Benefits to OEMs
It’s interesting looking at S88 benefits from an OEM perspective. There are many overlapping benefits with end users, but the level of importance may vary from benefit to benefit. For solution providers, including OEMs, systems integrators (SIs), and other vendors, let’s focus on market share, customer satisfaction, and revenue.
First of all, get out of that rut
Please forgive us while we be a bit critical. We realize there are many innovative and progressive OEMs and other solution providers in industry, but our recent experience shows that most of you are stuck in a rut.
Putting it another way, despite technology available today, it is surprising that there are OEMs and SIs that continue to sell solutions
- with obsolete control systems and design methods
- that are uniquely designed for each customer
- follow outdated project and revenue strategies
These technology and delivery laggards are being hounded by their old methods and designs.
Okay, enough of being critical. For those of you that we’re talking about (and you know who you are), we’re going to try to convince you to stop engineering the way you always have.
Engineering and automation can be your competitive edge. Anyone can sell a piece of equipment that makes widgets or packages something, or sell services to retrofit a control system. The engineering and automation tools that you use could allow you to deliver solutions quicker or cheaper or provide more flexibility in the final customer solution. Any of that will get you more business.
OEMs or SIs in demand are often limited by their own capacity to provide solutions. Here is how S88 can increase your capacity, either by allowing you to work on more projects simultaneously, or finishing projects quicker:
- First, replicating parts of existing equipment or process control to create another is much easier with the S88 approach. This will reduce both time and cost in getting solutions to customers. The benefits can be amplified, if you can create and maintain a library of modules (phases, equipment modules, control modules, HMI screens, etc.) that can be included in projects.
- Despite any standard solutions that you offer the market, customers always have specific needs. Often these specific needs translate to changes required by you before your equipment or solution is shipped. S88 enables those changes to occur must faster (and smother). This is because a modular S88 design will allow you to easily swap modules in and out to meet differing user requirements by individual customers. And if you design your modules to be highly configurable, there will be more configuration changes versus logic (procedural code) changes. Configuration changes are always much faster to make (with less risk for error) than logic changes.
- Finally, do not underestimate the power of common terminology and models in communicating with your customers. Getting everyone on the same page with terms and definitions is often a fundamental challenge when designing and constructing any new process. Once everyone is communicating using common terms, then the project can move faster and experience fewer setbacks because of misaligned interpretations.
Now, let’s talk about the realities of these benefits. First, to experience all of the gain requires you to have many reusable modules already completed. Creating a module (again phase, equipment module, control module, HMI screen, etc.) is not outrageously expensive, but it isn’t free either. If you want to create an entire library of modules during one project, that first project can be pretty expensive and long. So, you need to create a module development strategy that includes creating a library over several projects.
That all said, you can realize benefits even during your first project, as there can be intra-project replication. Plus, it’s easier to add items or remove items from scope when using a modular approach. (A customer changing requirements in the middle of a project? No way?!? This doesn't really happen, does it?)
Next, most companies can replicate from project-to-project, but let’s face it folks: how many of you have programmers that replicate by copying/pasting code or HMI screens from a previous project? To get the maximum benefit will require a “master” set of modules in a library from which all projects can pull. The module may be created initially by a single project and then placed in the library. Then, it’s about discipline to keep using that module intact and not modifying it for every subsequent project.
Customer satisfaction has a broad meaning, but let’s just say a satisfied customer feels very good about the value for the price paid for equipment or a solution. We’ll break this down into three areas:
- Quality of delivery and end product – This is all about unexpected problems, either before or after delivery. If the customer had specific user requirements that required changes from your standard solution, the S88 modular design approach helps minimize the risk that a change to one part of the process will affect another. And regardless if changes were made or not, you want to minimize startup problems and have a ramp-up to full production that’s as quick as possible. With S88, you’ll have a higher confidence that there are no lurking bugs to be found by the customer days, weeks, or months after delivery. It goes without saying that fewer bugs means happier customers.
- Meeting customer requirements – This seems fairly straightforward by acknowledging that all requirements can always be met given enough time and money. But your customers do not have bottomless wallets and all kinds of time to wait on your whiz-bang solution. So, the more requirements you can meet, the better. Plus, it’s not uncommon for a solution to be delivered, only to have the customer ask “uh, where’s feature x that I asked for?” Oops. S88 helps by providing a common set of terminology and models, so customer and vendor can speak the same language. S88 also helps by offering flexibility through replication.
- Cost (of course) – The more you can replicate, and also configure instead of writing code, the faster and cheaper you can deliver your equipment or solution. (How much of this saving you pass on to your customers is ultimately up to you.)
There is a tremendous upside to revenue growth using an S88 approach, but first, let’s talk about the realities of the investment needed:
- Training – Providing education to your engineers on S88 is one thing, getting them to design using an S88 modular approach is another. Training on S88 is available from ISA or the World Batch Forum (see our Beyond section). Learning the design techniques may require more time and energy, and could be best served through hiring independent consultants or partnering with your automation hardware/software supplier.
- Module development – We mentioned above the time and resources needed to develop modules for the first time. Again, don’t underestimate this effort.
- More resources needed on first few projects – This may be a bit redundant with the module development bullet above, but your testing and startup resources may need to be increased for the first few projects. Like trying anything new, the learning curve effect takes place. You’ll get smarter and faster about it, but the first few times there will be mistakes. You can compensate for these (and reduce risk of lower customer satisfaction) by planning to have an extra resource or two available.
Now that said, let’s talk about how your revenue strategy must change as well. First, your revenue-per-project will most certainly fall on the first few projects. This is caused by the higher investment needed to build your first set of modules and deliver your first set of modular solutions.
But more importantly, if your costing method focuses on engineering hours expended, then your revenue-per-project may fall permanently. (If you are spending less time designing and building due to replication, you have less hours to bill, right?)
To prevent this problem from occurring, you may need to change your costing (and bidding) process to one that is based on fixed-price. That way, you are balancing your internal costs with the profit you hope to achieve. Your price to the customer is then based on the value that your solution will provide. (And this should help you link more closely with customer satisfaction.) If you already use a fixed-price costing strategy, you may be just fine.
If you can absorb the investment and have a fixed-price costing strategy, here are the key reasons why your revenue will increase:
- You can finish more projects in a given year because projects are completed quicker and/or you can manage more projects simultaneously (your internal capacity has increased)
- Your more flexible and robust designs provide a competitive edge (you win more projects because of meeting customer requirements, delivering quicker, or simply having a more solid design)
- Your solutions have a lower defect risk (you achieve higher customer satisfaction that results in more repeat business or realize lower support costs incurred by you)
So, that’s our story (and we’re sticking to it). Don’t forget to read the next section on the human element, to learn more about people aspects of project challenges.