LNS Research President and Principal Analyst, Matthew Littlefield recap and highlights key takeaways from the Siemens' Innovation Day.
Can you imagine the potential cost savings and operational efficiency to be gained by having a "smart" reel in a 7x24 operation like pulp & paper? In this post, I'll discuss how the the Industrial Internet of Things (IIoT) and Smart Connected Assets are poised to make this a reality.
I've spoken recently about why you should invest in Smart Connected Assets broadly, and asset performance management (APM) in both the oil & gas and mining industries more specifically, but this week’s post is about the pulp & paper and forest product industry, a sector I've known as intimately as any.
I spent a quarter of my working career directly in the forest product and pulp & paper industry, and have worked with both Weyerhaeuser and Scott Paper Company. I’ve also spent several years on the vendor side serving the industry, and have seen it weather some very tight economic periods. Science and technology are some of the tools the industry has used to survive in one that is perennially plagued by extremely tight margins, a variable raw material supply chain, the need to run many operations 7x24, and highly capital intensive. This post looks at how the industry can leverage IIoT in general and Smart Connected Assets specifically, to continue to grow despite myriad pressures.
Forest Products and Pulp & Paper Industry Challenges
Forest product and pulp & paper, while often operating elements of a single company, are very different from each other in their very nature with forest products being a discrete manufacturing operation and a supplier to the pulp side of the industry, and pulp & paper being more of a batch or continuous process manufacturing business. They both are asset intensive, albeit on different scales, but have different operating models. Pulp & paper is typically a 7x24 continuous process operation with costly downtime, high volumes, and subject to global commodity pricing. Forest products is typically more shift work with maintenance downtime available and economics tied more to regional construction and building cycles. Both industries operate on narrow margins and cost of production is a key contributor to profitability. One way to gain share in the sector is to provide value-added services that competitors cannot offer.
Taking Smart Connected Assets to a Whole New Level
At LNS Research we have spent a lot of time talking about how Smart Connected Assets enable much higher levels of reliability and hence quality, safety, environmental performance, energy efficiency, and productivity by leveraging APM. In the paper industry Smart Connected Assets takes on a whole new meaning. With IIoT technology you can have a “smart” reel of paper talk to the slitter/winder bringing trim optimization to a whole new level. By knowing the exact profile of the paper on the reel, the sheeting or roll winding operations can produce rolls or pallets targeted to specific buyers based on a specific profile. Likewise, if the data can be subdivided to the roll/unit level and then provided with that unit to the customer it makes further processing that much more efficient and provides a value-add that differentiates the supplier in a highly commoditized market.
With paper having so many quality variables (basis weight, moisture, opacity, brightness, opacity, caliper, ash, etc.) being able to have the exact profile enables a printer to produce higher quality pieces or a packaging company to produce better containers. It not only provides differentiation, but the cost of claims drops to almost nothing in this environment as the supplier can invoice based on exactly the conformant material shipped instead of invoicing on bulk amounts and then refunding based on customer-discovered shortfalls.
Traditional Value Propositions Not Trivial
The traditional value propositions of Smart Connected Assets in the pulp & paper industry are not trivial either. Sheet breaks due to equipment performance issues or other quality problems that result from out-of-specification performance are an expensive cost in the industry as well. Smart Connected Assets can improve reliability, which drives quality and regulatory compliance on multiple fronts, all reducing the operational costs. With energy being a major cost factor in many paper production processes, followed by environmental compliance, APM enabled by the IIoT promises to deliver lower costs with higher yields. The IIoT has much to offer the industry, and as equipment replacement or modernization initiatives occur the pulp & paper side of the business should only invest in equipment that is IIoT ready.
Forest Products Companies Also Beneficiaries of the IIoT
It’s safe to say that the forest products side of the industry stands to gain significant cost advantages from the adoption of IIoT related technology. This applies whether we are talking about Smart Connected Assets related to the operation of the fiber harvesting side of the business improving safety and lowering maintenance costs, or the operation of conversion facilities like sawmills or panel plants. With poorly performing machinery, one of the greatest contributors to product quality variation andy safety exceptions in the solid wood side of the industry is the ability to operate closer to specification.
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