Enabling data-driven decisions to improve operational excellence
The Operational Excellence digital thread by Siemens provides a fully connected digital plant with industry-leading responsive production capabilities and innovation opportunities
The Energy and Utilities (E&U) industry will completely re-invent itself in the coming decades, with Owner-Operators and Equipment Manufacturers facing disruption from all sides.
But that development comes at a time when the race to net zero is gathering momentum, with businesses and governments pledging to reduce carbon emissions by 2050. At the same time, high inflation and market volatility have pushed the world into a global energy crisis. And, with global energy demand growing at 2% per year, companies must innovate faster, maximising production, whilst simultaneously reducing cost and emissions, if they are to succeed and remain competitive.
That’s why more Energy & Utility companies have been accelerating their digital transformation programs in the last few years. But, whilst progress has been made, new and ever-more ambitious targets will continue to be set, raising the bar across the industry, with significant hurdles still to overcome in the journey towards operational excellence.
In addition, industry leaders within E&U no longer have the luxury of time to determine the best course of action in response to changes in corporate strategy, the business cycle or in underlying commodity prices.
That’s why, to stay relevant, Energy & Utility companies will need to:
- Innovate: Dramatically improve operational performance to lower costs and maximise production by bringing in new and highly differentiated products to market, faster
- Improve sustainability: Be on a path to decarbonisation and executing on net zero by complying with ever-increasing environmental regulations and public scrutiny
- Accelerate digital transformation: Step-up investments in IT and OT to deliver new levels of agility and resilience, and become data driven enterprises, powered by Industry 4.0 technologies
Advanced analytics techniques like predictive modelling, artificial intelligence and machine learning, can help analyse large data sets to uncover trends, predict demand and make better decisions. Likewise, having an integrated and connected view of a plant’s production assets is also of vital importance. The problem, for many companies, is that analysing all of this data can be an extremely complex affair, and one that’s often constrained by outdated business processes and legacy systems.
In essence, the most successful E&U businesses that own and operate complex facilities will be the ones that can continue to leverage the digitalisation of their processes, including cloud-based solutions, to support the operational excellence of their physical assets.
To provide some context, the E&U industry is notoriously cyclical and it has survived many shocks in the past that put the business under pressure. In most cases, the industry learned that cost-cutting is only a partial solution. Digital technologies were often adopted to improve processes where a high level of return could be realised quickly.
In 2020, McKinsey reported that in the energy industry, “We have already seen digital facilitate 2 to 10 percent improvements in production and yield and 10 to 30 percent improvements in cost.” They concluded that the industry has partially digitalised, but there is still a long way to go. Put another way: there is a significant competitive upside within the grasp of E&U industry innovators.
The pathway for companies to fully benefit from that competitive upside is to harness the power of data to continuously optimise systems and processes in real-time. At Siemens, our Operational Excellence digital thread does exactly that: it provides a fully connected digital plant with more responsive production capabilities and innovation opportunities than other competitive tools.
It does so by leveraging a common digital thread spanning engineering through operations positioning energy businesses to continuously achieve their operational excellence objectives in real-time. Its three core areas of capability are:
- Operational Analytics: Connects your plant’s production assets via an open, industrial IoT platform, with the ability to develop powerful industrial applications that turn this data into actionable insight, alerting you to potential operational issues before they happen, whilst helping you to optimize operations and sustainability.
- Integrated Production Operations: Integrates your core production systems, whilst enabling you to take advantage of the latest advances in process automation to lower costs and deliver continuous improvement opportunities
- Executable Digital Twin: Connects real-time performance data with accurate, well-orchestrated plant information and simulation tools, enabling you to troubleshoot critical systems, model new concepts, and diagnose issues that might lead to instability or plant outages.
The bottom line is that a fully connected digital plant, utilising data-driven insights from operational performance, can deliver significant opportunities for continuous improvement. In fact, according to an Accenture study, energy leaders that reinvent and focus on an operational excellence approach can expect to achieve 2.3 times margin growth, 3 times Environmental, Social, and Governance (ESG) improvements, and 1.8 times revenue growth on average.
In summary, owner-operators in the global E&U business have a historic opportunity to grow their business and market share in the coming decades. Society’s demand for energy will continue to grow, yet how that energy will be produced and supplied will change. While doing so, supply must be reliable and consistent. Businesses that will emerge as the leader in tomorrow’s energy production and supply business will be those who can conquer that complexity and turn it into a competitive advantage. By combining the power of digitalisation with production assets to deliver operational excellence, energy can be produced more consistently, reliably and at a lower cost.
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