Can manufacturers digitalize to reduce energy costs and stay in business?
Forbes
Baltic edition
Soaring energy prices have put number of European manufacturers under a stress test. Faced with a brutal reality, the industry is forced to make some tough decisions - lay off workers, cut production hours or even shut their doors. Is there a cure that could help companies to stay afloat by reducing their costs? Robbert Brand, Founder of Innovation and Technology company AIVHY and Stanley Muller, Commercial director explain how smart sensors and making use of already existing data could save companies a lot of resources and even generate additional revenue.
Drastic measures or automation
Stanley Muller, Commercial director of AIVHY
With up to 75% decline of competitiveness, some of the manufacturers take radical measures to stay afloat, due to rising costs, especially natural gas and electricity price spike. However, AIVHY has experienced that incremental innovation steps like introducing automation and digitalization by installing IIoT devices (industrial internet of things) and sensors on existing machines could help companies understand better what their biggest energy consumers are and thus make better decisions.
Today basically all industries are feeling the heat of the inflation and the spike of energy prices. EU food and drink industry recently announced that they have started to scale back their operations during peak energy consumption, warning that some could soon stop production altogether. Especially those who are in more energy – intensive sectors like bakery, vegetable processing and dairy.
Even before the rapid jump of energy prices, industries like steel and downstream sectors (where most of the companies are SME’s and employ less than 50 people) were aging and stagnating due to different factors. These are typically slower innovating or noninnovating companies which are heavy consumers of energy and lag behind with green deal requirements and carbon footprint reduction. However, soaring energy prices affect all, including industry giants. Just imagine how tough it is to stay competitive in the global arena if Europe is paying seven times as much for gas as the US! Hence, the question – will companies move forward with digitalization and automation to secure their business or risk stepping out of the game?
Why to automate and is it really that costly?
Robbert Brand, Founder of AIVHY
Today, connectivity is driving a revolutionary digital transformation, which in turn is boosting business results. Hence, McKinsey forecasts that by 2025, nearly 52 billion devices worldwide will be connected (up from around 43 billion in 2020).
Why should businesses choose to automate? Based on the survey done by Mckinsey, the top reason companies tend to automate, is concern about the current effectiveness of organizations’ business processes. The second most common reason is to improve customer experience. Nevertheless, companies which refuse to innovate often mention insufficient resources as main reason. Mainly due to the misconception of it being super costly.
At AIVHY, we have seen significant impact on companies’ efficiency even after small, non costly innovation steps. For example, IIoT devices installed on the existing equipment can be really eye opening for company owners. All of a sudden, they can see a full picture of their business processes and manufacturing, or warehouse activities - how efficient their manufacturing runs in real-time, where the bottlenecks are, how much energy equipment consumes (and wastes) and if the whole capacity of the machines is utilized?
Digitalization can be one of the fundamental elements of efficiency in any industry, not only manufacturing. For example, IIoT sensors installed in the retail sector allow to efficiently manage inventory, improve customer experience, boost warehouse operations and better coordinate supply chains. In healthcare, connected devices and sensors make it possible to monitor in real-time medical equipment (such as wheelchairs and defibrillators) and also move towards paperless services.
All that is possible due to interconnectivity of machines, processes and people, the result of which can be read on one screen making life much easier for those who run the business. As said before, IIoT devices can be installed on your existing state-of-the-art and also legacy equipment, and is vendor independent (meaning it does not tie you to a particular brand/producer).
Thus, with small investments, companies can have not only insight in a real time, enabling faster and more precise decision-making. IIoT can also cyber securely ensure many other business processes, like reducing energy cost, waste, error, downtime, and human hours and even increase the revenue. And most important – allow companies to remain in business by being more efficient in those turbulent times.