We hear the term ‘Real-Time’ used a lot in the context of industrial operations. Generally, we take it to mean instantaneous, or as close to that as makes no difference. For example, we say automation systems run in real time. Processes are controlled in what we perceive as real time. We gather data from these systems, and we use real time insights and make real time decisions about how processes are operating. We can then act in real time to take appropriate action to optimize things.
The pace of business reporting is often slower. Results are typically measured on a monthly, or even yearly basis. Financial reports (which measure revenues, costs and resulting profitability) typically come out monthly. They may show financial performance at plant or perhaps departmental level but seldom (if ever) at the asset level.
If something negatively impacts financial performance, it could take days before people realize there’s an issue and they start to take corrective action. It’s a bit like driving a car by looking in the rear-view mirror. It’s also hard to pinpoint the root cause of poor financial performance quickly from plant level financial reports. To quickly Identify and address the source of poor financial performance data must be available in ‘real-time’, and at the asset level.
Profitability in Real time
What if you could proactively identify, then know what to do to fix sources of poor financial performance before you have a bad month financially? When we have a leaking tap at home, we fix it immediately to stop wastage and prevent water damage to our other assets. The longer it leaks the more damage and the more it will cost to repair. So ‘fixing the leak’ immediately and reducing the loss of production, efficiency, time, money etc. may be the difference between a profitable month or not. Digital transformation and the secure access it gives to IT and OT data now makes this fast, near real time response to emerging financial issues possible.
Somewhere in business systems in the OT layer the cost of a kilowatt hour of electricity or a unit of raw material is known. Apportioning revenue to the output of each production asset allows financial performance to be calculated down to the asset level and better yet, to do it at the speed of the process rather than the historical speed of business reporting.
We call this Real Time Profitability and it consists of the following maturity levels:
Where production costs mastered at the asset level in a move towards 100% OEE (availability, performance, quality)
Real Time Accounting
Where the contribution each asset and line make to overall plant profitability is measured & understood at the asset and line level in real time.
Where financial performance is controlled as an operational variable to optimize profitability per unit output in real-time.
To survive today industrial organizations must be more efficient, agile, and sustainable than ever before and digital transformation makes this possible. Profitability is also important too and digitization offers some exciting new possibilities here. Today’s investors expect companies to be sustainable AND profitable and Real-Time Profitability helps make this possible.
“Schneider Electric EcoStruxure allows us to remotely diagnose and view the plant like we could never do before. This gives us the flexibility so that we’re able to access the plant at any time from any locations via our laptops, smartphone, or tablet,” says Alan Williamson, Manufacturing Executive at Pongola Sugar Mill. Thanks to EcoStruxure, the RCL staff now have all the actionable insight at hand and can make bankable decisions and proactively optimize the operations of the plant.
After all it’s much easier to drive with all the information and controls in front of you, at your fingertips than looking behind you in the rear-view mirror.