Why Digital Transformation Matters in Mining and Manufacturing Now More Than Ever
The mining, steel, and coal industry is heavily dependent on large, very expensive equipment. Unexpected downtime can be the difference between a profitable and a money-losing operation. How can companies maximize equipment operations with Artificial Intelligence (AI)?
Ash Agarwal, the director of manufacturing and mining with Uptake, a company working with manufacturing firms to bring new technology to their operations, will host a workshop during the annual MetCoke World Summit. He will discuss strategies companies can take to streamline their operations and boost the bottom line. The workshop will be held Nov. 5 in Nashville, Tennessee.
To register for the workshop, click here https://www.metcokemarkets.com/metcoke-summit/metcoke_agenda
In advance of the conference, Ash Agarwal discusses the first steps a company needs to take to digitally transform their business.
Question: Where and when should the mining industry start to embrace artificial intelligence (AI) and the Internet of Things?
Mining companies need to adapt and implement new technologies. There has always been a pursuit within the mining industry to make operations more efficient, more reliable and cost-efficient so that they can survive super cycles that happen every few years. Every couple of years in the industry, companies that have a higher cost of operations get decimated by the competition. The best way to protect against these downturns is to be as agile and cost effective as possible.
Manufacturers and miners have tried different options – Six Sigma, TPM, 5S (Sort, Set in Order, Shine, Standardize, and Sustain) – in order to improve cost efficiencies and be the cost leader that they want to be. But there is only so much you can achieve from these tools.
If you want to have continuous step changes in improvement and cost, you need to explore new digital technologies, like AI. It’s no longer a question of if or when. That time has already passed.
It’s also important to understand the motive behind your company’s desire to pursue digital technology. Why should you do it? Why should you explore AI, predictive analytics or some other advanced technology? Is it because an investor asked? Has a board member made the pitch in a board meeting? Will it make the company look good in the market – “Hey, I’m a digitally transformed company.”
All those reasons are certainly valid and worth taking actions one — but the real reason is that it will impact your top and bottom line.. The mining company has a revenue number and a cost number.What are the drivers of those numbers and how can you influence those drivers by implementing technology?
One example of how AI and digital technology can actually move the needle on top and bottom lines is in steel manufacturing. A steel manufacturer with an end-to-end value chain — all the way from the iron ore to the blast furnace to cold roll steel — has several high value equipment.
During a certain period, the revenue and the profits the steel manufacturer records will be determined by how much steel they can produce, of what quality, and at what cost. All these metrics related to the machines responsible to produce the steel are effectively captured in the definition of OEE (Overall Equipment Effectiveness). With the right data and the custom AI models, it’s now practical to receive an advance warning of as much as one month about any negative impact on any driver of the OEE. Moreover, by looking at the historical data and processing the real time information, AI can not only warn about potential lower performance, but it can also provide a descriptive action that an operator can take to ensure a sustainable performance.
Question: How do you get started?
It will cost you money, and there are different approaches. The do-it-yourself experiment has been performed by lots of companies. They might decide that that they would be a software company that happens to produce steel. That is a bold vision right from the start. They would invest billions of dollars to build technology. But trying to replicate a software company is easier said than done. There are upsides in terms of intellectual property. You have complete ownership. You control everything. You hire and fire people.
The downside is that it is a huge capital investment and in an area where you’re the least effective. If you invest in your operations, you will have better control of finances because that is your core competency. Building software is not your core business and chances are that you’ll end up locking capital into something cursed to be outdated at a moment’s notice.
Additionally, AI by itself is not a delivery mechanism. AI works best when there are multiple learning points — when there is a network effect —helping that software get better. With network effects, you get the outcome more than anything. You don’t have to have a machine fail to succeed. All these things aren’t achievable if you do it yourself because you are only relying on yourself, not a robust network of information.
The second approach is completely dependent on a third-party software vendor. Many ERP (Enterprise Resource Planning) vendors have tried to reshape their offerings to include new technologies, but it doesn’t work. The traditional methods don’t work. AI requires a whole new way of thinking and working. Best approach is a hybrid approach. You have your own team that takes control and defines exactly what you need. You are able to make sure your needs are being met with the introduction of the software, that the outside source is delivering the value you expect and you are keeping the software vendor on their toes to make the updates you need..
Many companies also use consulting firms to ensure their success. The consulting company can do very well in terms of identifying the right problems to solve and making the roadmap to solve the problem. They help ensure that you are not missing the big picture or investing all your efforts in problems that don’t need to be solved, while missing out on the bigger problems. So I would say they can do well.
What is another example of how AI and a digital approach can benefit a company?
A maintenance supervisor goes to site first thing in the morning. He is responsible for 50 machines. He can’t know what machines need his attention unless he makes the rounds.
If you understand their pain points you can then build a platform, a solution so that while they are on the bus or on the phone they can find out what machines need attention. The supervisor will only go to the machines that need help. And the supervisor will be confident that the rest of the machines are working well. Those are the things that AI can cure. Helping people get smarter at their job.
At the end of the workshop I am going to give five points that are valuable, five steps that any technology leader – CTO, CIO, CEO – can take back to their businesses and start implementing. All the do’s and don’ts of technology. I will talk about successes and failures, while some places didn’t work despite the best efforts. Some real case studies. And good instructions on how to implement these things.
To learn more about how AI can benefit your company, make sure to attend Ashutosh Agarwal’s presentation at this important workshop, Nov. 5, in Nashville, Tennessee. Click here to register for the MetCoke World Summit https://www.metcokemarkets.com/metcoke-summit/metcoke_agenda