2020 has been a year full of surprises. But in resource-based industries like energy and mining, surprises aren't always a good thing. To help make sense of the situation—and maybe to help turn current challenges into future opportunities—we decided to ask an expert for advice: Colin Beaney, Vice President of Energy, Utilities & Resources at IFS.
Colin Beaney is an engineer by trade and has worked for IFS for over 20 years. Prior to his current role, he has been involved in a number of asset management-type implementations of IFS across many industries. He heads up the group that looks at pursuing new business in the energy, resources, and utility space.
NC: What is it that attracted you to energy and utilities, specifically?
CB: My background is asset management. I've always been involved in the maintenance of assets, I mean I worked for just under 20 years in the manufacturing industry and was responsible for a shift of people who were looking after plants. So I've always had this interest in asset management or maintenance as we used to call it. Over these decades, asset management has asserted itself as a proactive discipline for maximizing return on capital assets, ensuring they are able to play their role in revenue assurance and the customer experience.
One of the things that I've been very lucky to do is to help real companies adopt some of these more forward-looking practices around assets, helping IFS customers transition from just looking after equipment, ensuring the reliability of the plant to using asset management to create value. I implemented the product in a lot of energy/utility customers that we've got, which has been a true honor.
NC: Everyone's talking about COVID-19, so I'm curious if you have any insight on how COVID-19 is affecting energy, utilities, and mining right now?
CB: If we look at energy first: demand has dropped, which is primarily due to reduced consumption from industry which isn't using the quantities that they typically do. Obviously, consumer demand has increased slightly because we're all working from home. We're all putting more demand onto the local grid. But large-scale demand has dropped off. And what that has meant is that generally, countries and cities and regions are making active move towards satisfying this lower demand using renewable sources.
For example, here in the UK, we've generally rolled back the coal-fired power stations that we have now. And I think for somewhere in the region of two months now, the supply of electricity has come purely from renewable sources. And that pattern is being repeated around the globe. As a result, emission rates are low, and countries and governments are thinking a lot more about the carbon-neutral drive: the net-zero effect all of us should be thinking about to reduce our carbon emission footprint. We've seen companies invest more in things like electric vehicle charging facilities, and they've started to think deeper about the cycle of the energy and emissions that are created and all those sorts of things. So that's what we've seen from an energy perspective.
From a mining perspective, it's sort of similar in many respects. If you look at coal demand, demand has dropped because it's not required by industry or power generation. Prices are see-sawing and it’s tough to forecast demand during this period of instability. In the medium term, it's likely that coal demand will continue to fall away. However, the demand for minerals and metals is likely to stabilize. Some commodities, like copper and iron ore, are near high points in terms of the value.
The mining industry has also struggled with with social distancing and pandemic safety and have had to operate with a reduced workforce. Shift patterns are changing so people can work longer: four weeks on and three weeks off instead of two weeks on two weeks off. Local workforces may become more common in an industry often reliant on out-of-town specialists who travel for an assignment. The human impact could be substantial, changing an entire staffing model.
NC: Mining companies are thinking about social distancing, remote locations: if there's one piece of technology that they could implement to help with those changes, what do you think it would be? What would be the best "bang for their buck," if you will?
CB: It doesn't sound that exciting, but that the best "bang for the buck" answer may be the digital twin of the organization. This is a subtle concept, that is really about helping management teams analyze and understand their challenges and the best cost/benefit breakdown from different courses of action. From my perspective, an investment that assists them in really being able to determine what else they should be invested in is the foundation.
Say you've got a long-haul excavator or bucket excavator in a mine or a conveyor network, and you're representing that asset structure digitally so that you can see how it's performing, understand the health, understand the reliability – and you can start to think through your maintenance and asset management strategy. But what if you could expand and look at the whole organization as a digital twin? A digital twin is about more than modeling equipment characteristics and performance—it is about all the processes, responsibilities and goals of people, departments, and the organization as a whole. This information and key performance indicators (KPIs) are placed in operational intelligence software, then you can subject that digital twin to change. "Let's change this process" or "let's (unfortunately) see what happens if we reduce the labor pool in certain production areas." Well, that's going to reduce production output – maybe. But what happens if we invested more into the assets to make them run a little faster, some of the processes could be improved, what happens if we automate some of the processes? So this digital twin is something that I think can provide the capability for companies to effectively simulate challenges and change and improvements and innovation into their organization. I think that's a massive area of potential.
Of course, there are shorter-term benefits of autonomous capabilities of mines, automation and predictive maintenance. But It is the digital twin of the organization that helps define which of these approaches will be most fruitful.
We see a challenge from our customers in mining, energy, oil and gas: spare parts logistics, which often must include the lifecycle and origin of the spare part. If you're the person who requested that part is sitting on an offshore platform in the North Sea, oftentimes they really need visibility of where that part is geographically, if it is shipped or even if it is manufactured yet, as these parts can have a long lead time and may be of custom design. That's where blockchain could someday be really useful because everybody that interacts with that part through the logistics cycle of the part being ordered, shipped, moved, loaded, stored in a bonded warehouse, put onto a vessel or a helicopter — if everyone in that workflow was feeding information up to that common blockchain platform, that would be fantastic.
NC: ..and maybe getting people along the chain to buy in, too.
CB: Absolutely. I mean if you're a loading person in a warehouse somewhere, or you're a receiving person on a vessel, you need fast and reliable answers on what is going on in the supply chain so you can use equipment and assets to meet the company’s obligations and meet corporate goals. And that comes back to another challenge that we've got in energy and utilities: making transactions simple, making transactions easy to run, automating transactions that can be automated, automating workflows, configuring workflows to make them simple, and as stated above, having information at hand to make strong, forward-looking and strategic decisions about what to automate and how.
In part 2 of our interview with Colin Beaney, we talk about the benefits and drawbacks of automation. Stay tuned!