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Moves to connected manufacturing hindered by stranded assets

Stranded assets in manufacturing facilities can lead to inefficiencies and can hinder companies from moving to smart factories and taking advantage of fully connected systems.

As manufacturers move increasingly toward connected manufacturing facilities, they face problems with what to do...

with legacy machines that have usually worked in isolation.

Connected assets help companies stay more competitive by operating more efficiently, but problems are arising not from the connected machines and systems, but the ones that are left behind. Stranded assets are costly and can hinder companies from installing connected manufacturing facilities and reaping the benefits of fully connected systems.

Aspen Technology Inc. (AspenTech) estimates that 40% of manufacturing plant assets are stranded; that is, they're not connected to each other or the network. However, the reasons for these stranded assets can vary greatly.

A stranded manufacturing asset is typically an asset that either has an inadequate control infrastructure, such as an old programmable logic controller, or some type of automation that can't be connected to a network using traditional methods, according to Keith Flynn, senior director of product management at AspenTech, an industrial software company based in Bedford, Mass.

Stranded manufacturing assets can also be assets that have adequate controls, but that are located in a plant that has an inadequate infrastructure.

"Maybe there's a lot of steel and a lot of interference, so there's no real way of dropping fiber down or you can't reach it with the traditional wireless methods," Flynn said. "A stranded asset could also literally mean it's a remote asset that's nowhere close to the facility."

Not the same as energy industry stranded assets

Although the same term is used, the concept of stranded assets in connected manufacturing differs from the concept of stranded assets in the oil and gas industry, according to Joshua Greenbaum, principal at Enterprise Applications Consulting in Berkeley, Calif.

In oil and gas, the concept of stranded assets has two major components, Greenbaum explained. One is simply that the economy is moving toward less carbon-based fuel and that, in itself, makes the classic oil reserves of the large oil companies questionable and potentially stranded assets.

"The [large oil companies] spend a lot of time developing these oil fields and ... the investors are investing based on these future reserves," Greenbaum said. "And they are potentially quite stranded in the sense that if the economy shifts dramatically toward non-fossil fuels, these fossil fuels will literally have no value."

In addition, oil reserves that are less refined may become stranded because of government regulations limiting the use of fossil fuels.

Technology changes cause obsolete machinery

In manufacturing, stranded assets are very much about machines on the shop floor that are becoming obsolete due to dramatic changes in manufacturing technology. That, in turn, is changing business processes and changing how manufacturers want to do business, according to Greenbaum.

There are all these reasons why having an asset not connected to anything else is really bad.
Kim Knicklemanufacturing specialist, BlueMetal

And if it's a truly stranded manufacturing asset, that piece of equipment is not being looked at as part of an overall system, according to Kim Knickle, manufacturing specialist at BlueMetal in Watertown, Mass. There are certainly disadvantages to that because there's a major delay in interpreting the performance of the asset based on actual data from the asset, she said

For example, someone would have to walk up to the asset and maybe use a USB stick or actually look at the screen on the asset itself to get some sense of whether the equipment should be maintained, Knickle said.

"There are all these reasons why having an asset not connected to anything else is really bad," she said. "So [connected assets are important] for the health of the asset itself, for the performance of the overall line, certainly for the management of the plant, and for the ability to identify best practices from one plant to another."

The lifecycle of industrial assets is measured in decades, and these machines that are connected through old-style supervisory control and data acquisition or other connectivity systems are meant to be on the shop floor for decades, according to Greenbaum.

What has happened is that the technology has reached the connected manufacturing shop floor and has started to evolve at a much faster rate than ever before, and that evolution of technology has left a lot of these systems behind, he said.

"When you have a system that is based on 20-year-old communications devices, 20-year-old security systems, 20-year-old technology, it's going to be hard to bring that into the current technological infrastructure of the modern factory," Greenbaum said. "And that's an impediment that strands these assets."

Older assets might not need full replacement

Today, much of the supplier community is trying to convince manufacturers that their assets are stranded in the sense that they aren't smart and, therefore, they should replace them with new smart assets, according to Dan Miklovic, principal analyst at LNS Research, a Cambridge, Mass.-based firm.

"And, in some cases, that may be true because if the asset is such that it can't have retrofitted intelligence, then it truly is a stranded asset if you're trying to become an industry 4.0 smart manufacturing-enabled company," Miklovic said.

But there are a lot of assets capable of being modernized with the addition of sensors and communications capabilities and through improved industrial internet of things technology, so the assets aren't truly stranded, he explained.

"The problem [can be likened to] an island offshore that's only connected to the mainland by a really tiny little bridge," Miklovic said. "And that's a stranded asset because you can't get the full use of it."

However, other assets in manufacturing can become stranded because of capacity, according to Miklovic.

Take the battery industry, for example. What happens to a company that has invested tons of money in specialized equipment to make certain types of batteries? Then, all of a sudden, that battery chemistry becomes passé and the market for that type of battery goes away.

"You're up a creek because, in some cases, the actual machinery to make the battery is chemistry-specific, and the chemistry is no longer a viable battery type because it's been replaced by a higher efficiency one [and, therefore, the machine becomes a stranded asset]," Miklovic said.

This was last published in November 2018

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