age 45 and will double in next ten years
• Fastest Shrinking Age Group of Workers between 35 and 44 –arguably the most productive
Europe is expected to lose 1 million jobs annually for the next 25 to 30 years
• Severe shortage of skilled workers and engineers!
Oil & Gas Industry
• 50% of its production engineers will reach retirement age by 2010
22© ARC Advisory Group
Investments Must Continue to be Made in Key Industry Segments, In Spite of Economy!Investments Must Continue to be Made in Key Industry Segments, In Spite of Economy!
America’s Crumbling Infrastructure
Roads & Bridges
Water & Wastewater
Power industry
Aging control systems
Nanotechnology
Sustainability is the Issue! Sustainability of Your Business!
Innovation Instrumental in Driving Economic Growth
Users and Suppliers Must Continue to Invest in R&D
23© ARC Advisory Group
Infrastructure Needs ModernizationInfrastructure Needs Modernization
ARC Estimates Total of $65 Billion in Installed Process Automation Systems are Reaching the end of their Useful Life
The Majority of this is in the Hydrocarbons Sector in North America, Europe, and Middle East
33.7%
16.1%
50.2%
New Plant
Expansion
Modernization
24© ARC Advisory Group
Obama’s Infrastructure Plant and What it Means to the Automation BusinessObama’s Infrastructure Plant and What it Means to the Automation Business
Infrastructure: $90 billion
Where does the money go?
$30 billion: Highway construction
$10 billion: Rail and transit projects
$31 billion: Modernize federal and other public buildings for long-term energy savings
$19 billion: Water projects
Obama Mentioned Science in His Inaugural
Address
25© ARC Advisory Group
Obama Stimulus Plan Targets EnergyObama Stimulus Plan Targets Energy
Energy: $58 billion
Where does the money go?
$32 billion: Fund a smart electricity grid
$20 billion-plus: Renewable energy tax cuts and a tax credit for research on energy efficiency and clean energy, plus a multiyear extension of the green energy production tax credit
$6 billion: Weatherize modest-income homes
26© ARC Advisory Group
What the Plan Means for AutomationWhat the Plan Means for Automation
Power and Water will see Huge Investments
Increased Investment in Intelligent Building Automation Systems
Increased Emphasis on Boiler Efficiency
Sophisticated Approaches to Energy Management
Hundreds of Millions of Dollars Worth of New Systems and Instrumentation Will be Required
Money won’t enter the system until 2010-2011
27© ARC Advisory Group
The Sustainability ChallengeThe Sustainability Challenge
In addition to having to deliver to a highly competitive, flat world economy, manufacturers have to meet the new SUSTAINABILITY challenge
Sustainability is the response to the increased pressure on the environment, the rising demand for natural resources, energy, and the need for a socially responsible approach to business
Sustainability will drive towards a higher level of COLLABORATION between organizations and systems and most likely a complete rethinking of traditional organizational structures
Automation Suppliers are uniquely positioned to help manufacturers meet the SUSTAINABILITY challenge with Collaborative Power and Control Solutions
28© ARC Advisory Group
Information and Communication Advances Have Made the World More “Connected”
• Easier exchange of info, ideas and money
• Global access to product/service suppliers
Business Has Become More Global
• Many new, large markets to sell more products
• Outsourcing of ―Core‖ activities
• China (Manufacturing), India (Services)
• New Capital Investments
• Chevron Refinery (India), Dow (Middle East)
• Increasingly complex global networks to manage
Business Has Become More Competitive
• More aggressive legacy-free competitors
• Tougher Price/Product competition
• Changing customer needs with local requirements
• Product proliferation
• Product innovation and new product launch
Business Drivers
Dynamic Customer Requirements
Shrinking Product Lifespan
More Demanding Customers
Fierce Global Competition
Global Markets, Supply Chains
Greater Product Variety
Compliance and Tracking
Many Others
Manufacturing Today: Flat World has Raised the Bar for Manufacturers and ProcessorsManufacturing Today: Flat World has Raised the Bar for Manufacturers and Processors
29© ARC Advisory Group
Sustainability Will Raise the Bar Even HigherSustainability Will Raise the Bar Even Higher
To create zero waste
25% reduction in solid waste in 3
years
To be supplied 100% by
renewable energy
Stores 25% more efficient in 7 years
Fleet 25% more efficient in 3 years
To sell products that sustain resources &
the environment
20% supply base aligned in 3 years
Wal-Mart Corporate Environmental Sustainability Goals
30© ARC Advisory Group
“Green” BuildingsEnergy Recovery Package Innovation
Ft. Pierce FloridaFt. Pierce Florida
PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate – environment, social,
economic – creating a better tomorrow than today.
Respect andFairly Treat our
PEOPLE
ProvideTrustworthyPRODUCTS
Conserve andRespect our
ENVIRONMENT
Sustainability Will Raise the Bar Even HigherPepsiCo
Sustainability Will Raise the Bar Even HigherPepsiCo
31© ARC Advisory Group
Economic Stimulus: Clean Energy
Stimulus Push Gets Greener Tint - “President-elect Barack Obama and congressional Democrats are intensifying work on a stimulus plan that would dole out roughly a half-trillion dollars on an array of "green“ projects and infrastructure initiatives such as building renewable energy plants, improving the electrical grid & installing "smart" meters” Wall Street Journal, Dec 6, 08
Jobs, Clean Energy are Key to Obama Stimulus Plan - “Obama aide states: "Given the magnitude of the problems, you're going to need a large plan. Much of what we would do is double duty, with the effect of helping aggregate demand today but also enhancing the productivity of the economy for years and decades to come”. "Green jobs, healthcare technology and infrastructure fit that.“ Los Angeles Times, Dec 6, 08
China's $586 billion stimulus package is its - "biggest contribution to the world," Premier Wen Jiabao said Monday, as hopes rose that heavy spending on construction and other projects would help support global growth by fueling demand for imported machinery and raw materials. AP, Nov 10, 08
European Economic Recovery Plan ”… immediate budgetary impulse amounting to 200B Euro and kick-start investment to modernize infrastructure. It will drive a competitive Europe ready for the low-carbon future.” Jose Manuel Durao Barroso, Pres., European Commission Nov 26, 08
32© ARC Advisory Group
AgendaAgenda
Setting the Stage for Sustainability
33© ARC Advisory Group
Climate Change Creating HavocClimate Change Creating Havoc
Mean Temperature Change
World CO2 Emissions
CO2 Concentration
Scientists project a 3º to 7º F rise in global temperatures by 2100 – Consequences could be dramatic
• 3.7º F = Arctic ice disappears
• 5.4º F = Amazon disappears
• 7.2º F = Agriculture declines
34© ARC Advisory Group
The Addition of Power Generation Capacity is Getting Harder Energy Conservation and Management a MustThe Addition of Power Generation Capacity is Getting Harder Energy Conservation and Management a Must
Asian demand for equipment and services drives up Capital Goods Prices globally
The cost of new plants is rising very rapidly
Example: US estimated costsfor new PowerGen capacity• Up 19% in the last year• Up 69% since 2005• Up for all types of plants
• Steam• Combined cycle• Wind• Nuclear• Hydro
In
dex V
alu
e
(These measures includes design, equipment, and construction; exclude fuel costs)
35© ARC Advisory Group
Manufacturers and Processors Have The Most To Gain By Saving Energy
• Uses more energy than any other single sector; >1/3 of U.S. energy consumption
• Produces approximately 30% of U.S greenhouse gas emissions
• Accounts for more than 35% of U.S.natural gas demand
• Accounts for 28% of U.S. electricity demand
• Energy is key to economic growth in domestic manufacturing
• Many companies have been unable to pass higher energy costs on to their customers, which has impacted their profit margins negatively
Industry33.4%
Transportation27.2%
Commercial17.9%Residential
21.5%
Energy Use
Source: US Department of Energy
36© ARC Advisory Group
Major Energy-Intensive IndustriesSustainability impacts ALL!Major Energy-Intensive IndustriesSustainability impacts ALL!
Energy Consumption (Trillion Btu)
Petroleum
Chemicals
PaperPrimaryMetals
Food Processing
Nonmetallic Minerals
Tobacco/Beverages
Furniture
Leather Machinery and Computers
Wood
Transportation
Fabricated Metals
Textiles/Apparel
Plastics/Rubber
Electrical
Printing
Miscellaneous1
10
100
1000
10 100 1000 10000
En
erg
y I
nte
nsit
y(Th
ou
san
d B
tu/
$ G
DP
) Energy-Intensive Industries
Industrial Energy Intensity vs. Energy Consumption
Mining
Source: US Department of Energy
37© ARC Advisory Group
Energy Challenges Create Drivers For SustainabilityEnergy Challenges Create Drivers For Sustainability
The World Commission on Environmental and Development defined Sustainability as the development that meets the needs of the present without compromising the needs of future generations
The Core Principle is care and respect for the environment and the society we live in
By applying this approach manufacturers judge the success of product designs not only by the financial but also by the contribution to society and the ecosystem
The concept of sustainability reaches beyond environmental stewardship
Sustainability is a positive business approach that has as much to do with delivering economic benefits, and being a responsible member of the community, as it has to do with reducing the environmental impact
38© ARC Advisory Group
AgendaAgenda
What does Sustainability mean for Manufacturers?
39© ARC Advisory Group
Infrastructure
•Real-time Plant Support
•Technology Platform
•Applications Platform
•Business Processes
•Security
•Role-based Portals
•Unified view
Integration
•Enterprise
•Design & Engineering
•Operations, Controls, & Equipment
•Supply Chain & External Operations
•Product Support Ops
Functionality
•Production Planning
•Production Execution
•Product Data Tracking
•Visibility & Analytics
•Quality Enforcement
•Inventory Logistics
•Asset Mgmt
•Product Support
Operations Management
To the Pillars of Operations Management…
40© ARC Advisory Group
ECONOMIC
•Customers
•Employees
•Suppliers
•Government
•Community
ENVIRONMENT
•Climate
•Energy
•Water
•Emissions
•Waste
SOCIAL
•Wellness
•Diversity
•Products
•Safety
•Community
The Triple Bottom Line
… add three more for Sustainability
41© ARC Advisory Group
ARC’s CMM provides a Model to help achieve SustainabilityARC’s CMM provides a Model to help achieve Sustainability
Manufacturers must deploy Collaborative Manufacturing Management (CMM) tools to effectively connect to their customers and suppliers, as well as to connect within their own enterprises
CMM is the management practice that controls the key business and manufacturing processes of a manufacturing enterprise
CMM builds upon a collaborative infrastructure, business process management services, and real-time strategic business management tools
CMM leverages critical applications, production systems, and enterprise information, to maximize the responsiveness, flexibility, and profitability of the manufacturing enterprise
42© ARC Advisory Group
ARC’s CMM Model Stresses Collaboration Via A Three Domain Service Based InfrastructureARC’s CMM Model Stresses Collaboration Via A Three Domain Service Based Infrastructure
Lifecycle Domain
L ifecycle Domain
Value Chain Domain
Enterprise Domain
Lifecycle Domain
Value Chain Domain
Enterprise Domain
Value Chain
Domain
Enterprise Domain
Service Based Infrastructure
Business Operations
Systems
Plant/Factory Operations
Systems
Supply-Side Materials
Management Systems
Customer & Order
Fulfillment Systems
ARC’s Three Domain CMM Model
External
Internal
Excellence Throughout Operations is Essential to Value Chain &
Enterprise Performance
External
43© ARC Advisory Group
Business
Production
Suppliers Customers
ARC’s CMM Model Requires Processes To Be Synchronized And Integrated In Real-Time
44© ARC Advisory Group
Questions Manufacturers Must Address To Be Synchronized And Integrated In Real-Time
Hardware – Do manufacturers have the hardware platforms at the plant floor and at IT level, that enable collaboration between power, automation, and the enterprise?
Software – Are manufacturers deploying software platforms at the plant floor and at IT levels that enables collaboration between power, automation, and the enterprise?
Services – Do manufacturers have access to the services required to install, deploy, and maintain the necessary platform infrastructure?
Human Capital – Is the entire organization, from CEO on down, committed to eliminating all silos and deploying the collaboration necessary to achieve sustainability?
45© ARC Advisory Group
Multi-domain functionality on a single platform: power, logic, motion, HMI, and process control
Capability to deploy multiple control applications on a single platform for End Users and OEMs
Common engineering development platform for the design and integration of multi-domain power and automation systems
Open, modular, and scalable control architectures that enable highly distributed automated manufacturing environments
Use of de-facto standards for network interfaces, languages, etc., allowing data exchange as part of networked multi-vendor systems
What Characteristics Are Required To Be Synchronized And Integrated In Real-Time?
46© ARC Advisory Group
AgendaAgenda
Driving towards a Solution
47© ARC Advisory Group
MotionNetworks
Domain Specific Solutions Are Converging to Improve Performance
DeviceNetwork
ControlNetwork
Common Tagging & Single Database
Common Development Platform & Configuration
Tools
Logic HMI
Process Control
Power
Logic HMI
Motion
Process Control
Power
Motion
C-PACS Model
48© ARC Advisory Group
Collaborative Power And Control SolutionsCollaborative Power And Control Solutions
C-PACS articulate the convergence of multiple disciplines on a common platform
C-PACS specify functions under a single environment
C-PACS promote the value of the common communications infrastructure
C-PACS recognize the value of standards in automation
C-PACS demonstrate the importance of a single power, and control platform
49© ARC Advisory Group
Enterprise
Systems
Business
Processes
Operations ManagementOperations Management
Service-Based
ArchitectureService-Based Infrastructure
Production
Processes
Factory
Operations
Systems &
Services
POWER: Power Meters, Circuit Breakers, Transfer Switches, Intelligent Motor Control Centers,…Automation: Motor Drives, Logic, Motion, HMI,
Sensors, Actuators,…
C-PACS – The Foundation for CMM
Mfg Ops &Mfg Ops &Production Production
ProcessesProcesses
Product Product DefinitionDefinition
Production Production ManagementManagement
Factory Factory
AutomationAutomation
ISA 95
Models
Business Process Components
Supply Chain Management
Product Lifecycle Management
Business Process Components
Supply Chain Management
Product Lifecycle Management
Work Flow
OPC-UA
C-P
AC
S
Control & Device
Networks: Real-Time
50© ARC Advisory Group
C-PACS and Operations Management Enables Collaborative Production Systems CPSC-PACS and Operations Management Enables Collaborative Production Systems CPS
Enterprise/BusinessOperations
Outbound Supply Chain& Logistics
Inbound Supply Chain& Logistics
Product/Plant Design and Engineering
CRM
Collaborative
ProductionEnvironment
Operations Management
Production Resources
51© ARC Advisory Group
Business Planning & Supply
Chain Management
Operations Management
Manufacturing Operations
Management
BatchContinuous Discrete
C-PACS - Power Management,
Controllers, Devices, Machines,
Networks
Production
Definition
Production
Capability
Production
Plan
Production
Information
Common Information Infrastructure
CPS Incorporates The Plant Floor, Power, and Operations Management
C-P
AC
S
CP
S
CM
M
52© ARC Advisory Group
Common Actionable Context
• Role based dissemination of information
Real-time Performance Management
• Performance Intelligence
• Resolution to Unit Operation Level
• Operator Engagement
• Targets, progress and trouble analysis in real-time
• Operational Perspective/Financial Impact
Common View
• Plant and Corporate ―single version
of the truth‖
• Aggregation of Operations Intelligence and Business Intelligence
ContextData Quality MgmtCommon Time
Dynamic Plant Reference Model
Application Portfolio
Data ModelWork Processes
& State
ContextData Quality MgmtData Quality MgmtCommon TimeCommon Time
Dynamic Plant Reference ModelDynamic Plant
Reference ModelApplication PortfolioApplication Portfolio
Data ModelData ModelWork Processes
& StateWork Processes
& State
Maintenance
RPM
Dashboards
Real-timeAccounting
System
Real-timeAccounting
System
Real-time Operations
Data
Real-time Operations
Data
KeyPerformance
Measures
KeyPerformance
Measures
CEO
CFO
Engineer Worker
PlantManager
CPS Turns Data into Actionable Information
The Knowledge Workplace Requires added Dimensions of
Context
53© ARC Advisory Group
Application Example*UPS Worldport - Louisville, KY
The world’s largest fully automated package sorting facility
Sort Capacity Per Hour: 421,000 packages
Number of Conveyor Drives: 25,314
Miles of Transport Conveyors: 128 miles
Power consumption: 72 MVA
(City of Louisville: 114MVA)
Facility Size: 5.6 million square feet
YTD Overall Investment > $2 billion
IT Equipment 4,500 Scanners 6,000 PCs 1,500 Printers >500 Data Comm Devices380 Servers
*Source: Presentation by ARC at Schneider Electric Initi@tive 2008
54© ARC Advisory Group
UPS Worldport - Scope of Supply by C-PACS SolutionUPS Worldport - Scope of Supply by C-PACS Solution
Redundant 13.8 KV Feeders
– 1220 Amp Main Switchgear
– Mimic Panel
44 4000 Amp Substations
10 High Voltage Lineup’s
> 100 Power Logic Panels (energy metering)
790 Motor Control Panels (MCP’s)
3,750 Remote Control Panels (RCP’s)
POWER AUTOMATION
23,700 Variable Frequency Drives
3,100 PAC’s & PLC’s
55© ARC Advisory Group
UPS Worldport - Louisville, KY System Schematic for C-PACS Solution
Sorting System No.1
Vendor A
Sorting System No.3
Vendor C
Sorting System No.2
Vendor B
Content:• PACs & PLCs• Motor Drives • Power Logic Energy
Metering
High Level Control (CPS)
These separate sorting systems are fully
integrated at the data (C-PACs)
level
Global Message
Hub
20 Enterprise Applications (aprox.)
Data Collector Data Collector Data Collector
Content:• PACs & PLCs• Motor Drives• Power Logic Energy
Metering
Content:• PACs & PLCs• Motor Drives • Power Logic Energy
Metering
Database Application
56© ARC Advisory Group
KPI Efficiency Goals Accomplished through Advanced Automation Solutions !
1999 Grade Lane (manual)
2007 Worldport
(automated)
%
Volume 495,000 pps 812,000 pps 64
Design Capacity 215,000 pph 304,000 pph 41
Staffing (Sorting) 1984 2362 19
Productivity (per person)
48 pph 93 pph 94
Injuries (LTI) 10.9/yr 2.0/yr -82
Missorts 1/2226 1/4554 -51
pps: packages per sort (1 sort: aprox. 2.4hrs) pph: packages per hour
57© ARC Advisory Group
ECONOMIC
•Customers
•Employees
•Suppliers
•Government
•Community
ENVIRONMENT
•Climate
•Energy
•Water
•Emissions
•Waste
SOCIAL
•Wellness
•Diversity
•Products
•Safety
•Community
The Triple Bottom Line
Impact on Sustainability ?
58© ARC Advisory Group
• 82% Reduction in Injuries (LTI)
Increased Efficiency Impacts Sustainability PositivelyIncreased Efficiency Impacts Sustainability Positively
ECONOMIC
ENVIRONMENT
SOCIAL
• Information leverage and system flexibility enhancement through enterprise collaboration
• Energy efficiency maximization through use of variable speed drives for motors wherever possible •Throughput increase and sorting error reduction through advanced automation solutions implementation• Jet and truck fuel reduction by maximization of the sorting intelligence of material handling solutions• Increased visibility and regulation of power consumption through Power and Automation collaboration
59© ARC Advisory Group
Summary and Recommendations
Manufacturing and Processing Companies face significant challenges not only from a flat world, but also from Sustainability requirements
Sustainability demands collaboration across organizational silos (e.g. infrastructure vs. manufacturing)
C-PACS creates opportunities for Manufacturing and Processing Companies to optimize across the entire enterprise:
Energy consumption for infrastructure and process
Coordination between consumption and cogeneration
C-PACS is a key component of CPS, and it empowers knowledge workers through actionable information
Common actionable context and KPIs that link manufacturing performance to business and sustainability goals
Automation Suppliers help meet these challenges with Collaborative Power and Control Solutions
60© ARC Advisory Group
What Can We Collectively Do To Navigate Through The Economic Turbulence ? What Can We Collectively Do To Navigate Through The Economic Turbulence ?
√ Recession is global
√ Recent economic news is pretty much all bad
√ Manufacturing is being hit hard
But:
√ Investments still need to be made!
√ Curbing investment in certain sectors now could have negative consequences down the line
√ Companies cannot cut their way to growth and prosperity
Industry Leaders Need to Plan Now for the World Beyond the Current “Gloom and
Doom”
61© ARC Advisory Group
AgendaAgenda
Consider ARC Your Partner In Navigating Through This
Difficult Period!
62© ARC Advisory Group
Thank YouThank YouFor more information, contact the author at
cresnick@arcweb.com or visit our web pages at www.arcweb.com
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