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Plan for Payback

May 19, 2003
Shake the tree by supporting business performance with a consistent, corporate-wide strategy for improving process automation

In the process industries, with the majority of assets and costs dedicated to manufacturing and controlled by automation, it could be argued that process control is the single hard manufacturing asset that can do the most to achieve operational excellence (OpX).

But how to define operational excellence? Moreover, how does a corporation apply automation thoughtfully, optimally, and consistently across diverse operations, in some cases scattered across the globe and built by diverse original owners?

We believe the best answer is to systematically develop and follow a consistent, corporate-wide strategy for planning automation projects, choosing suppliers, and implementing updated and improved controls.

Pros & Cons of Outside Expertise

Developing a strategy is really a team project and the composition of the team should reflect the breadth of the project and the areas targeted for change. Typically, there should be representation from operations management, operations, control and automation (C&A), advanced process control (APC) if separate from C&A, maintenance & reliability, engineering, purchasing, IT, and supply chain management (SCM) if the company has an SCM initiative.

As with any team project, it is important to understand and work within the team dynamics. Including a consultant or other outside personality can be disconcerting and interfere with team dynamics. If outside expertise is included, we believe it is most effective to use the person as an expert member of the team, not as a leader.

Figure 1: Through the Looking Glass

In the strategy development process, current reality becomes the benchmark, a gap analysis quantifies shortcomings, and solution criteria are used to evaluate alternatives. (Source: ARC Advisory Group)

As a team member, the consultant's suggestions and positions must be accepted on the basis of their contributions to the team and project goals. The team leader, not the consultant, should be viewed as the logical person to drive the project. But to ensure results, the team leader and the consultant should share the same responsibilities for successful completion of the project.

Another dynamic that must be managed is supplier preferences. Most team members will have preferred suppliers, but this can interfere with developing the best independent strategy and must be dealt with up front. It must be made crystal clear that this is a strategy development process and not a supplier selection process or a purchase specification development.

Define the Quest

The project starts with an achievable and measurable mission statement from management. This is the first link between business leadership and the team. It is critical because it establishes a common set of expectations based on the corporation's business objectives and ultimately sets the measures that will determine the team's success or failure.

The team takes ownership when members establish their vision statement. This is their stake in the ground, a statement of the benefits automation will need to deliver to satisfy the expectations set by management. Developing this vision statement is not easy; it requires a lot of soul searching, give and take inside the team, and finally bonding.

Once the vision is established, it is important to create the baseline, or current reality. Current reality issues should address performance benchmarking, what's working and what's not, recurring problems, barriers to performance, and future initiatives that need to be accommodated.

These issues are collected through independent interviews of internal customers across the company and directly from the team members themselves. The results are organized into categories and ranked by importance. Defining the current reality is a two-step process. The first is collecting the issues based on the team's current understanding through the interviews. The second is identifying issues based on a broader understanding.

For team members to identify issues based on a broader understanding and to make informed decisions about desirable solutions, they need to understand their industry's trends and requirements and emerging technology, and gain a perspective of suppliers' strengths and challenges. This is one place where the consultant can make a major contribution. A qualified consultant can deliver an in-depth presentation on these leading issues. Armed with this understanding of the possibilities, the team is able to synthesize a solution and ultimately complete a gap analysis between current reality and the solution (Figure 1).

The team synthesizes its solution by first restating current reality issues as proposed solutions. Then, the team discards current realities that have no solutions, expands valid solutions into detailed recommendations, and reclassifies them into new categories. The aggregations of the recommendations become the strategy details.

With the current reality and the solution defined, a gap analysis can be completed. The results of the gap analysis are the solution criteria, which are used to evaluate alternatives.

How Nova Chemicals Did It

Nova Chemicals is essentially two businesses, ethylene/polyethylene and styrene/polystyrene. Its products are used downstream to make basic household and industrial products. It has 18 manufacturing sites in Canada, Europe, and the U.S. that produce annual revenues of $3 billion. One of the company's objectives is to be the low-cost provider of its commodity chemicals.

Another part of Nova Chemicals' business strategy is to operate as an industry consolidator. It recognizes that one consequence of its strategy is an installed manufacturing base that is diverse in legacy systems, scale, cost structure, and culture.

Executives believed the company already was benefiting from economies of scale and the thoughtful structuring of manufacturing assets, but they also felt there would be benefits from a consistent corporate-wide process automation strategy. Specifically, their objectives were to establish a methodology and criteria that coupled automation expenditures to business strategy and best leveraged the corporation's automation resources, systems, and practices with current value-adding initiatives.

Nova chose to use the ARC Advisory Group automation strategy development process for guidance. ARC is a market research and consulting firm focused exclusively on manufacturing, particularly automation. Its automation strategy development process has evolved through use by a number of end user companies.

The company defined more than 200 current reality issues, which were divided into nine categories ranging from automation and control to supply chain management (Table I). The top four categories accounted for more than 70% of the ranking.

The current reality phase provides an appreciation of the magnitude of each area. It is probably the most important phase because it is where the requirements are set. Everyone should be encouraged to list their issues because every issue is a part of the puzzle.

The process of getting to recommendations has two steps. The first is to restate issues as proposed solutions and consolidate similar or overlapping solutions. The second is to expand and qualify the solutions into detailed recommendations. These recommendations are again classified into categories.

When the more than 200 current reality issues were restated as solutions, consolidated, and reclassified into categories, they boiled down to six recommendation categories (Table II). Each of these categories is discussed below.

Best Practices

It was no surprise to see this recommendation so high on the list. The legacy of an industry consolidator is a broad diversity of procedures, automation products, and systems.

The first area of best practices dealt with the value of product standardization based on standards. This best practice is first focused on the value of developing a suite of products that Nova Chemicals would standardize on to enjoy the benefits of consistency, both in use and support. Second, when these standard products are also based on international standards, automation investments tend to have longer lifecycles, particularly when hardware proprietary barriers to changing suppliers are minimized. Software standardization has the additional benefit of further leveraging IT in its traditional training and support role.

We also recognized the value of applying this best-practice approach to standardized work processes and strategic applications. Standardized work processes can deliver well-defined roles, responsibilities, measures of project execution, and operating procedures for purchasing and maintenance. It can also provide standard procedures for exceptional situations. The consistent deployment of strategic applications reinforces operational objectives and corporate guiding principles.

Skills Management

This recommendation deals with managing the human automation resources. Skill management supports a quality capability through training and shared understanding. It addresses continuous improvement through formal knowledge capture and transfer and recognizes the value of outsourcing for other than core competencies.

Automation Steering Committee

Several requirements converged to justify creating an Automation Steering Committee (ASC), responsible for keeping the strategy current and for arbitrating variances from the strategy (Figure 2). The ASC is also responsible for providing clarification and guidance to senior management as well as a cost perspective.

Figure 2: Hands on the Wheel

The Automation Steering Committee (center) is responsible for communicating the Process Automation Strategy throughout the company. The committee also keeps it current and arbitrates variances from it.

As a result of its makeup, the ASC provides an excellent forum for collaboration between automation practitioners, purchasing, IT, and engineering. With respect to general support, the committee provides coaching and guidance to operations and local practitioners. It also satisfies the important role of providing one face to suppliers for negotiation, possible changes to the strategy, and dispute resolution. Finally, it conducts post-project audits to ensure progress and performance.

The ASC structure (Figure 3) reflects the senior management team it reports to with representation from manufacturing, purchasing, IT, and engineering. Practitioners from each manufacturing division represent that division to the team and the team to their division. Purchasing's place on the team ensures the opportunity for all other team members to be heard and minimizes the chance for surprises. IT's participation provides the opportunity to leverage IT as a resource and for IT to gain a better understanding of manufacturing's requirements. The team is led by the steering committee leader, who reports to senior management. The team members have a dual reporting responsibility to both the steering committee leader and their line management.

On an ongoing basis, the heart of the ASC are the three principal practitioners. They are differentiated by their specific focus. During strategy development, we saw the need for leadership in three specific areas. Automation Asset Utilization deals with using automation and best practices to drive manufacturing asset utilization. The Standard Platforms and Systems area deals with standard products, both hardware and software, based on international standards. The last area is the NovaSoft Manufacturing Suite, which is that set of supervisory software that Nova Chemicals selects to execute its business at the production management level.

Figure 3: The Critical Players

Nova Chemicals' Automation Steering Committee has members from manufacturing, purchasing, IT, and engineering. The steering committee leader reports to senior management.


This recommendation deals primarily with related engineering standards and regulatory compliance. It addresses the need for adequacy and consistency for automation project development and execution, loss prevention, management of change, network security, etc.

Automation Asset Lifecycle Management (AALM)

Just like any other asset, automation assets have a predictable series of phases they go through in a lifecycle. To keep that asset functioning and delivering value, a policy must be in place. In this case, the team set several benchmarks that mark the progress of an asset through its lifecycle:

  • Acquisition - A "field proven criteria" (in the market for six months with references) was adopted as a basis for considering an acquisition.
  • An adequate support infrastructure needs to be in place to consider an acquisition. If it isn't, the needed infrastructure also must be justified.
  • Repeated acquisition of an asset is contingent on performance.
  • The end of an asset's lifecycle is marked by reliability issues and/or the inability of the supplier to support the asset, as determined by Nova Chemicals.
  • As policy, if the requirement continues, the end of an asset's lifecycle triggers a Nova Chemicals process to replace it.

The AALM policy also states that critical or high-frequency purchases should be defined by a detailed purchase specification, and all other purchases should be based on a detailed functional specification.

Just Getting Started

Although less than a year into the process, Nova Chemicals now has a strategy to manage, plan, and execute projects and programs associated with its automation assets. Strategy success measurements focus on increasing plant on-stream time, improving automation project performance, effective resource and application leveraging, as well as automation benefit identification and reporting.

Nova Chemicals estimates the cost of working with ARC and using the ARC methodology represents less than 1% of the projected annual benefits.

So far, the process was applied to the selection of advanced process control software for the polymer area of the company, and a key supplier's contract was modified and ultimately renewed with the corporate automation strategy in mind. Currently, we are looking at our varied installed base of distributed control systems, considering which are most likely to become obsolete and which can likely be migrated to new technology.

Moreover, we feel we know where and how to invest the company's money in automation so our infrastructure will be ready to contribute when the inevitable pickup in the chemical industry does happen.

Peter Dolinsek is leader of process automation at Nova Chemicals; he can be contacted at [email protected]. Dave Woll is vice president of consulting at ARC Advisory Group; he can be reached at [email protected].

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