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Graham Holt
By
April 02, 2020

The Overlooked Cost of Low Valued Assets: Graham Holt, Chief Product Officer

As the Chief Product Officer, I frequently speak with our customers about their business needs and goals surrounding remote monitoring systems. The conversations I have often begin with a focus on the highest valued assets – the ones on which production hinges, and where performance improvement can result in better business outcomes, lower operating costs, and increased safety.

 

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People tend to gravitate towards the higher value assets – simply because they are critical to the core function of the business. And while improving their performance can have a big impact on the business, I’ve noticed a general trend: The more important the asset, the more challenging it is to make incremental improvements with meaningful impact.

That’s when I always bring up the lower-value assets. These “unsung heroes” – which can include water tanks, transfer pumps, generators, or other ancillary equipment – may not do the heavy lifting for the core business function, but without them, the business function would break.  I find that our customers often overlook the costs of maintenance associated with these hidden assets. These assets end up costing companies thousands of dollars a year. Usually, this is because companies still use manual processes to manage, maintain, and control them. The assets which are intended to support operations become a silent killer of efficiency.  

My next question in the conversation, then, becomes this: At what point do you begin to address these costs and deploy remote monitoring systems that can eliminate unnecessary site visits on supporting assets?

This is where the overlooked ROI lies, especially in times of economic uncertainty or industry downturn. I like to think about it this way: In times where business is not booming, industrial companies are going to have to find ways to make their employees do more with less. A lot of times, they end up just reducing operating staff in times of stress… only to end up paying employees overtime, increasing employee safety risk, and deteriorating working conditions and culture – which can have long term negative impacts. Instead of trying to run the same operations with a smaller workforce, what if they invested in remote asset management technology to get the data they need from supporting assets, without having to physically go to sites? This can save industrial businesses a tremendous amount of time and money, especially during periods of economic uncertainty.

 

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An example from one of our customers

We recently had a great opportunity to help a large US steel producer implement a remote monitoring systems on a steel plant in Indiana. Steel producers use natural gas as an important part of their process, and the meters which measure the flow of natural gas are part of the supporting infrastructure which powers the steel production. In this particular plant, the gas meters needed to be read weekly to provide usage and internal billing reports. Taking into account that the plant is several square miles in area and there is a 5-mph mandated speed limit, it takes a team of five people multiple hours per week to drive around and manually record meter readings. Then their manager transposes the readings to a spreadsheet and creates a report to send out to stakeholders.

Recording gas readings for internal billing does not directly impact the core business function of producing steel, but it’s an important part of the process. If due to global geopolitical or environmental forces the price of steel suddenly dropped, steel producers might have to implement layoffs to maintain a tenable balance sheet. What would happen to this process requiring significant man-effort to accomplish? Would the workers simply have to focus more on core functions, and stop reading the gas meters? Or perhaps check them less often? If they kept checking them weekly, they’d probably need to be paid overtime, which could minimize the cost savings that the layoffs were intended to achieve…  

There are bigger problems under the surface  

Assuming the steel producer didn’t want to pay overtime, they would have to start checking gas meters less often. But this comes with tremendous risk as well. Perhaps a gas leak goes undetected for many months (This happened to our customer). That's tens of thousands of dollars of gas pumped into the atmosphere, creating the trifecta of financial, safety, and environmental issues.  

Or consider a scenario where a gas valve was closed during a maintenance task, and not reopened (another thing that actually happened). That closed valve goes undetected for days or weeks and leads to failure in the building heating system. This then leads to frozen and burst pipes, which can lead to flooding and a total shutdown of production.  

Do you see how these “hidden” supporting assets can have such a big impact on a business if not managed well?  

How can these overlooked issues have been avoided?  

The impact of these failures can be eliminated very simply: by putting remote monitoring systems in place. In the event of the gas leak, the maintenance staff would have been notified - via a text message or some other real-time notification - of an increase in gas flow. Or in the event of the closed valve, they would see that the accumulated daily gas volume dropped significantly compared to yesterday. With remote monitoring systems, instead of routinely interrupting their core functions to constantly check for issues, their process is only interrupted when a problem exists.  

Fortunately, this large steel producer chose to use a remote monitoring system set up by WellAware. We helped them connect to their gas meters to begin monitoring flow rates, and our Launch Team developed an edge-algorithm to calculate daily volumes to assess where issues might occur. This system saved the steel producer over $100,000 in annual operating costs associated with manually monitoring the gas meters, in addition to the untold benefits of minimizing the risk of failure provided through real-time alerts. 

Old Technology Challenges:

These overlooked OPEX costs tend to not be top of mind. Due to the excessive costs of connecting these assets to legacy SCADA infrastructure, adopting a new approach to asset management has historically been a painstaking process – that’s not the case with our solutions here at WellAware.    

In the current time of financial stress that we are facing in the market today, unnecessary manual tasks and associated costs can be eliminated. At WellAware, our goal is to provide businesses with easy-to-adopt remote monitoring systems that are low cost and allow companies to get the asset data they need from any location. If you’re interested in learning more about our solutions here at WellAware, you can click here to request a demo.