- March 6, 2019
- Posted by: David Marshall
- Category: Digital Transformation, Innovation
Several years ago, when I was the president of Robroy, we were faced with a problem of how to deal with an old business that was run down, obsolete, and had an employee retention problem (we would lose 20% of our workforce every time we conducted a random drug test). This was my world without any kind of digital transformation or automation. The results were poor quality products, stifled capacity, terrible inefficiencies, a huge amount of waste, and low profitability.
My dream was to have a manufacturing operation that was as close to fully automated as possible. Truth be told, if we could have operated it with only a red stop button and a green start button, I would have been happy.
The only way we could come close to that was with automation.
After two-and-a-half years of planning and executing, we were able to build a factory whose machines were fully automated and were dotted with measurement devices, counters, scheduled maintenance, and productivity monitors, plus plenty of safety devices and equipment.
The equipment and the production processes were designed so all the data points could be captured — 44,000 points of data per work cell per shift. (A cell is a set of equipment that’s preprogrammed to operate in a predetermined way by a single operator.)
The system monitored the quality and efficiency of the equipment and the product is delivered at the end, and the whole machine would produce its different parts — say, a 45-foot fiberglass-reinforced epoxy liner for oil field tubulars — and all the operator had to do was monitor the progress on a screen. The data that was being captured would tell the operator if everything was working correctly, and whether or not the part that was being produced had passed all the quality checks built into the process.
(Then, all of this data from all the work cells would be shared to a measurement dashboard that the managers and executives could see and then tell at a glance whether the entire operations was running at peak efficiency.)
The system also gave the operator the ability to do a very quick analysis if something was wrong. In other words, it showed where each of the liners was being wound on a mandrel, where each mandrel was in the work cell, whether there was a liner on the mandrel, and whether it was a good or bad liner.
If one of the data points flashed red, it was because it had failed a quality check. If it was green, that meant it had passed all of the quality checkpoints. And this all showed up on an HMI — human-machine interface, a fancy tech word for “screen” — in real time. In this way, if there was a problem, it could be resolved before you made hundreds or thousands of pieces.
The Improvements Created by Digital Automation
That was 12 years ago, and I believe we could create this same kind of factory now for lights out manufacturing, a system where there are no lights in the operation because there are no humans working there.
And the entire operation would be scalable in the sense that each work cell was actually its own little factory. If we needed to reduce operations, we could turn off a cell, but if we had to ramp up, we could just run the cells longer.
More importantly, if we had a sustainable increase in demand, we could just purchase another cell. A single work cell only costs $6 million (“Only!”), but it was better than running additional shifts, hiring more people, or building a bigger factory. In many ways, this is a more sustainable model like a mini brewery or even a micro steel manufacturer, like Nucor Steel.
The whole point of the automation expansion was that, from start to finish, there was one operator per cell, and the product was untouched by human hands until it was shipped out the door or cemented into the oil field tubulars.
But we saw several significant improvements because of this new automation.
- For one thing, we reduced the possibility of injury. Not only did we have fewer associates who could be injured, but nobody was touching anything during the entire process.
- We had full traceability of the product “from womb to tomb.” From the resins and fiberglass being delivered to the way it was processed through the system, the quality checks it passed, and the validation of those checks — that all gave us a built-in record so each piece that was produced could have its origins traced all the way back to the original source of the raw materials.
- You could execute change orders right from the ordering system. For example, once you completed an order for 500 5-inch liners, the operator would just punch in the new order — say, 500 3″ liners — and the system would make the necessary changes.
- Our environmental remediation costs were slashed from $500,000 – $1 million per year to literally $0.00. We switched from a hot oil-based curing system for the epoxies we used to a steam based one. The only byproduct was water.
- We reduced waste from $2 – $2.5 million per year to less than $250,000 per year.
All told, the ROI of this new factory took only 8 years. Thanks to the elimination of waste and environmental remediation costs, the factory was completely paid off within 8 years, and we were making an additional $2.5 – $3.5 million in straight profit.
In the plastics industry, margins are very slim, so waste can be a profit killer. If your waste is 1% on $1 million in sales, that’s $10,000. Lose that much money every month, and pretty soon, you’re talking about real money. If you could get that 1% back into your bottom line, it would quickly pay off any improvements you made to your manufacturing process.
I’ve been a manufacturing executive, as well as a sales and marketing professional, for a few decades. Now I help companies turn around their own business with automation and digital transformation, as well as speak at conferences, trade shows, and chambers of commerce. If you would like more information, please visit my website and connect with me on Twitter or LinkedIn.
Photo credit: Wookie7445 (Wikimedia Commons, Creative Commons 4.0)