By now, you must have heard the term ‘Industry 4.0’ somewhere in your business circles either in manufacturing trade-shows or trade-magazines. It’s also interesting to note that most of the business fraternity never really spent any time in coining the term Industry 3.0. The house is still divided whether Industry 3.0 is already over or not.
For the uninitiated, Industry 4.0 typically known as the Fourth Industrial Revolution (hence the 4.0) is an advanced amalgamation of innovative processes and developments that integrate new technologies and fit them in with the industry standards that manufacturing sector follows to serve the dynamically moving markets. Terms like AI (Artificial Intelligence), Machine Learning, Additive Manufacturing, Big Data Analytics, AR (Augmented Reality), Cloud and Industrial Robots all form the elements of Industry 4.0.
Information technology has been extensively used in the petrochemical industry for a long time now. The sensors, computational modeling, process designing, and control systems have long been the backbone of petrochemical industry. Still, Industry 4.0 is an incredible opportunity for the oil & gas industry. The benefits are far-reaching for natural gas and petrochemicals sectors including the manufacturers, employees and customers. The size and scope of oil & gas industry is huge. In this article, we look at the impact of Industry 4.0 on petrochemicals business.
We break-down the petrochemical industry into three segments: Manufacturing, Storage & Logistics and End- Consumers. The petrochemical manufacturing process is complex and different from manufacturing processes of other industries. There’s a high level of interconnectivity in operations and the risks involved are much higher than most other manufacturing industries. The industry is also under constant lens of regulators for its emissions and environmental impact.
At the broad level, Industry 4.0 involves disruption through
- Advanced analytics and data processing(Big Data and Analytics)
- Higher levels of collected data volume requiring extensive computing power and Low Power Wide Area (LPWA) networks for sensors
- Machine-Machine interactions (Internet of Things, AI, Machine Learning)
The core pivot around which the Industry 4.0 phenomenon revolves is data and its efficient use and management. The idea of collecting data and translating it into decision making is not new but its applications under Industry 4.0 are revolutionary.
We can see two immediate areas for Industry 4.0 in petrochemicals, the first is to sustain existing businesses and improve efficiencies in decision making through data and second is to create new business streams for future growth.
In our opinion, the capital-intensive nature of the petrochemical industry would lead to adoption of Industry 4.0 in sustaining existing business in the short-term. This is the easier of the two options as it would ensure that the legacy systems can be augmented with new technologies. Also, this would serve as a testing ground for the measuring the efficacy of Industry 4.0 systems in petrochemical business. However, radically new business opportunities would require some level of trust and comfort before becoming mainstream in petrochemicals. This long-term approach for new growth opportunities would require careful planning of the revenue streams to serve as stand-alone business models for petrochemical companies.
Let’s look at sustaining and improving existing business value chain in petrochemicals with Industry 4.0:
When we say manufacturing, we include the raw material & feed-stock as part of the manufacturing process. Oil prices have been the driver of the feed-stock cost for the petrochemical industry. While many things go into the composition of oil prices, the cost is driven by the exploration & production activities. Big Data can help companies lower down the extraction cost by analyzing geological data and providing meaningful insights on the gas-field and oil-well operations.
The physical to digital data transition can be aided through IoT (Internet of Things) sensors that can collect data from gas fields and oil-wells. These sensors provide data which can be analyzed through Advanced Analytics and could help companies lower down the extraction cost by its analysis.
In certain petrochemical manufacturing operations that involve some degree of risk, robots can replace humans and carry out the functions. Although, petrochemical operations are mostly controlled via software packages and control panels but still certain activities like pipeline inspection and preventive maintenance require human intervention. Extruder sensors can assist in real-time monitoring and the output data can be used to create a shutdown-prediction models. This can provide substantial savings in downtime and operational expenditure for petrochemical companies.
- Storage and Logistics
Smart Warehouses have been the talk of town in e-commerce with the state-of the art Amazon and Alibaba warehousing systems involving robots. Research suggests that 70% of the workflow in the warehouse can be automated through IoT. Our analysis suggests that process automation is going to take the center-stage by the combination of robots and cognitive technologies like AI and Machine Learning. The repeatability of warehouse operations in terms of movements can be programmed and automated.
In the petrochemical warehouse of the future, customer orders would be received digitally after which the system confirms its availability and traces its location and shortest path. The tracking and measurement of inventory can limit stock-outs and better optimize warehouse operations. Data-entry mistakes often lead to loss of precious time in tracking pallets but with IoT and sensors, human errors can be eliminated. The system also checks the various transportation options and schedules the delivery using its algorithm.
Most of petrochemical warehousing operations are not measured and analyzed. Whether the forklift operators are taking the optimum route to locate the stock or whether the stacking operation is the most efficient one, companies don’t have a definitive answer to it. Big-data analytics can turn real-time sensor data into useful route-optimization and inventory storage insights.
- End Consumers
Supply Chain visibility is the talking point in the petrochemical industry. In-transit visibility of finished goods from the manufacturer’s warehouse to the customer location is the biggest advantage of the Industry 4.0. A simple RFID chip can be placed in the trucks to provide information on the location using GPS technology.
FedEx recently introduced “Sense Aware” technology that lets customer monitor shipments on real time basis. Using this piece of technology, the customer receives periodic alerts and notifications for their shipments. They can monitor temperature, humidity, pressure, light exposure, route and time-based alerts etc. for every shipment. The customer can have end to end visibility on their orders and manage inventory using Industry 4.0 more efficiently.
Long-term Future outlook
In the long-term, petrochemical companies would be moving from maintaining and sustaining solutions to radically new growth products. This would reflect in the way consumers and processors would interact with petrochemical companies. Using Industry 4.0, companies would be able to provide personalized experiences and attention to the requirements of their consumers and co-work with them to improve their situations.
The roadmap for Industry 4.0 requires a deep understanding of the entire organization including its management priorities, capabilities, culture and experience curve in digital technologies.
ValuEndow Consulting would be your trusted partner for embracing industry 4.0 in your petrochemical business operations.