Operations Management and the Pursuit of Profitability: Synchronizing Goals

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For a moment, put yourself in the position of a lead control room operator. (Maybe that’s exactly what you are, which makes the exercise even better.) Answer these questions: What is the primary objective of this company? Does the way you’re running the unit or plant reflect that objective?

Here are some typical operational objectives:

  • Maximize production output

  • Optimize energy consumption

  • Deliver specific product quality or attributes

  • Minimize pollutants, air and/or water

  • Some combination of the above, or other variations.

It might be that you’re happy simply keeping things on an even keel, running as best you can with minimal interruptions. The reason for asking these questions isn’t so much about what’s actually happening, it’s more about communication from your management. Your plant has undoubtedly been assigned some KPIs.

Plant output is universal, but how it’s characterized can vary. Sometimes it calls for maximizing output if you’re in a good market, or it may call for a specific level if your unit is making an intermediate for another unit. The ultimate point is whether you have a clear connection to the C-level managers based on how your KPIs relate to the desired overall company performance.

All about profitability

All companies want to be profitable because making money over the long term is critical to survival. In fact, most companies are profit-driven operations (PDOs), and profitability is, first and foremost, the most important objective. That being the case, how does your activity affect profitability? Is your plant or unit optimized to deliver maximum profitability? Are there things you should be doing differently to maximize profitability?

In many facilities, the answers to those questions would be, “I don’t know.” There are some KPIs, but they may not be aligned in any visible way with larger corporate goals. Profitability can depend on different things. In some cases, it might be brute volume. In other cases, a higher grade of product commands a premium price. It might be more critical to optimize energy use than shooting for a specific volume. To make matters worse, the market situation may change next week, calling for a new optimization strategy.

Such information may not get to the operators until it’s too late. The performance report and review meeting could be titled: “Here’s What We Should Have Been Doing Last Month.” Situations like this continue because the operating areas of the plant (quality, energy management, environmental, reliability) are in their own silos and focused on their individual KPIs.

Getting to profitability

The latest digital technologies—such as a digital twin, artificial intelligence (AI), deep statistical analysis, and others—solve these problems.  Working together, these technologies support:

  • Silo removal, supporting collaboration across the organization

  • Faster and better-informed decision making, supporting optimized operation

  • Lower dependence on individual operators, reducing the likelihood of human error.

Operations management becomes transformed in the process, and the plant truly becomes a PDO. By applying the right digital tools, process manufacturers can become an optimized, sustainable, and flexible operation. All plant personnel, from C-level to plant operators, understand corporate goals and have relevant, real-time KPIs that drive toward profitability, and operators understand the relationship between their KPIs and C-level KPIs.

All areas in the plant can maximize their performance, fulfilling a common goal of profitability, thanks to the digital technologies.

Yokogawa’s Operations Management Suite is a comprehensive group of customer-centric solutions, with each benefitting from expertise developed through longstanding experience obtained through tens of thousands of automation projects. Any manufacturing plant, regardless of its maturity level, can adopt one or more of these solutions in a phased deployment.

Yokogawa’s Operations Management Suite ties together all areas of the company to fulfill common goals.

Yokogawa’s Operations Management Suite ties together all areas of the company to fulfill common goals.

A transformed plant

When a plant has undergone this transformation, what does it look like?

Traditional KPIs are replaced by SPIs (synaptic performance indicators) that indicate the ideal, optimized operating conditions—aligned with corporate goals in real time. Every operational area of the plant or unit knows exactly what it should be doing to achieve those goals by working together in a tightly coordinated manner. If goals shift, thanks to specific market opportunities or changing conditions, these can be transmitted and implemented quickly to maximize benefit.

Big-data and statistical analysis using AI can determine the optimum operating conditions to achieve any specific goal. Day-to-day operation becomes more automated and less dependent on human intervention. Procedures, such as startups or grade changes, can be automated to make them quicker and safer. These improvements boost profitability and provide quick payback.

Yokogawa’s Operations Management Suite delivers on these promises by supporting data-driven, risk-based decision making. When deployed, it builds toward eventual true autonomous operations using optimized strategies and the best mix of digital technologies.

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