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Disruption of value chain optimization

April 1, 2020 Duncan Micklem, Executive Vice President Marketing

Value chain optimization involves the agile and efficient alignment of supply of premium products as closely as possible to market demand with sufficient resilience or operational flexibility to readily adjust production and exploit market opportunities. Under normal circumstances, the main goal of value chain optimization is enhanced return on capital employed, for which the three levers are revenue maximization, at least cost, whilst being capital efficient. A distant secondary goal, albeit important, is a reinforced “license to operate”.

However, these aren’t normal circumstances. Far from normal; totally unprecedented. The goal is an existential one; to “flatten the curve” of COVID-19 infection, give health services time to cope and protect our older and higher risk employees and members of society. In many cases, it is our older and higher risk employees who have key skills, knowledge and decades of experience for enabling and empowering the younger generation. The goal of society now is to save lives and restore its communities.

The healthcare community needs more doctors, beds, ventilators, sanitizer, cleaning agents, disposable suits and other personal protective equipment. The way in which the Energy and Chemical industry is pulling together to answer this call is admirable. Value chain manufacturing is pivoting from optimizing return on capital employed, to optimizing production to address industry’s license to operate. After all, a large segment of the community has, or will spend, approximately one third of their lives serving these companies. It’s now their turn to respond. Organizations with resources and capabilities to possibly help in some way, are re-purposing their activities to support communities in need. Chemical companies have changed their manufacturing recipes to ramp up volumes of alcohol-based sanitizer. Electronics companies, who normally make televisions, DVD players and other plastic-based consumer goods, are re-purposing their activities to make more masks and ventilators. Doctors and nurses are coming out of retirement to augment the system. Even armies around the world are re-purposing their “value chains” to go out and wage war against the invisible enemy, through the building of hospitals at speed.

If ever Industry 4.0 technologies needed a catalyst for adoption, COVID-19 has delivered. Within days, the UK’s NHS had built and released a mobile app that pre-checked volunteers could be called on to support. For example, the CEO of KBC-A Yokogawa Company, Andy Howell, has volunteered and will be using his motorcycle to courier much needed medicine and blood between hospitals and isolated patients when he can. The 3D printing community is pulling together in a “wartime” manner to build ventilators at scale to help those in need. Those sheltering at home out of prevention or self-quarantining are relying on online purchasing at a scale never seen before. As for the digital collaboration and connectivity tools we now have on our phones; I am eternally grateful. My parents are over 65, at risk, and living under severe lock-down in South Africa. Being able to reliably see their faces and hear their voices is at least something. More important than my own personal needs, is the way IT connectivity has evolved to enhance primary care system capacity through telemedicine, with doctor consultation through video-conferencing tools.

Technology is infuriating when it doesn’t work. But technology has come so far and become so central to our lives; I am so grateful for it. The technology in my hands whilst I’m sheltering at home is what’s most apparent to me; my phone, my Wi-Fi, my PC. Although “behind the scenes”, I’m also extremely grateful for all the leading-edge measurement, control, information and optimization solutions keeping our power plants, oil refineries, petrochemical and chemical plants running. Without them the lights wouldn’t be on, there’d be no connectivity and there wouldn’t be any semblance of normality.

Value chain optimization and factories of the future need to be smart and connected, but still with a human touch. To all the instrumentation, control, optimization and IT engineers out there working through your shifts and keeping society’s basic needs met; a big heart-felt thank you.

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