Elements of the fabled “Factory of the Future”

“The Factory of the Future.”MichaelKanellos

It’s something we’ve been talking about since…well…the early 1880s. The FoF always seems around the corner because it’s a never-ending job. Manufacturing plants and equivalent facilities like oil refineries and power stations stand as remarkable achievements in engineering and process innovation, but they are also complex, multifaceted and can always be improved.

Today, relentless competition, new regulations, fluctuating commodity prices and new algorithms are forcing companies to look at new ways to streamline. So what will business leaders focus on?

Energy, of course. Energy can take up 30% of the cost of producing metals or running a water-treatment plant. Data centers—which can cover millions of square feet and rival the size of the Pentagon—spend more on energy than anything else (except employees). Renewables have become a high priority for many data centers because (1) it helps the company reputation and (2) it can turn what can be an unpredictable, variable cost for 30 years into a smooth, capitalized asset.

The US Department of Energy notes that industry, worldwide, consumes 54% of the world’s total delivered energy, or more than homes, office buildings and cars combined. Expect to see a big emphasis on the three Ss (solar, storage, software) in many places. Companies like Alcoa, which own their own power plants, have also successfully fine-tuned operations to sell power back to the grid at peak periods…a new, unexpected revenue stream. 

We’re also going to see an increasing change in ownership. Rather than buying equipment, equipment-makers will install systems, maintain and control them, then sell access to them as a service. Equipment-as-a-service creates some legal/title headaches, of course, but financially it makes quite a bit of sense for everyone. Plant owners don’t have to invest up front and equipment makers can enjoy a steady revenue stream.

The oil industry in many ways is a pioneer in this regard. Exploration companies and refiners have long relied on third parties like Kongsberg Marine. In the FoF, companies like Flowserve, which can trace its roots to the 1790s, have started integrating digital-monitoring services for better maintenance while startups like SenseOps are helping smaller equipment-makers reach more customers. Instead of selling equipment, a producer can build one system and lease time on it to many people in the same region.

Finally, as more systems get monitored and owned remotely, many employees (or rather the employees of equipment-providers) won’t need parking spaces. They will be working in control rooms somewhere else.

Michael Kanellos is a technology analyst and senior manager of corporate communications at OSIsoft