As a project manager for a system integration company, I am constantly quoting projects with customers. An example of a typical scenario for a large project would be receiving a bid package, having a walk-down meeting, asking questions, and then working on the proposal. The proposal is then submitted and I anxiously await the call to find out if we're in the running for the final decision. One of the people on that call (and many times the first time I meet this person), is the purchasing agent. Then comes that dreaded question, “How can we get your price down?”
The age-old war between purchasing and contractors. No matter how hard we work on proposals to be as competitive as possible, the price question always comes up and the battle rages on. We're now time-locked to get a project off the ground, but must begin the fight on rates, T&C’s, and other fine details. It often ends with both sides feeling defeated because the purchasing agent has the very important job of driving costs as low as possible to ensure the company remains profitable. The contracting company has the task of performing the work for a profit, otherwise they go out of business. What isn’t accounted for in this method, however, is the total cost. The battle starts at a point in time to drive one cost down rather than being involved in the entire project execution process to keep the total cost down. I believe the key is for purchasing to be involved in the entire project life cycle.
The first step is to vet potential contractors. This doesn’t mean you have an active bid package or project, it simply means purchasing needs to get out and start looking. In general, plant personnel know whether they will need integration help or not and what size projects they are expecting in the future. The purchasing agent can create criteria for the companies they want serving the plant and then find them. Then, as projects come up to bid, you know right away who is a valid bidder and who not to waste time/energy on. It's critical to know the difference between being qualified to bid and qualified to do. Think about company size, number of resources with the correct skillset, insurance requirements, etc. Getting calls by business developers for integration companies? Now they can be vetted right away. The earlier you get to know integrators, the better positioned you'll be at the bid table to ensure you have the right companies. This also prevents the usual mistake of just going with the lowest bidder. If they aren’t qualified, you can expect a huge cost impact as the design and implementation phases progress.
Next, purchasing agents need to know about projects before they are sent out for bid. One of the biggest factors that goes into every bid package from consultants is risk. There's an old adage in project management, do you want it fast, good, or cheap? If the scope is unclear or the schedule is not defined, it adds risk. The higher the risk, the higher the price. Remember, contractors are trying to run a profitable company as well and we must protect ourselves from the unknown. Purchasing should get ahead of this dilemma by ensuring the scope is very well defined and the schedule allows for proper execution. If you can’t determine this internally, contact one of your trusted providers to perform a FEED/FEL to establish this baseline scope and schedule. The upfront cost is worth a lot when considered against unexpected surprises on the back end of projects or higher prices during the bid process.
Lastly, understand the value the integrator is bringing to the table. It’s common practice for the first project that the industrial automation firm works on to have a lower price in order to get in the door with the client. But, the purchasing agent shouldn’t expect reduced pricing every time. Once the value of the industrial automation firm is realized, the commensurate price should be expected. No one expects to pay more than the services provided, but you shouldn’t expect to pay less for higher skills or more value. It’s understandable to ask for a discount from the industrial automation firm for taking the initial risk of working with them, but once they're a proven partner, a higher price needs to be acceptable to keep projects running on track.
It’s important for purchasing to get involved early with the industrial automation company. Before the project is bid, get to know the company, and understand if they are a good fit. When necessary, let the firm get involved in scope development, base design considerations, and developing the expected project schedule all the way from design to implementation and installation. Purchasing shouldn’t focus so much on the price at the bid table but instead should think more about the total project cost and how developing relationships will result in better lifetime costs for the company. With this approach, not only will you gain a valuable partner, but you will also reach the objectives of saving costs for your company.
As seen in Automation World, we would like to respond to the allegations of unpreparedness in the article - The IIoT Integrators Are Coming.
In particular, we would like to refute the statement that industrial control system integrators as a whole “are not particularly Industrial Internet of Things (IIoT)-savvy.” This may be true for other system integrators, but certainly is not true for Avid.
Our company has a dedicated team focused on Smart Manufacturing solutions that include smart connected products, cloud solutions, big data and machine learning. We are gearing up to fully support this industry as our customers demand the solutions. We have experts on staff, as well as partnerships that provide us with all of the capability necessary to deliver the most challenging IIoT applications today. We are consulting with top deep learning experts to leverage their knowledge of data mining and translate this to the industrial space. We have been in discussions with executive level resources at large globally-known providers of cloud-based and machine learning platforms to discuss how we can introduce smart control room technology to our customers and create a cognitive SCADA environment that will be a rich resource for our customer’s operational teams. Our vision is to be on the front lines of this technology, but let's face it, IIoT is still a nascent technology. Although we see lots of low hanging fruit, there still needs to be a demand for these applications. We believe the demand will grow as the industry looks for solutions to its problems and the only obvious solution will be an IIoT solution.
One of our biggest challenges is that unlike the commercial space where smart watches, smart phones, smart cars, smart appliances, smart electric outlets, smart light bulbs, and even smart forks exist, we in the industrial space don't have a plethora of smart instruments from which to choose. We're certain these smart instruments are in some R&D lab being created, but the most interesting ideas we've heard have come from small startups.
One such product, a smart horn, is a device connected to wireless Ethernet with a web-based configuration page, similar to commercial smart devices. It would also have an onboard OPC Client to point directly to a tag in the Programmable Logic Controller (PLC) or point to some other data source using MQTT. There is no need for hardwiring signals to and from the PLC. Also, there is potentially no need to program the PLC and no need for downtime to wire the output signal to the horn. It will only be necessary to mount, configure and go. This could be the same story for proximity switches, limit switches, temperature switches, transmitters, etc. If you remove the cost of engineering and construction to add new instrumentation, it becomes increasingly cost effective to provide visibility where there are currently holes in your SCADA monitoring.
We do have Ethernet VFDs, Ethernet Flowmeters and Hart devices that give us tremendous data and look somewhat similar to IIoT devices, but they don't learn and communicate to each other and make decisions. Decisions are all still made by the PLC, which definitely doesn't have any machine learning capabilities, and we are not yet close to having these devices encompass the four categories of Industrial IoT: Connectivity, Cloud, Big Data Analytics and Application Development.
Another point of contention in the article is the statement, “They [industrial control system integrators] don’t know networking and TCP/IP. So it is a big scary world that is coming in and they don’t see the benefit.” Industrial control system integrators have been installing private cloud solutions for more than a decade now. We design top-to-bottom networks reaching from the business systems to the plant floor, the only thing scary on our end is when non-automation companies attempt to come down into the manufacturing space.
The point here is that not all integrators are unprepared. We're certain other system integration companies, are planning to charge forward with their customers by continuing to provide top-notch automation systems, while also supplying the necessary IIoT solutions that will help to move our entire industry forward.
As seen in Automation World, relationships work best when both parties operate from a common understanding and shared goals. When this occurs between a client and integrator, it usually involves execution of a successful project that is on time and budget. But, this can be a challenge for a client who is accepting a bid from an integrator for the first time.
During my career, I’ve had the opportunity to be both a customer and provider. After approximately nine years as a provider, I went to work as an owner’s agent for a new facility located in Taiwan. One of my first duties was to facilitate the bid process for multiple vendors. To offer a sense of scale and complexity, consider that it was a greenfield facility and involved hardware and software for normal utilities automation, complex SCADA functions interfacing with many different OEM pieces of equipment, batch sequencing, and interfaces with a laboratory information system and SAP. Through this process, I developed a greater appreciation for the client perspective. With that in mind, I offer these guidelines for how to make the bid process go more smoothly:
1. Ask questions - Writing requirements for the bid can be challenging. A good client should attempt to convey all of the information in the bid requirements, but sometimes a topic may be either intentionally vague or mistakenly omitted in error. As a client, you might decide to leave an area open for ‘best in class’ solutions or to seek out superior knowledge. No matter the reason, the integrator should ask clear questions during the bid process to demonstrate an effort to understand your needs. It also provides an opportunity for the integrator to impress you with superior knowledge and creative thinking.
2. Pay attention to specific selections - If you stipulate a specific selection for an item or requirement, the bidder shouldn’t substitute or ignore the requirement without discussing it with you first. Many time, you may specify a brand and model for a component. While the integrator might not agree with your selection and they would prefer to propose an alternative - you might have very valid reasons for that specific selection. It may not be the perfect solution for this project, but it could already be a standard across the entire facility. This also provides another opportunity for the integrator to demonstrate attention to detail regarding the requirements.
3. Cut the fluff - While integrators typically don’t do this, when you receive a proposal that is 90% glossies and marketing material, it is just frustrating. If anything, it seriously dilutes the integrator’s differentiating value. If it is difficult for you to wade through documents to gather all of the facts, you might decide to just ignore the bid all together. Since you are typically receiving three or four proposals, the more reading you have to do, will lower your chances of success for any potential integrator.
4. Relevant references – During the bid process, you normally require relevant job references. Even though most don’t look exactly like the job out for bid, it provides an opportunity for you to get a better feel for capabilities as well as jobs that overlap in terms of required skills. If you ask for references that the bidder doesn’t have, it is better for them to omit references, as opposed to providing something irrelevant and risking the chance of demonstrating a lack of understanding of your bid request.
5. Big Files – Most IT departments put caps on file sizes and employee mail. If the integrator has large files, it is better for them to use a secure professional file sharing service such as ShareFile or WatchDox. You will likely regard files from a personal DropBox or ad-hoc file sharing service as unprofessional. The integrator’s proposal likely contains sensitive information, so a secure site is imperative.
6. Be On Time – There is no better way for a bidder to lose the chance to win the job than by being late. When you are bidding out a project, you are likely too busy to do it yourself. If an integrator can’t make a meeting or a teleconference, they need to let you know as far in advance as possible.
Everyone understands that things come up, but if you receive a note five minutes before a call, that is unacceptable. Most importantly, they need to submit the bid by the due date. Allowing one vendor to submit their bid later can cause serious issues with scheduling.
I was surprised by how many vendors violated these guidelines during the bid process. Your vendors need to remember that this could be the beginning of a long term relationship with your company. They should keep in mind that even if this bid isn’t successful, their first class presentation might ensure inclusion in your future bid requests.
- Andy R.
As manufacturers all over the world race to compete in a dynamic and global market, process improvement, waste reduction, and safety all become more and more pivotal within organizations in every industry. More and more frequently, it has become necessary for all types of manufacturers to address outdated technologies and processes with some regularity. System Integrators play an integral role in helping to address these concerns and in offering cutting edge, sustainable solutions. Recently, we took on the challenge of addressing some inefficiencies that were creating work stoppages, waste, and a level of unpredictability for a crimping operation at a cosmetic manufacturer's production facility.
The customer was finding that their Servo control system was having some issues with reliability, creating both unnecessary downtime along with quality issues. We were approached about evaluating what was causing these issues and making the necessary changes to correct the problem. It was found that some of the equipment in use was either outdated or insufficient for what the customer was trying to accomplish. Communications from the machine used in the process were identified as the main culprit for these issues.
Upon investigation, it was found that Ethernet cables being passed through a slip ring could be attributed for most of the communication issues from the machine. We quickly went to work, replacing all the electrical components including a fixed panel subplate, turret PLC, twelve servo drives and motors, as well as an HMI PC onsite and brought two production lines back up with minimal downtime. Our ability to address the issues quickly and come up with effective solutions in order to minimize loss of production between the two lines affected left a lasting impression on the customer.
It's important to understand the utilization of automation can lead to long term, sustained production by addressing key parts and processes that need to be changed or replaced on a production line or facility rather than reinventing the wheel. Think of it along the lines of an automobile: it isn't necessarily time to purchase a vehicle when the tires are bald or the brake pads are worn. What we can do is offer stop gap solutions that allow the customer to make the necessary changes while still maintaining a production schedule.
Forging a long-term partnership with a system integrator, beyond the immediate scope of work, keeps complex control systems functioning at peak performance.
The time has come for an upgrade, greenfield project, expansion or additional engineering support for your organization. What are you looking for when you hire a system integrator? Does an ongoing trusted relationship factor into your process? Or do you hire strictly for the job at hand? If you ignore the relationship factor, you may be missing out on optimal performance.
To illustrate this point, consider the world of medicine. The heart is obviously a critical organ not only to our daily survival, but also to our quality of life. When the heart is not performing to its designed optimal performance, the patient turns to an expert in the field of cardiology to fix the problem. Let's say that problem is a blockage that needs to be removed. Sure there is a scope of work that needs to be done, but typically to return someone to optimal health there is much more involved. The patient and the doctor form a relationship that is ongoing and are partnered together to achieve the best outcome.
"The interconnection of control systems with the processes they control is very complex and its performance can be affected by seen and unseen variables."
Beyond the immediate scope of work on clearing the blockage, there are also diagnostic tests to see how the heart is functioning; there is counseling on diet and exercise that should be followed; and prescriptions for medication that will assist the heart to function properly. If there were no ongoing relationship and only the blockage cleared, the likelihood of the best possible outcome would be in doubt. More than likely, the patient will end up back on the operating table.
Control systems are the heart of your processes. They keep the equipment operating in rhythm to produce the end product. Yet, the typical course of action from many integrators when these systems require attention involves some limited scope of work with little to no ongoing relationship. The principle of how the heart works is simple, but how the heart ties into your facility is very complex and can vary from day to day depending on operations and how other related systems are functioning.
The interconnection of control systems with the processes they control is very complex and its performance can be affected by seen and unseen variables. Just as a doctor who gets to know her patient's history, tendencies and daily routine through spending time together can better treat the patient's condition, so can the integrator better serve the client through an ongoing relationship. This allows the integrator to truly learn their client's needs-needs that even the client at times may not be aware of including:
We believe in building relationships through a process called OBE (Outcomes-Based Engineering). Our goal with each project is to help uncover hidden opportunities and establish ongoing partnerships. This allows us to not only cover the immediate need in the scope of work, but to also help our clients understand how to most effectively leverage their control system for the best performance possible. Don't trust the "heart" of your business to just any integrator; seek one who sees the value of ongoing partnerships to maximize the value of your control system.
**Originally posted on Automation World Blog