Presentation: Equipment Monitoring and Diagnostics at Metallizing Facilities The Impact of M2M Technology.

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1 Presentation: Equipment Monitoring and Diagnostics at Metallizing Facilities The Impact of M2M Technology. Delivered by: Spencer Cramer ei3 corporation Angelo Colombo Galileo Vacuum Systems Contact Information: Spencer Cramer Angelo Colombo President Director of Technology ei3 corporation Galileo Vacuum Systems 136 Summit Avenue Via delle Fonit 432 Montvale, NJ , Prato, ITALY Tel: Tel: +39 (05)

2 Equipment Monitoring and Diagnostics at Metallizing Facilities The Impact of M2M Technology. Abstract: Machine-to-Machine (M2M) technology refers to the ability to communicate data between machines, people and enterprises to enable remote monitoring and service. This technology will have a greater impact on the metallizing, coating and laminating industries than the adoption of PLC based controls, digital drives and even industrial computers. This paper examines the fast moving dynamics of the adoption cycle for M2M within the converting industry. It looks at economic fundamentals including Return On Investment (ROI) and Total Cost of Ownership (TCO) to build the case for rapid adoption of this revolutionary business model. Success stories are presented, including how one OEM company is increasing customer satisfaction with M2M service technology, as well as how a large manufacturing company is using M2M monitoring to view their production status in real time. What is M2M? According to The Focal Point Group, M2M is the process of transmitting asset or environmental data in order to inform enterprises, individuals, or other machines. M2M utilizes sensors and embedded processors (PLCs, digital drives, etc ) working together with communications standards to gather and analyze data communicate asset status, provide remote enabled service, and enable higher order functionality in machines. 1 In essence, this is the creation of a circle of value that links information in real time from production machinery to business decision makers and ERP systems. Further, the M2M model also provides a means for remote technical access to production machinery enabling the manufacturer to acquire technical support in a more timely and cost effective manner. When properly executed, the M2M solution becomes an indispensable part of the enterprise by maximizing the value of equipment assets to achieve a competitive advantage. 1 The Focal Point Group, LLC, What is M2M? A primer on M2M technologies, companies and adoption. C Page 2 of 11

3 Applications Remote Monitoring Already there are a number of companies who are applying M2M remote monitoring technology within the converting industry. These companies are tracking basic productivity indicators like line speed, and uptime but further, they are also monitoring CTQ (Critical To Quality) parameters. One productivity example is the real time reporting of machine OEE. This Six-Sigma metric helps drive lean manufacturing programs. Along with OEE, the individual components are also displayed: Units produced Downtime Quality (Yield) Measurement By providing the ability to see the components of OEE in a granular format, it becomes easier for plant decision makers to focus on the areas where improvement efforts will pay the highest dividends. Applications Service Manufacturers are also taking advantage of the benefits of M2M service. Networking products are available that enable the set-up and control of access to individual machines and their devices for service, improvements, and expansion projects. Remote individuals are able to contribute their knowledge and experience on an as-needed basis to help optimize productivity. For security purposes the manufacturer can monitor their activity as well as open and close the access from a secure Internet console. Perhaps one of the best applications of remote service is the ability to grant an OEM access to their machine in a time of service need. Galileo Vacuum Systems provides every new machine in North America with a secure Internet based remote service capability. This enables faster machine start-ups, better performance and higher customer satisfaction. Applications Other In addition to these solutions, M2M companies are also delivering a wide portfolio of productivity enhancing tools such as data interfaces to ERP systems, on-line certificate of quality (for third party customers), recipe management, disaster recovery, SPC analysis, plant production score boards... Page 3 of 11

4 The net result of M2M solutions, is that once a proper machine connection is established, a platform is created that supports the delivery of potentially any business metric in real time. M2M Overview The adoption of M2M strategy in business is the result of fundamental demographic trends including equipment technological advances, workforce specialization, and global competitive pressures. Over the recent years as the availability and affordability of networking technologies has increased the value of M2M solutions become more apparent to manufacturers. Consequently these manufacturers and some OEM within our industry are now harnessing these developments to build on their competitive advantage and improve market position. Trends: Investments in Production Machinery Manufacturing companies have been forced by the competitive market pressures to invest in modern production machinery. The reasons for these investments vary from company to company and product to product, but the multi-million dollar global capital machinery market for the converting industry is a testimonial. The new machines that are being delivered are more technically advanced than ever, and carry a higher price tag. By virtue of their outstanding production rates, they enable their owners to win orders from their competition, achieve higher margins and prosper. The increased complexity of these machines also creates the requirement for more advanced support strategies. And increased machine costs also implies that downtime becomes more expensive. Even in periods where the overall demand for a produced product declines, manufacturing companies use enterprise capacity rationalization to get more output from fewer operational assets. Consequently, the management of big, expensive production machines and finding the technical people to maintain them is a critical part of running a manufacturing enterprise. Trends: Specialization of Workforce As equipment continues to become more complex, and the support strategies more challenging, it appears that in the future there will be a small pool of machine specialists who are very skilled at delivering the specific technology required for a manufacturing plant. Transporting these specialists to the equipment sites around the world in a secure trusted manner becomes a critical matter. Page 4 of 11

5 According to the RAND Corporation s recent publication The 21 st Century at Work, Rapid Technological change and increased international competition place the spotlight on the skills and preparation of the workplace, particularly the ability to adapt to changing technologies and shifting product demand. 2 Trends: Changes in the Organization of Production In the same publication, the RAND corporation states: Technological Advances and globalization are changing the way production is structured, pushing firms toward vertical disintegration and specialization, decentralized decision making, and attaching a premium to acquiring and sustaining knowledge as a means of achieving competitive advantage. Such specializing allows firms, which may remain as large as ever, to exploit their comparative advantage in the provision of particular goods and services, while outsourcing those functions peripheral to the core business. With more decentralized decision-making, striking the right balance between empowerment and control will be an important management element in the future workplace. Further, in some sectors these trends could result the in the disintegration of the firms to the individual level in the form of numerous e-lancers. In this new business model, individuals may compete in a global manner for project opportunities and may work on multiple projects at any given time. 3 A big question that needs to be answered is, does the technical support of production machinery fall into the category of a core business role? The answer probably depends on a number of factors including the size of the facility, the number and type of machines supported, then redundancy of machines and the economic factors governing the situation. It is noteworthy that there is a growing group of converting companies who have made the determination that, while producing their products is a core business function, the support of their equipment as well as the systems that measure and report on production are better handled by specialists who focus on remote monitoring and support services. The M2M Solution There is growing evidence that the future workplace will be ever more virtual, and the companies who adapt to these important trends will be in a position to maximize success. 2 Rand Corporation, The 21 st Century at Work, Forces shaping the future workforce and workplace in the United States, c Lynn A Karoly, Constantijn A. Panis 3 ibid Page 5 of 11

6 Early adoption of M2M benefits converted products manufacturers by: Delivering real time data to the Decision Makers who guide the enterprise Controlling Access for technical people (internal and external) who optimize output And, Integrating real time data to business systems such as SAP. M2M Market Landscape A business segment is rapidly forming composed of companies who fulfill the human capital, technical, and integration needs of supplying M2M technology. Applications are diverse and widespread with most of the companies concentrating on a few well-covered market segments. The M2M market is in its infancy and the companies who are supplying and using M2M technology are the pioneers and early adopters. Harbor Research, a company that is focused on the developing M2M business space, predicts; By 2010 a minimum of 1.5 billion devices will be internet-connected worldwide, and the forces driving networking are self-perpetuating. Devices that are not connected will quickly decrease in value, thus increasing the pressure to network-enable virtually every object The largest opportunity will exist for value-added service providers and thus access to devices information will become a de facto part of most service or sales contracts. 4 Consequently networked devices will create by 2010 at minimum $700 Billion total opportunity for the companies involved in enabling, monitoring, and providing valueadded services. Important Considerations When designing a M2M strategy, it is important that manufacturers take into consideration details such as security, reliability, implementation and economics. At first deploying such a system may appear to be a straightforward, even simple application. But once all factors are considered, the M2M system s maximum value can be realized only through deployment of a sophisticated, engineered solution. For example, a poorly implemented M2M system has the potential to create network vulnerabilities for malicious access. Consequently the network architecture, as well as constant maintenance and upgrading of a defense perimeter is essential. These issues are 4 Harbor Reseach, Inc. The Pervasive Internet Opportunity, December 2003 Page 6 of 11

7 well understood by experienced M2M solution companies who have security teams versed in all the latest network protection technology. System reliability and uptime is critical, after all, manufacturers don t want to have a production reporting system that is less reliable than their production equipment. Therefore the network and data warehouse must be designed with reliability and redundancy as a primary concern. There are M2M remote monitoring companies who have Operations Centers with fully redundant equipment running 24x7 insuring that the manufacturers receive high availability. For delivering productivity reports that suit the needs of a manufacturing organization, an ASP (Application Service Provider) who has experience in the industry is the best solution. Leveraging years of experience, an ASP company has many pre-defined software solutions that deliver the reporting, alerting and data analysis to achieve maximum value. ASP companies can accomplish the goal of real time production reporting at less than half the Total Cost of Ownership of a custom engineered solution. These are reasons why in almost all cases, it is best to work with an outside solution provider. Before launching a remote monitoring and service network, manufacturers should search for a M2M solution provider that has strong Internet security experience, a long list of customer references, and existing solutions that meets their business needs. M2M Solution Providers In response to the economic trends, technological paradigm shifts and business needs, companies such as ei3 corporation of Montvale, NJ are targeting the M2M business space. Theses companies are focused on providing excellence in remote monitoring and service solutions. In many ways they are similar to OEMs who specialize in certain types of equipment because through their focus, they are able to package M2M technology into a practical and cost effective bundle that addresses a manufacturer s needs. These M2M solution providers also partner with OEM companies in a way that provides exclusivity within a defined market, this becomes a competitive advantage for the OEM. In the future the OEM s competitive advantage will increase in significance as the benefits become understood on a wide scale. The M2M provider can also augment the OEMs service capability by providing a front line service desk performing service request qualification and escalation if necessary on an around the clock basis. Page 7 of 11

8 OEM Testimonial Galileo Case Study: of support from Italy to USA machinery Galileo Vacuum Systems of Prato, Italy has been working with ei3 Corporation of Montvale, NJ since 2000 to provide superior remote monitoring and service solutions to their customers in North America. Ei3 Corporation provides a secure Internet based solution that consists of three components. 1). A secure network that enables remote service connectivity 2). Front line technical support from an operations center that is ready 24x7 to respond to customer requests for assistance. 3). Remote productivity monitoring. This solution has been demonstrated to be very effective in achieving quick resolution to machine issues. By combining the front line support of the ei3 team with Galileo s experienced engineers, customers are presented with a seamless integration that is both responsive to their needs as well as capable of handling every situation. The customer needs to know only one phone number to make contact to the necessary technical specialists. Using the ei3 Argo service network, engineers are able to provide customer support. Using secure Internet protocols enables connection to the machine from ei3 s operation center, Galileo s office in Italy or by engineers from the road. The net result is that Galileo Vacuum Systems has measured drastically improved TTR (Time to resolution) on customer service issues. Manufacturer Testimonial Case Study: Using the production monitoring in morning meetings. Remote monitoring based productivity measurement is a powerful tool that enables the manufacturer to make better business decisions and plan operations more effectively. Some progressive companies have already incorporated these tools into their daily workflow. For example, one company uses the ei3 production reporting system every morning to assess performance of the previous day as well as to plan production for the current day. Downtime tracking is also used to perform root cause analysis of problems that are impacting production. This analysis becomes the basis of continuous improvement efforts. Page 8 of 11

9 Individual production recipes are monitored and quality reports generated showing that CTQ (Critical To Quality) parameters are being maintain within their defined tolerances. Return on Investment Calculation Obviously the Return On Investment (ROI) calculation varies for every situation. But there are common factors governing both the cost of every machine downtime and the savings where remote services reduce downtime. The ROI proposition has be been proven by many different companies who have been using M2M remote services for years. In most cases, for ei3's customers, ROI is typically less than days for most solutions Tables showing the common costs as well as savings are shown below: Factors Contributing to Machine Downtime Cost - Machine Downtime - Capital Investment for Machine Cost - Hourly Overhead per Machine - Machine unplanned breakdowns - Lost Revenue per Hour Yield, materials wasted, - Engineering Pay per Hour - Personnel Cost per Hour - Outsourced Labor Costs - Expenses - Travel time Table 1. Factors Contributing to Cost Factors Contributing to Savings (ROI) Downtime root cause analysis & remedy Process Optimization, DOE, Operator Training Enterprise Capacity Rationalization (ECR) Complaint Analysis, COA Data Management, better production reporting Calculate & track ROI Improvements Reduce Changeover Time Accessibility Disaster Recovery Version Control / Program Coordination Page 9 of 11

10 Table 2. Factors contributing to ROI Total Cost of Ownership One of the most compelling factors driving manufacturers to use remote monitoring for the production reporting systems is the drastically lower TCO. A remote monitoring solution does not require the manufacturer to purchase hardware or software, instead the solution is software as a service. A monthly subscription cost covers all of the traditional costs of a reporting system including development, start-up, hardware, packaged software (if used), support and ongoing administration. The manufacturer is being charged to use a portion of a large centralized system, and since the Remote Monitoring solution provider is able to reap many economies of scale, all of the major costs of the system are shared by many customers, producing a lower cost to each customer on an individual basis. In most cases the TCO for a M2M reporting solution is less than 50% of the traditional custom engineered method. An example calculation derived from one customer is shown in table 3. Comparison of TCO for Reporting Solutions Custom Engineered Reporting Solution TCO Financial Cost Packaged Software/Development $75,000 Engineering Implementation Cost $140,000 Hardware Server $10,000 Support Fee per Year (x3) $30,000 Annual On-going Administration (x3) $30,000 3 YEAR SERVICE TOTAL $285,000 (Sample) Remote Monitoring Reporting TCO Financial Cost Start-up Fee $5,000 Annual Network Administration $6,000 Annual Data Collection Fee $15,000 Annual Recipe Management Fee $6,000 Annual Downtime Tracking Fee $12,600 ANNUAL SERVICE TOTAL $44,600 TOTAL FOR 3 YEARS SERVICE* $285,000 TOTAL FOR 3 YEAR SERVICE* $133,800 Table 3. Comparison of TCO for reporting solutions Page 10 of 11

11 Conclusion M2M remote service and support solutions are beginning to be deployed in the converting industry. There are companies such as Galileo Vacuum System who are including M2M remote services with every machine because they understand its value to their customers. And, early adopter manufacturers have fully embraced M2M remote monitoring technology as a way to continue to build their competitive advantages. With more and more companies using M2M technology, it is apparent that the converting industry is approaching a paradigm shift. Soon the use of M2M remote monitoring and services will no longer be a strategic competitive advantage, but will become an essential tool required to attain competitive production goals. Page 11 of 11

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