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The Economic Benefits of a Truly Connected Enterprise

March 2, 2015
Manufacturers face countless decisions every day in which the line from action to improved productivity is often hard to see. Building a connected enterprise is different: It brings clarity to choices that previously seemed ill-defined: Revamp production workflows? Proceed with a game-changing new product? Enter an emerging market? Trial a new supplier? The return on investment from creating a connected enterprise — using the validated Rockwell Automation Connected Enterprise Maturity Model — is ongoing. News release brought to you by Rockwell Automation. Visit The Connected Enterprise for more.

By: Beth Parkinson, market development director, Rockwell Automation

Manufacturers face countless decisions every day in which the line from action to improved productivity is often hard to see. Building a connected enterprise is different: It brings clarity to choices that previously seemed ill-defined: Revamp production workflows? Proceed with a game-changing new product? Enter an emerging market? Trial a new supplier?

creating a connected enterprise — using the validated Rockwell Automation Connected Enterprise Maturity Model — is ongoing. As your organization develops through five stages of maturity, the economic benefits keep increasing:

  1. Assessment — This stage of the Connected Enterprise Maturity Model determines howready a company is to change its processes and architecture to leverage accurate, real-time information. This work establishes a strategy to securely integrate technologies, processes, and people. From a financial perspective, it quickly surfaces infrastructure problems, such as high-risk security holes or the inability to monitor critical performance indicators (e.g., energy wastes, quality issues, machine downtime). A single minute of downtime in the auto industry, for example, can cost tens of thousands of dollars. What does downtime cost your company annually?
  1. Secure and upgraded network and controls — You now build and improve your operations-technology/information-technology (OT/IT) backbone. Can it be costly to upgrade controls, sensors, and infrastructure? Yes, but … the improved business processes and workflows that result will deliver vast more cost savings. For example, scrap and rework costs an average of 5.4 percent of plant sales among all manufacturers, but among the upper quartile of these firms, it’s only 1 percent.[i] Do the math for your company.
  1. Defined and organized working data capital (WDC) — Your organization identifies how to harness and leverage its new data in Stage 3 by “contextualizing” the data within a matrix of new workflows, schedules, and responsibilities. The impact can be huge. Improved access to the right information allows executives to make dramatic workflow changes — line changes, production scheduling, employee staffing — that are long overdue, enjoying economic benefits in the form of lower energy costs, longer equipment life, lower maintenance costs, and higher productivity. For example, results tallied for the first 200 Energy Savings Assessments conducted in 2006 by the DOE showed opportunities to save a total of about 52 trillion Btu of natural gas per year, representing nearly $485 million in potential annual energy cost savings.[ii]
  1. Analytics: At an operational level, analytics help to pinpoint the greatest needs for real-time information (e.g., persistent problems); to identify the authorized recipients who can act on information to address issues as they arise; and to establish the standardized practices and protocols that help these individuals make the right decisions when action is needed. At the senior executive level, analytics help executives to evaluate and optimize their operations and achieve significant long-term savings via capital-avoidance. At Rockwell Automation, for example, approximately 30 percent savings annually in capital avoidance has been realized alone due to improved capacity utilization and scheduling across our plant network.
  1. Collaboration: With internal equipment and networks communicating with each other, the Rockwell Automation Connected Enterprise Maturity Model looks to the outside world. It anticipates activities across the organization and throughout the supply chain — market trends, political events, even weather patterns — to minimize losses from negative events, leverage new opportunities, and coordinate activities from furthest suppliers to end customers. For example, speed-to-market with a new product often comes down to how rapidly suppliers can deliver new components, materials, ingredients, or tooling. Enabling all supply-chain players to see the opportunity can cut months or more from a product-launch schedule. Oak Stone Partners estimates that a product delay can cost a company as much as 35 percent of the product’s net present value.[iii]

Establishing a connected enterprise offers a range of improvements and cost savings — production, network security, asset management, supply-chain collaboration — that expand over time. And since the effort pays for itself, this should be the easiest decision of your career. Are you ready to make it?

[i] MPI Manufacturing Study, The MPI Group, 2012.

[ii] U.S. Department of Energy, “Why Your Plant Should Be Energy Efficient,” Reliable Plant.

[iii] “What Are New Product Launches Costing You,” Gold fire Blog, IHS, June 17, 2012.

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