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Plugging Electronic Technology
into ILMA’s Business Part 2
By Thomas F. Glenn, PetroTrends
Compoundings Magazine
April 2001
As discussed in Part I of this
article, independent lubricant manufacturers employ the use of electronic
technology in a wide range of applications that take place within
the manufacturing gate (WGT) and outside of gate (OGT). Part II
of this article looks at high impact technologies residing on both
sides of the gate, including local area network (LANS), laboratory
information management systems (LIMS), blending, tank monitoring,
Wide Area Network (WAN), Wireless Local Area Networks (WLAN), and
e-commerce platforms. In addition, it provides insights into factors
influencing selection of technologies and an Internet link for information
on technology providers.
Although packaging technology is
not included in this article, it should be noted that packaging
and fill lines do employ a significant amount of electronic technology,
including metering electronics, labeling and imaging electronics,
video systems, sophisticated controls, and others. These systems
are, however, too complex to cover within the scope and space limitation
of this article.
Within the Gate electronic
technologies…
LANS
A Local Area Network (LAN) represents
the backbone, or nerve center of an electronic community of devices.
It provides a central communications link (a server) that allows
computers, printers, hard drives, sensors, controllers, and other
electronic devices to share data and resources. The basic components
of a LAN include a file server, cables, network interface cards,
peripherals, software, and workstations.
Most independent lubricant manufactures
have LANs in place. And the good news is that many recently minted
electronic devices and systems used by lubricant manufactures operate
on a common communications platform that can be readily plugged
into a LAN. Where in the past it may have taken special adapters
and custom software to get an employee punch clock, weight scales,
and other common devices talking to the network, today it can be
a simple plug and play installation. This means it is increasingly
important to assess the communication capabilities of new equipment
prior to purchase in an effort to fully evaluate both the costs
and benefits of interfacing with a LAN. And this evaluation should
look beyond the actual function of the new equipment and consider
it as a part of an electronic community sharing and operating on
data with others in the community. In the example of the electronic
time clock, although it may not actually save the employee any time
to “punch in”, it could represent a significant saving
in time for the front office, and even more in terms of the accuracy
of compensation, when data moves instantly and directly from the
clock to the accounting system.
LIMS
Most independent lubricant manufacturers
operate a laboratory to assure products are blended to specification.
In addition, some independents operate laboratories to provide oil
analysis services to customers, or commercial laboratories as profit
centers. Regardless of the size or complexity of the laboratory
operation, each is required to record, calculate, report, and store
and retrieve laboratory information. Each of these functions can
be done manually or electronically.
Laboratory information management
systems (LIMS) include a wide range of electronic technologies
(hardware and software) designed to log samples, schedule testing,
receive raw data from laboratory instrumentation, tag test data
to the appropriate samples identifications and previous laboratory
reports. LIMS systems are also used to perform calculation on raw
data, produce reports, conduct quality assurance, and other laboratory
functions. These systems are highly valued by commercial laboratories
that process a large volume of samples in regulated industries (e.g.
environmental, pharmaceutical)
In the most basic sense, LIMS is
a database manager run on a PC. From there, a LIMS system
can grow to include electronic interfacing with all laboratory equipment,
direct-real time data transfer of result to customers, and communications
with accounting and inventory control systems.
Although LIMS systems can reduce
errors and stream line a laboratory operation, commercial systems
are not typically a cost effective solution for independent lubricant
manufactures. Low-end systems typically start at close to
$25,000 and can move up very quickly from there. In addition
to the upfront cost for LIMS, some vendors charge a user fee for
each employee logging onto the system. The number of samples typically
processed by an independent (~ 20 a day) would make an investment
in such a system extremely hard to justify.
An alternative to buying
a commercial-turnkey LIMS solution, an independent may find a more
cost effective approach is to build a system A relatively simple
system constructed on a Microsoft Access®, ORACLE or Microsoft
SQL Server database. Such data verbose laboratory equipment
as spectrometers, and gas chromatographs are increasingly capable
of dumping data into the file structures of these databases as a
standard digital output. The database becomes the heart of the system.
It provides the independent with a platform to manage laboratory
information and grow the system to communicate test results to customers
and raw material suppliers, interface with laboratory equipment,
exchange data with accounting and inventory software, and others
on an as needed basis. By taking the “build” approach,
an independent is in a stronger position to justify the initial
costs of LIMS and pace investments in enhancements. Depending on
capabilities, energy and interest level, and time availability of
the staff, a homegrown LIMS solution will typically cost $5,000
to $10,000.
The decision to build, buy, or
rent LIMS is primarily a function of sample volume. For most ILMA
members, the solution would likely be to build.
Blending
Most independent lubricant
manufacturers batch blend: pour a drum of additive into a tank of
heated base oil and stir. Although seemingly simple, independent
lubricant manufacturers are highly skilled in this method of blending
and the lubricants produced are typically right on spec. In addition,
it affords them an opportunity to produce small quantity batches
and meet customer’s needs for specialty and custom products.
Batch blending, however, is not very efficient and there are other
options that employ the use of electronic technology that are.
One option, usually too expensive
and inflexible for most independents is in-line blending (ILB).
In-line blending will typically cost $100k to 250k to implement.
It is an excellent process for steady state blending of high volume
“big mover” lubricants. The pumps, and flow controllers
used for in-line blending, although quick, do require a relatively
large batch in order to level out variations in blending caused
by ramp up and ramp down of the equipment. To ensure an accurate
blend, a system with 3 inch piping (0-150 GPM) would typically require
a minimum batch size of about 1,000 gal. A system with 4-inch piping
(0-300 GPM) would require a minimum batch size of roughly 2,000
gal. Independents typically employ the use of 3-inch piping systems.
Another option is Simultaneous
Metering Blending (SMB). According to Ralph Beamer, president
and co-owner of Globetech Services, Inc., a Naperville, IL based
engineering firm, “SMB is similar to in-line blending but more
flexible, and minimum batch sizes are much smaller. It uses a sandwich
blending approach introducing a base component into the line first,
followed by a mixture of base component and additives, then finishing
with the balance of the base component(s).” Although each component
is introduced directly into line, homogenization of the components
takes place in the finished product tank, not in the line.
Unfortunately, SMB also tends to be on the pricey side for many
independents. The cost for such a system is close to that of traditional
in-line blending systems.
An independent can build an SMB
for about 30% less by purchasing the electronic heart of the system
(a self contained batch blend controller) for $15,000 to $20,000,
several meters at cost of roughly $10,000 each, a few pumps, and
some piping. However, according to Todd Ignatius, Director of Sales
& Marketing for FMC Blending and Transfer, “building
a system from the ground up is risky business, particularly if the
independent tries to economize further by building around a standard
Programmable Logic Controller (PLC).” Ignatius notes,
that, “constructing the algorithms necessary for a PLC to match
a finished lubricant recipe with actual component flow rates can
require far more money than the 30% saving over buying a complete
plug and play SMB system.”
A less expensive option, and a
good fit for some independents looking to automate blending with
electronic control technology is an engineered system employing
the use of a mass flow meter to accurately measure the flow of basestocks
and additives into a pigged manifold.” The mass flow meter
is interfaced to set/stop value that controls the flow of each component
in a blend into a pigged line. Each component of a blend is then
batched through its respective line, metered accurately into the
manifold, and then transferred to the blend tank. The process
is then repeated for each component with pigging after the last
component. For these systems, a decanting weight tank can
be used to introduce drummed additives and hand additions. All of
the blending takes place in the finished product tank. The least
expensive configuration typically employs a single mass flow meter
and valve to sequentially measure all bulk components. The cost
for these system can range from $20,000 to $50,000. Although relatively
inexpensive and certainly very accurate and reliable, on the downside
this approach tends to be more time consuming than most other blending
options.
Each of the blending schemes described
above are typically interfaced with an electronic master control
system. In addition to monitoring and controlling flow meters, valves,
sensors, and other components in the blending operation, the systems
can be interfaced with back office software to handle such functions
as:
• Raw material inventory control
• Procurement
• Laboratory data handing
• Customer service
• Remote monitoring
The value of integrating electronic
technology with blending in any of the above blending schemes is
significant. Although such automation and integration of blending
comes at a cost, it provides several significant advantages over
typical small batch blending. One of the advantages is that
automated blending is very accurate and consistent due to the high
precision of the metering equipment and electronic controls. Product
is on spec from start to stop, and with in-line blending can be
delivered directly from the line to the tank truck or railcar. The
second advantage, and one that could be particularly important to
independent lubricant manufacturers, is reliability and dependability.
Automated blending equipment blends basestocks and additives based
on recipes and algorithms programmed into the master control system.
Once programmed, the operator selects the product desired, enters
batch size, and walks away. Although electronic and mechanical systems
can break down (get sick), it’s exceedingly rare to see one
pick up and leave because it found a better job.
Tank
monitoring
Tank monitoring is an electronic
technology with feet planted firmly within and outside of the independent
lubricant manufacture’s gate. It’s vocation, however,
is the same in both locations. Tank monitors provide a means to
measure how much lubricant is in a tank and plan accordingly. Outside
the gate technology is a service provided to independents customers
to assure they do not run out of product and to assist the supplier
in panning deliveries (vendor managed inventory). The value of each
of these function can be readily appreciated by any sales rep having
received a call from an “angry” (or worst yet, a
soon to be ”former customer”) because they shut down operations
due to lack of lube, or by a driver that just completed a 25 miles
run top off a tank reportedly “empty” and is now unavailable
to service the “angry” customer. Even beyond the
occasional and sometimes inevitable bumps in the road, tank monitoring
can be an effective means of reducing transportation costs by allowing
you to better plan deliveries and allocated resources (trucks and
people).
Tank monitors come in a verity
of flavors. They include simple level sensors that trip when the
fluid reaches a predetermined level(s), ultrasonic sensors that
bounce a beam of sound off the top of the lube to measure volume,
and submersible pressure sensors that gauge volume based on pressure
differentials. The real value in these often-innocuous little workhorses
is in their communication skills. Tank sensors typically tell your
customers how much lube they have in their tanks and fire the same
information to your office in the form of a report. The communications
can take place over a dial up modem, a cellular phone circuit system,
bounced off a satellite, or faxed. In addition, suppliers of tank
monitoring systems typically offer central monitoring with web access.
Central monitoring provides an lubricant supplier with the opportunity
to check any customers inventory from anywhere in the world by going
to a website
The costs of tank monitoring systems
run from a low of about $300 a tank to high of nearly $5,000 a tank.
A typical installation would cost roughly $1,000 a tank for the
equipment and roughly another $1,000 a tank for installation. Cost
is a function of the sensor technology (precision and accuracy),
level of sophistication in the telemetry, tank distance from control
panel, power supply, central monitoring, report requirements, and
other variables. A high-cost system might be one monitoring tanks
in a remote region of the world where the sensor is powered by the
sun and bounces information off a satellite. Low-cost systems
are available that include sensors with and onboard computer chips.
The sensor, which includes a phone line, is dropped into a tank
and plugged directly into a nearby phone jack. A lube supplier can
then call that line from a remote location and program the sensor
to report on tank levels at a prescribed interval. These systems
are ideal for totes and other lower volume applications, or for
very costs sensitive accounts.
Tank monitoring systems are used
the same way within the gates. They report on basestock and additive
inventories. Tank monitoring systems on both sides of the
gate can be integrated to create a seamless communications between
raw material requirements and customer demand. Theoretically, this
would provide an lubricant manufacture with the opportunity to electronically
order basestock and additives based on monitoring a real time customer
demand and reorder set points communicating directly with raw material
suppliers. Although these systems can be built, there are currently
believed to be too expensive for a typical independent.
Outside the Gate electronic
technologies…
WAN, and WLANS
A Wide Area Network (WAN) is similar
to a LAN except it uses telephone lines, satellite transmissions,
and other systems that reach outside of the manufacturing gate to
network other corporate locations. Although independents typically
do not operate WANs, it is not unusual for one to dial into a WAN
via a supplier’s extranet. This could give them access to thesuppliers
network for exchange of data, information, and other functions that
streamline procurement, custom service and technical support. Access
to a WAN is not the same as visiting a website. You are actually
on another company’s network and typically have access to privileged
information and functionalities not available to web surfers.
Wireless Local Area Networks (WLAN)
is fundamentally LANs without the wires. They run the range from
complex wireless systems that provide distributed data across the
entire LAN, to such devices as a personal digital assistant (PDA),
and hand-held optical scanners. Sales reps are already using
WLAN technology to “beam” business card information between
PDAs and LANs. In addition, hand-held optical scanners are becoming
more visible at trade shows to literally scan contact information
off the lapel badge of show attendees.
Driven by intense competition in
a growth market, PDA technology is advancing rapidly and directionally
moving to bring cellular phone service, computing power, WLAN communication,
GPS navigation, multimedia tasking, optical scanning, photography,
Internet access, and other technologies into a common plug and play
platform that fits in the palm of your hand. Expect to see these
devices become an increasingly important tool in the hands of sales
representatives, lubrication engineers, technical service representatives,
operations managers, and product delivery personnel. These
powerful and adaptable devices will likely find use for product
cross referencing, lube surveys, uploading orders, guiding sales
reps and drivers to customer location, and even finding the location
of your drivers and sales reps (within 3 meters of actual).
WLAN devices are just as comfortable
within the manufacturing gate as they are outside the gate and in
the case of PDAs, GPSs and others WLAN devices, can be very affective
and affordable technologies. In addition to assessing the
utility of WLAN devices, evaluation the operating system and expandability
of are important selection criteria.
E-commerce
Part I of this article provided
insights into the different options available to independents for
implementing e-commerce initiatives. In addition, it concluded that
the upfront capital required to “build” or “buy”
a meaningful e-commerce solution would quite likely be well beyond
the means of an independent lubricant manufacturer and the cost
of ownership would be even greater over time. As a consequence,
independents would likely finding that “renting” an e-commerce
solution from an application service provider (ASP) or Internet
marketplace is the most cost effective solution.
But who to choose and how?
The important factors to consider
when choosing an ASP are similar to the factors considered in choosing
any business partner. First, do they really understand your business
and provide products and services that speak to your customers and
ultimately your bottom line? In the increasingly competitive world
of e-commerce, more and more providers are trying to pound square
pegs into round holes simply to remain solvent. They offer generic
e-commerce “solutions” that look great in demos, however,
in practice they are unable to discern the differences between packaged
and bulk, or pounds vs. gallons, or appreciate the challenges and
nuances of piping meaningful technical service and content to customers
over the Internet. Furthermore, it is not unusual for supplier of
a generic solution to give you a blank stare when asked about integration
with legacy systems. Signing on with a provider that does not understand
the lubricants business, even more importantly, the business of
independent lubricant manufactures, is a high stakes gamble with
bad odds.
Another important factor to consider
in selecting an ASP is health. A year ago, the number of companies
stepping up to say, “I can deliver an e-commerce solution”
would have numbered over one dozen. However, as a result of
flawed business models, poor financing, acquisitions, and other
market factors, the list is much shorter today. With that
as a backdrop, it is important to conduct the necessary due diligence
to assure that the company you select is financially healthy and
run by a solid management team.
A third, and equally important
consideration in supplier selection is the ASP’s ability to
help drive top line revenue and create internal efficiencies.
Beyond simply thinking of an ASP as an electronic order taker, it
should be viewed within the context of your entire operation and
its ability to work with others (real and virtual) to reduce costs
and increase profits. In many resects, this issue addresses the
common theme in each of the electronic technologies discussed in
this article. That theme being the power of interconnectivity and
digital communication.
Much like managers and supervisors
are challenged to maximize the productivity of employees by encouraging
good communications and teamwork, electronic technologies must also
be taught to communicate and work like a team to reduce costs and
increase profits. An ASP solution that is afraid to talk to the
electronic technology responsible for blending lubricants because
it too technical, or an inventory control system that doesn’t
have the communications skills to speak to a customer’s WAN,
or worse yet, an immature accounting system that simply refuses
to speak with its customers accounting system if it calls on the
internet, can all put one at a significant competitive disadvantage.
Some ASPs aspire to being the most
effective platforms to get electronic technologies talking and working
like a team. Along with your LAN, an ASP is well positioned
to deliver on this vision. With that in mind, the choice you make
today for an “e-commerce platform” could end up also being
your choice for a key player in tomorrow’s virtual business
management team.
Copyright©2002 Petroleum Trends
International, Inc. All rights reserved.
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