Developing a data-driven approach to mitigating risk
Companies looking to modernize or improve their technology often face many challenges and need a risk mitigation strategy to get a better idea of what needs to be done.
- Learn about the benefits of developing a data-driven approach to reducing risk with obsolete systems.
- Understand data collection’s role in developing a risk mitigation strategy.
- Learn about the different types of risk mitigation strategies and how they can be successfully utilized.
Asset management insights
- Companies are often financially tied to their legacy machinery and are loath to change, which can lead to companies becoming less efficient and more prone to breakdowns.
- Developing a risk mitigation strategy while moving toward modern control systems and technology can help ease some of the financial burden and make companies better positioned toward the future.
For many organizations, keeping up with the ever-evolving industrial digitalization or smart manufacturing trends and technologies is not easy. Most manufacturing companies have a large monetary investment in long-running, stalwart legacy systems and there is some personal attachment to them. It’s no wonder making the decision to move on and upgrade or migrate their systems can be difficult. Change can be hard.
The resistance to change is why some manufacturers still run their operations with old and obsolete equipment. Due to limited resources, they are hard-pressed to keep plant automation current and functioning at the highest level, which can lead to issues impacting reliability, including unplanned downtime, extended outages due to parts availability and lack of available replacements. Performance, safety, and network and cybersecurity also are impacted.
To address this situation, manufacturers must first understand what automation assets are installed in the plant and what exists in the storeroom to support those assets. This initial assessment will be the foundational piece that will serve as the basis from which data-driven strategies are derived and developed enterprise-wide.
Physical and digital data collection
Gathering the initial assessment data is easier than it may seem. Personnel can use existing methodologies to perform this data collection process physically or digitally.
Physical data collection – A field engineer manually collects the data. The amount of data collected depends on the size of the plant and requires some scoping. This process also includes collecting information on spare parts from the storeroom, which are essential for supporting the existing installed base.
Digital data collection – This approach involves running a data acquisition program across the network to identify and gather the data from the connected assets. In this scenario, the scope can be delivered on a turnkey basis as the size of the plant doesn’t impact it. The storeroom spare parts information is manually collected.
Once the data collection is completed, if lack of bandwidth is an issue, third-party reliability consultants can help personnel analyze the data and develop risk mitigation strategies, such as inventory management and repair and future modernization planning.
Using the right risk mitigation strategy
To gain greater visibility into the risks associated with operating obsolete and end-of-life automation assets, manufacturing personnel need a clear understanding of a plant’s installed base. Once they have insight into the lifecycle status of automation assets enterprise-wide, they can make strategic data-driven decisions to mitigate risk.
Inventory management and repair
Manufacturers trying to extend the life of their old and obsolete automation assets must rely on dependable resources for the repair of failed units. This is often done in a haphazard manner using multiple independent repair suppliers mixed in with original equipment manufacturer (OEM) services. The process is transactional and can leave companies who operate in this way dissatisfied with price, quality and turnaround time. Quality has a direct impact on unplanned downtime, and longer repair turnaround times can result in extended downtime as the plant waits for the critical part to be repaired.
Market leaders take a more in-depth look into this process, understanding the impact on the entire production process. Newer strategies tend to be contractual in nature, moving the process away from being strictly transactional. Two of these strategies are fixed-spend and all-inclusive models:
Fixed-spend model – A manufacturer determines the annual repair spend and issues a purchase order in that amount. All repairs draw down against the purchase order until the spend is depleted. The funds can be used for all repairs. Funds can be added to the purchase order if it is depleted before the end of the term.
All-inclusive model – A manufacturer and a third-party vendor agree on an annual amount based on a specified bill of materials (BOM). The amount covers all repairs for the BOM regardless of the volume. The manufacturer is protected against any unexpected costs for the period of the contract.
While a good repair policy can make a positive impact on risk mitigation, it should not be regarded as the only solution for implementing a comprehensive risk mitigation strategy. When combined with an inventory strategy, the repair strategy’s impact increases. Together, the two strategies can impact the plant in a positive way by helping to reduce downtime and the mean time to repair (MTTR) when failures occur.
Working with the plant’s third-party technology suppliers, manufacturers can negotiate inventory levels to ensure sufficient spares are available, either in the storeroom, an off-site location or both. Quantities are dictated by the installed base, criticality of the operations the automation supports, and availability of the specific part.
For example, if the plant has 100 units of a specific part number, then the storeroom would need approximately 10 units to support the installed base, or possibly 15 units for critical applications. Off-site stock can be protected for a specific company’s use only, thus ensuring availability when needed.
Companies also can supplement the execution of this with on-site resources to help manage the process and ensure the desired outcomes are achieved. Both repair and inventory strategies require a thorough understanding of automation installed in the plant to deliver the best outcomes.
The combination of these strategies will allow the plant and/or the enterprise to extend the life of the installed base assets. Benefits of doing this well include reduced downtime, reduced MTTR and lower maintenance, repair and operations (MRO) costs by ensuring the right quantities of spares are available when needed based on criticality.
Once companies understand their risk profile from an end-of-life perspective and know about the obsolete automation technology being used in production, they can leverage cloud-based technology to view, analyze and consume the data. They also can apply this data insight to continue to manage their risk mitigation strategies such as inventory management and repair and modernization planning.
Modernization planning strategy
The combined inventory management and repair strategies allow manufacturers to delay modernizing their technology installed base for the short-term. A cloud-based portal allows them to manage this on a day-to-day basis, helping to extend the usable life of these obsolete technologies.
Delaying modernization cannot and should not be indefinite, though. End-of-life and discontinued automation systems and technologies lack the performance, safety and cybersecurity features of the current product offerings on the market.
Modern technological advances will continue to evolve, and manufacturers need to evolve as well. Companies need to start planning their modernization project and understand that in most cases, expenditures will include multiple projects over multiple years, requiring capital expenditure approval. A third-party technology and solutions partner can help companies prioritize and plan these projects based on budget, criticality, production risk and cybersecurity threats.
Benefits of developing a risk mitigation plan
As companies look to understand and take inventory of their plant-wide automation assets, they need a solid plan that includes risk mitigation strategies with an eye toward future modernization. Modern control systems contain valuable technologies and tools that can help manufacturers manage their assets and operations. When this infrastructure is combined with a strategic data-driven approach to asset management and optimization, companies can increase efficiency and productivity throughout the enterprise to achieve desired business outcomes and keep their competitive edge.