editorial Vol. 09 | Issue 04 | november 30, 2009
Managing Director: Dr Pramath Raj Sinha Printer & Publisher: Kanak Ghosh Editorial Group Editor: R Giridhar Assistant Editor: P K Chatterjee
Managing The
Green
Sr. Correspondent: Satish Chavan Sub-Editor: Reshmi Menon
Impact
Design Sr. Creative Director: Jayan K Narayanan Art Director: Binesh Sreedharan Associate Art Director: Anil VK Manager Design: Chander Shekhar Sr. Visualisers: PC Anoop, Santosh Kushwaha Sr. Designers: TR Prasanth & Anil T Chief Designer: N V Baiju Photographer: Jiten Gandhi Sales & Marketing VP Sales & Marketing: Naveen Chand Singh (09971794688) General Manager: Nabjeet Ganguli National Manager-Events & Special Projects: Mahantesh Godi (09880436623) National Manager Online: Nitin Walia (09811772466) Assistant Brand Manager: Arpita Ganguli Co-ordinator Ad Sales, MIS, Scheduling: Aatish Mohite GM South: Vinodh Kaliappan(09740714817) GM North: Pranav Saran(09312685289) GM West: Sachin N Mhashilkar(09920348755) Coimbatore: D K Karthikeyan (09843024566) Kolkata: Jayanta Bhattacharya (09331829284) Production & Logistics Sr. GM Operations: Shivshankar M Hiremath Production Executive: Vilas Mhatre Logistics: MP Singh, Mohamed Ansari, Shashi Shekhar Singh office address Nine Dot Nine Interactive Pvt Ltd C/o KPT House, Plot 41/13, Sector 30 Vashi (Near Sanpada Railway Station), Navi Mumbai 400703 For any information, write to info@industry20.com For subscription details, write to subscribe@industry20.com For sales and advertising enquiries, write to advertise@industry20.com Printed and published by Kanak Ghosh for Nine Dot Nine Interactive Pvt Ltd C/o KPT House, Plot 41/13, Sector 30 Vashi (Near Sanpada Railway Station) Navi Mumbai 400703 Editor: Anuradha Das Mathur C/o KPT House, Plot 41/13, Sector 30 Vashi (Near Sanpada Railway Station) Navi Mumbai 400703 Printed at Silverpoint Press Pvt. Ltd, D 107, TTC Industrial Area, Nerul, Navi Mumbai 400706.
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R Giridhar editor@industry20.com
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he United Nations Climate Change Conference in Copenhagen in December will once again bring to public attention the impact of modern technology on the environment. Spurred by the growing disquiet over the global warming, the negotiators at the conference are expected to haggle over—and agree on—a series of tough measures to manage the problem. Ahead of the conference, the Indian government has said that it will attempt to achieve 20 to 25 per cent emission intensity cuts in greenhouse gases by 2020 (when compared to the 2005 levels). While the announcement is in line with the National Action Plan on Climate Change, critics are already asserting that India’s unilateral carbon intensity cuts could jeopardize its economic growth and restrict its economic options in future. But, it is not just India that is making these promises. Both Europe and China have also publicly committed to cut emissions. However, the US has been circumspect about what it plans to do to tackle the problem. Whilst the Indian manufacturing industry is worried over the government’s resolve to cut emissions—and the possible ramifications and costs—the outcomes of this conference will resonate throughout the world. For instance, in countries that are aiming to meet aggressive targets for emission control and power conservation, there will be a surge
industry 2.0
in demand for energy efficient products and services. From light bulbs to domestic appliances, motors to televisions—a massive shift to better products will take place. This means that manufacturers around the world will have the opportunity to develop, supply and maintain a wide variety of novel solutions—including alternative energy solutions. On the flip side, stricter environmental norms could make life difficult for manufacturing professionals and supply chain managers. Certain manufacturing processes and materials may be legislated out of existence, while others may need to be radically modified. There will also be greater pressure on manufacturers to account for the “carbon footprint” of all their activities—and to offset the deleterious impact of their activities through carbon credits. This will compel companies to rethink the way they manage their entire supply chain—from sourcing to customer delivery. Many countries will also require manufacturers to be responsible for the management of their manufactured products through the entire lifecycle—from production to disposal. This will also throw up a number of new challenges. While many of these “green” changes will be accomplished through a combination of legislative measures and financial incentives, and will perhaps take a few years, smart manufacturers should begin to prepare themselves for the inevitable. n
- technology management for decision-makers | november 30, 2009
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contents materials & processes 22 Making Ceramic Tiles
The recent boom in real estate has spurred massive growth in the Indian glazed ceramic tile industry.
management & strategy 24 Optimizing Knowledge Sharing in a Factory Network
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Designing a manufacturing network entails devising and managing flows of innovation and know-how—not just determining what to produce and where—and organizing the resulting logistics flows.
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28 Preparing for GST Regime
The government of India, in its Union Budget 2009-10, has reiterated its commitment to introduce the Goods and Services Tax (GST) by April 1, 2010.
32 The Outlook for Solar Power
Don’t be fooled by technological uncertainty and the continued importance of regulation; solar will become more economically attractive.
Cover Design: Anil T
Picture courtesy: www.amrivalves.com
facilities & operations 40 Improving Energy Efficiency in Plastic Industry
Three different cases explain ways to reduce energy consumption in plastic moulding machines.
information technology 48 Enhancing Productivity through Web Collaboration Web collaboration solutions act as efficient tools in keeping cost of travelling at bay.
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supply chain & logistics 50 Integrated Logistics Parks
cover story
16 Actuators Make Smart Moves
The new generation of actuators have come a long way from being mere mechanical devices to initiate a movement. Innovative designs and the use of new materials and technologies have widened their scope of applications.
in conversation
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Rolf HabbenJansen CEO, Damco
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SMEs keep on banging head against the wall, instead of finding a door to move out of their problems.
departments 06 Industry Update 13 Event Report
Vice President, Oracle Fusion Middleware, Oracle India
november 30, 2009 | industry 2.0
opinion 54 Making the Paradigm Shift
01 Editorial
Shailender Kumar
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By assembling all the necessary facilities in one location and enabling them to be shared, modern logistics parks significantly reduce expenditure, for manufacturers.
53 Advertiser Index 57 Product Update
- technology management for decision-makers
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El
LOGO! Simply different – simply ingenious
V ec isit ra us Ha m a ll a t No 20 . 1 5
Micro automation The new LOGO! generation
LOGO! now comes with even more functions – for example thanks to a memory with 200 function blocks and an additional back-up battery. The LOGO! TD is a real highlight. It can be connected to all new basic devices and configuration is child‘s play with LOGO! Soft Comfort V6. It has four function buttons as additional inputs in the application program and now features ten menu languages like the basic devices. www.siemens.com/logo
Answers for industry.
s CMYK
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industry update Manufacturing Industry Shows Signs of Revival
Growth rates in majority of the sectors covered showed positive trend during the period April-September 2009.
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he first half of the current fiscal (April-September 2009) proved good for the manufacturing sector in India, according to a recent CII m-ASCON survey undertaken by the Confederation of Indian Industry (CII) for the period April-September 2009 over AprilSeptember 2008.
Growth rates in majority of the sectors covered showed positive growth during the period April-September 2009. The survey concluded that about 10 per cent of the sectors covered recorded excellent growth rates of more than 20 per cent in April-September 2009 as compared to 7 per cent in April-September 2008. The 26 sectors, which recorded high growth of 10 to 20 per cent in April-September 2009 include aluminium, cement, fertilizers, paints, polymers like PS, circuit breakers, gases like carbon dioxide and hydrogen, refractories, pumps, light commercial vehicles, cars, scooters, mopeds, motor cycles, other consumer durables like consumer electronics and home appliances. n
Tata Motors Begins Distribution of Prima Trucks
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ata Motors has commenced distribution of its Prima range of world trucks, launched in May this year. The first product, the Prima 4028 S, is a 40-tonne 266-PS (Cummins ISBE engine) tractor comprising a 9-speed ZF transmission and a matching trailer with brakes, ABS and axles for high speed application. The tractor-trailer is considered to be ideal for carrying freight like steel, cement and containers up to 40.2 tonnes of gross combination weight. The cabin of the tractor is airconditioned and includes reclining seats, adjustable steering wheels and arm rests for driver comfort. Sleepers are provided to facilitate long-distance travel. The vehicle can operate for long hours and covers over 700 kms per day. Initially, the company has com-
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event update ENGIMACH 2010
The event will showcase engineering, machinery, machine tools, automation, material handling equipment, hydraulics, pneumatics and other industrial products and technology. Venue: University Ground, Ahmedabad Tel: + 91-79-26469725 E-mail: info@imtos.com Date: Website: www.engimach.com 7 January to
11 January 2010
IFEX 2010
The international exhibition will display foundry technology, equipment and supplies. Venue: University ground, Ahmedabad Tel: +91-40-65594411 E-mail: g.vamshidhar@koelnmesse-india.com Website: www.koelnmesse-india.com Date: 5 February to 7 February 2010
Metallurgy India 2010
The exhibition will display equipment, innovation, machinery and technology in the metallurgy sector. Venue: Bombay Exhibition Centre, Mumbai Tel: +91-11-26971056 E-mail: info@md-india.com Date: Website: www.md-india.com 10 February to 12 February 2010
Tube India International 2010
The tractor-trailer is suitable for carrying freight like steel, cement and containers up to 40.2 tonnes of gross combination weight. menced distribution with select customers particularly in Gujarat, Maharashtra, Rajasthan, Delhi and West Bengal. The driving crew of the customers have also been given training at the company’s manufacturing unit in Jamshedpur. The Prima 4028 S tractor is priced at Rs 21 lakhs (ex-showroom Delhi) and that with the trailer comes at a price of Rs 31 lakhs. n
- technology management for decision-makers
The event will showcase equipment, innovation, machinery and technology in the tubes and pipes sector. Venue: Bombay Exhibition Centre, Mumbai Tel: +91-11-26971056 E-mail: info@md-india.com Date: Website: www.md-india.com 10 February to
12 February 2010
Essen Welding India
The trade fair will display products and technology for the welding, cutting and joining sectors. Venue: Bombay Exhibition Centre, Mumbai Tel: +91-11-26971056 E-mail: info@md-india.com Date: Website: www.md-india.com 10 February to
12 February 2010
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industry update Automation Industry Needs to Relook at Product Development
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here is a growing need for collaborative auditing systems to realise full benefits from automation investments. This point was highlighted at the recently held third edition of Automation Tech 2009, organised by the Automation Industry Association (AIA).
The future of automation lies in holistic technology solutions. The theme for this year’s event was ‘Manufacturing Competitiveness and Sustainability’. K Ravi Kumar, former chairman and MD, BHEL, said, “The concept of islands of automation within a manufacturing facility is no longer relevant.” He said that manufactur-
ing plants can be globally competitive only if they adopt an integrated approach to automation. Ramnath S Mani, chairman and CEO, Energys Software, added that a key challenge for control engineers was to step up and show manufacturers how to apply automation solutions for sustainable growth. Vinayak Deshpande, president & COO, Hindustan Construction observed that the Indian automaton industry needs to move ahead from being just product suppliers to main automation contractors. The experts, during the event, concluded that the future of automation lies in holistic technology solutions that not only cater to the productivity, cost advantage and efficiency needs of the manufacturing plant, but also deliver value on safety and security, environment friendly and energy efficiency parameters. n
Logistics Sector on Growth Path
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he global logistics industry is set to tread a novel path out of the ongoing economic crisis, says an analysis carried out by Frost & Sullivan (F&S). The study titled, ‘Global Logistics and Transportation Industry Outlook 2009: Impact of Economic Slowdown on the Future of The United States, The European Union and The Asia Pacific’, observed that logistics service providers (LSPs) and end user companies could expect opportunities that would be inconceivable in a healthier economy. The report added that the global recession had in fact created a climate in which the companies could re-align business processes to
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emerge stronger from the ongoing economic crisis. Many governments have focused on stimulating trade with new trade policies and multilateral trade agreements, the report said. However, if it is boom time for the transportation and logistics industry in the near future, the LSPs are undergoing a rough patch. The latter is facing hurdles like fluctuating demand, liquidity crunch and narrow focus on industry sectors. “As most sectors including automotive, retail and consumer electronics are affected by the recession, so are the LSPs that serve them,” explained Prasanna Sriraman, research associate, F&S. n
- technology management for decision-makers
Recession Renews Focus on Efficiency
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he global recession has given way to a renewed focus on operational effectiveness among Indian businesses. This was stated in a recent survey conducted by PricewaterhouseCoopers. The survey, titled, ‘Beyond the downturn’, observed that the global meltdown changed the growth oriented objectives of Indian businesses and they undertook various measures on operational functions to ensure survival. The study observed that over 91 per cent respondents implemented significant cost reduction and 70 per cent reviewed operational/working capital cycle. The survey was conducted amongst the CEOs, CFOs and group heads of diversified Indian businesses. n
IHS’s Top 10 Economic Predictions for 2010
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hief economist, Nariman Behravesh and experts at IHS, a leading economic and financial analysis and forecasting company, have announced the annual list of top 10 economic predictions. According to IHS, global GDP is likely to grow 2.8 per cent in 2010, up from 2.0 per cent drop in 2009. The top 10 predictions include: 1. The US recovery will start slowly. 2. Europe and Japan will rebound more slowly than the United States and will see more modest recoveries. 3. Most emerging markets—especially in Asia—will outpace the developed economies. 4. Interest rates in the G-8 economies will remain very low. 5. Fiscal stimulus will begin to ease. 6. Commodity prices will move sideways. 7. Inflation will (mostly) not be a problem. In most regions of the world, inflation will remain tame. 8. Global imbalances will worsen again. 9. The dollar may strengthen a little, it is on a downward glide path. 10. The risk of a ‘Hard W’ is uncomfortably high. There is about a one-in-five chance of a double-dip or ‘hard W’ downturn. n
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industry update ADVIK, Trochocentric Forge Technical Collaboration Pact
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near Pune with an uto component investment of Rs 350 manufacturer, million. The plant will Advik Group of commence operations Companies is aiming by the end of 2010. to touch Rs 1,600 The phase I of the million by 2013 with project will have an 20 per cent exports. An integrated oil pump from installed capacity As part of its expanTrochocentric. to manufacture 0.5 sion strategy, the million oil pumps, while the phase II company recently entered into a will produce about one million technical collaboration with Trochooil pumps. centric for design, development and Plans are also underway to set manufacture of oil pumps. up two more plants at Manesar and The expansion plans also include Pantnagar. n setting up of a plant at Chakan
Caterpillar to Acquire JCS of Korea
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aterpillar has entered into an agreement to acquire JCS Co, a subsidiary of Jinsung T.E.C. Co., a South Korea-based manufacturer that specializes in producing undercarriage components for earthmoving and other off-road machinery. The acquisition of JCS is expected to provide Cat-
erpillar proprietary technology to produce highly engineered seals. Presently, Jinsung supplies Caterpillar with rollers, idlers and metal-faced seals used on a wide range of Caterpillar machines. The move is also aimed at improving Caterpillar’s supply chain and component capacity in Asia. n
Alstom, Schneider Plan Buy out of Areva T&D
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reva has decided to enter into an exclusive negotiation with Alstom and Schneider Electric for the acquisition of the activities of its transmission and distribution business, Areva T&D. The proposed integration of Areva T&D’s activities will comprise transmission moving out to Alstom (around two thirds of the business) and distribution to Schneider Electric (about one third). Alstom and Schneider Electric are planning to preserve and develop the links between transmission and distribution in areas such as commercial through crosspurchasing agreements, technological via the adoption of identical standards (hardware and software) and on innovation through a common research and development programme on the smart grid concept. Product from The two companies will extend the capabilities of Areva Schneider T&D in turnkey projects to more than €8 billion from the Electric’s power logic range. current €1.6 billion for the whole electricity industry. n
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- technology management for decision-makers
L&T, TMEIC Sign Partnership Agreement
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arsen & Toubro (L&T) is planning to strengthen its base in automation space of steel and paper industry. As part of the move, the company recently signed a preferred integrator partnership agreement with Toshiba Mitsubishi-Electric Industrial Systems (TMEIC) covering specific control system solutions in the metal sector and the paper industry. As per the agreement, TMEIC will supply its low voltage variable frequency system drives and industrial controls to L&T. L&T is planning to leverage its strengths in engineering, project execution and local service and its experience in India and the GCC countries, to deliver mill automation solutions to users. Dale Guidry, CEO, TMEIC, said, “L&T has an excellent presence in the Indian market and a portfolio of products and systems integration expertise that complement our expertise in drives and automation.” n
Millipore Buys Remaining Stake in Indian JV
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illipore Corporation has acquired the remaining 60 per cent ownership of its joint-venture (JV) in India, Millipore India. The move is with an aim to invest in new initiatives that will drive growth and strengthen company base in India’s life science market. Martin Madaus, chairman & CEO, Millipore, said, “By establishing direct operations in the country, we will be able to more effectively execute our strategy and leverage our unique capabilities to accelerate growth and support our growing customer base in this dynamic market.” The Indian government has invested to the tune of $1.7 billion to accelerate growth in the life science and biotechnology industries. The joint venture’s revenues are split evenly between Millipore’s Bioprocess and Bioscience divisions. The acquisition is expected to have minimal impact on Millipore’s 2009 earnings per share. n
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industry update New Textile Park to Come up in Mumbai Metropolitan Region
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15 per cent margin n intergrated money subsidy for SSI textile park is textile and jute sector being set up and 5 per cent interin Mumbai metroest reimbursement for politan region by all textile units, even Ackruti City, which if the ceiling limit of has created a Special investment in plant and Purpose Vehicle machinery exceeds Rs (SPV), by name 200 lakhs. Asmeeta Infratech for Besides, the subsithe same. The park is dies provided by the being set up under Micro, small and medium state government the Scheme for Inteenterprises are liable to five per include a 25 per cent grated Textile Park cent subsidy on equipment. tax reimbursement (SITP) introduced by for a period of seven years up to the Ministry of Textiles. 30 per cent of fixed capital and an The textile park, spread over 60 interest subsidy on interest actually acres, will be located at the Kalyanpaid to banks for the first four years Bhiwandi area. The total cost of up to a ceiling of Rs 10 lakhs. the project is estimated to be Rs Micro, small and medium manu300 crore and it is scheduled to be facturing enterprises are liable to completed in one year. additional benefits, such as five per Various central and state cent subsidy on equipment, 50 per government benefits will be made cent subsidy on quality certificaavailable for the unit holders at the tion expenses, 25 per cent subsidy Asmeeta TEXPA. The central govon cleaner production measures ernment subsidies comprise 20 per and 50 per cent subsidy on patent cent margin money for power looms registration expenses. n for small scale industries (SSI),
Intertek Sets up New Footwear Testing Lab
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ntertek has set up a technology footwear testing laboratory in Gurgaon. The new facility will provide a complete spectrum of footwear testing services to prepare footwear manufacturers, wholesalers, retailers, retail chain stores, importers, fashion designers and fashion labels to meet quality standards. Intertek is a leading provider of quality and safety solutions to a wide range of industries. The new footwear laboratory is fully equipped to evaluate essential constructional properties of shoes from design to wear.
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The consumer labs of Intertek around the globe currently test footwear for all ages and types, from conventional shoes to slippers, sportswear and safety footwear. The range of tests conducted at the laboratory include slip resistance, sole bond adhesion strength, seam strength, heel attachment strength, flex cracking resistance, component testing (i.e. zips or other fasteners), colour fastness, waterproof testing and hazardous substance testing under the European Toy Safety Directive EN71 and Consumer Product Safety Improvement Act, where applicable. n
- technology management for decision-makers
Honeywell Plans R&D Unit in Gurgaon
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oneywell is planning to set up a new technology centre in Gurgaon to expand its global research capabilities in refining, petrochemical and other technologies. The 400,000 square foot centre is expected to involve a total cost of $34 million. The centre is likely to come up at an existing Honeywell-owned property. The facility will basically house pilot plants for developing and demonstrating refining and petrochemical process technology developed by UOP, a part of Honeywell’s Specialty Materials business group. Besides, the centre will also include laboratories for process and applications development for other specialty materials technology areas, including fluorine products and nylon materials. n
Sanheay Batteries Sets up New Unit at Chakan
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anheay Batteries has set up a new unit in Chakan near Pune. The 35,000 sq. feet plant will produce about 10,000 units of battery and 5,60,000 units of plates per month. The company also recently launched its LaBatt brand for customers worldwide. The range of products under LaBatt brand name will cater to stationary applications, automobile and multi product industries in the country. Labatt batteries will be available in two types, viz., Labatt tubular battery and Labatt grid battery with extra power. This will comprise automotive and two wheeler batteries, stationary applications batteries both pasted and tubular batteries for UPS / inverters—square wave as well as sine wave. n
Errata
The name of the co-founder of Imaging Association of India (IAI) Dr Ganesh Devraj, was incorrectly mentioned as Dr Ganesh Devraja on page 11, 12 and 14 of the October 2009 issue of the magazine. Industry 2.0 would like to apologize for the error.
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event report
Leveraging Business through Lean Manufacturing To remain competitive in the global market, all Indian manufacturers should adopt lean practices. F&S’s event demonstrated how smart manufacturers are benefitting from using these practices.
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he Indian subcontinent is characterised by the existence of a big market beside the huge manufacturing base here. However, right now, a major portion of the country’s manufacturing industry is at stake, because of a lack of timely shift of paradigm towards lean and green manufacturing. Raghavendra Rao, senior director (Manufacturing and Process Control), Frost & Sullivan (F&S) finds, “In the not so distant future, it will be imperative for Indian companies to adopt lean manufacturing practices for survival. Organizations having global ambitions will have to look beyond becoming lean to be able to realize their vision. This is because China is set to be a strong influence by adopting sustainable manufacturing practices, and the competitive advantages of the Indian manufacturers may be seriously threatened by a lean, globally scaled, and imminent China.” With a view to creating a knowledge sharing platform and giving a roadshow to the yet-to-adopt-lean manufacturers, F&S recently arranged India Manufacturing Summit 2009 in Mumbai. The two-day-long event facilitated crossindustry learning through best practice presentations, and brought in a nice opportunity for the attendees—to know about the proven practices and hear industry experts speak on factors that contribute towards the successful deployment of these practices. The
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R Rao, Senior Director, Manufacturing and Process Consulting at F&S stresses on the urgent need for adopting the lean manufacturing practices by Indian manufacturing industries. forum was designed to assist companies to overcome their implementation constraints, and thereby improve processes. The success of these practices was ratified through real-time case studies presented by companies that have successfully implemented them. Among the presentations shared, there were—Lean Six Sigma in a Process Industry by Tata Chemicals, Process Benchmarking by JCB India, Reliable Simulation Models for Effecting Process Improvements by Essar Steel, A Collaborative Approach in Supply Chain by Hindustan Unilever and many others. The presentation on Clean Development Mechanism (CDM) by Dr PKN Raghavan from Bharat Aluminium was an eye opener to the people from various walks of manufacturing. Also, Tarapada Pyne from Ispat Industries drew attention through his presentation on reliability. Two sessions of panel discussions titled ‘Effective Lean Initiatives Lead
industry 2.0
to Competitive Advantage’ and ‘Higher Level of Management Commitment can Crash Lead Time for Effective Lean’ were highly appreciated by the manufacturing fraternity present. The benefits of aligning the manufacturing strategy with the business unanimously surfaced from the discussions held. The meet with interactive sessions provided attendees with optimum opportunities to network and exchange ideas. While commenting on the event, YS Shah from KHS Machinery said, “We have noted how NCR has gone for some fantastic changes. I think that exposure is really worth coming over here.” KB Chandran from Krone Communications informed, “To me, it was a great learning experience. However, I would recommend—in future summits, F&S should have a flavour of companies coming from tech manufacturing like computers, IT and communication hardware and network infrastructure.” n
- technology management for decision-makers | november 30, 2009
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event report
Smoothening the Path to Welcome GST Regime GST is a broad-based, single, comprehensive tax levied on goods and services consumed in an economy. When India is heading towards implementing it, how to gear up?
S Dutt Majumder, Member, Central Excise & Computerisation explains the proposed aspects of GST. Panellists (sitting), J Mustan, CEO, AFL Logistics (L) and N Sukumar, Sr Vice President (SC), Reliance Industries (R) are also on dais to elucidate points raised by the audience.
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ndian government is going to start implementation of a comprehensive indirect tax reform, called the Dual GST (Goods and Services Tax) regime, from April 1, 2010. With a view to addressing all relevant issues, unfolding the possible implications & opportunities and delivering a gear up roadshow—related to the phasing in of the GST on the Indian firms’ supply chain (SC) operations, India Supply Chain Council recently organized a summit of (mainly SC) professionals from various manufacturing and logistics firms. The delegates were exposed to several reflections, analyses and perspectives on the Indian logistics scene post GST, through 10 presentations and four informative panel discussions centering around the sessions on ‘The Survival of the GST Test...’, ‘Is Indian Industry GST
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Ready?...’, ‘Reformist Agenda Driving Logistics Infrastructure—GST...’ and ‘Making GST Work’. In the brain storming slot facilitator R Srinivas, Partner KPMG (a global network of professional service firm of KPMG International) divided the attendees into three groups based on professional fields (like SC Operation, Finance and others), and initiated three group discussions on the potential advantages of the post GST days. The speakers and panelists list of the summit included field personnel like B Jani, executive director, TranSmart, J Mustan, CEO, AFL Logistics, U Palsule, executive director, Spear Logistics, N Sukumar, senior vice president (SC), Reliance Industries, Manish Shakalya, from Cadbury, S Prasad & Dr V Muppani of Dow Supply Chain Expertise Center,
- technology management for decision-makers
S Dutt Majumder, member, Central Excise & Computerisation, P Mehta, partner, BSR & Company, P Dayal, head (business excellence), DIESL. Highlighting the impacts of GST from the biz perspective, N Sukumar pointed out—the flow of goods will be directly enroute to consumption, stock locations will be fewer, inventory load lower, most importantly there will be fewer cases of date expiries and wastages. From the SC management point of view, Manish Shakalya indicated that the SC companies have to be more customer-centric. Elimination of inefficiencies should be given more priority than to negotiating for reducing costs. Also, the SC professionals henceforth need to move from logistics focus to end-to-end supply chain solution focus. Commenting on the talks on the 3PL service strategies in the summit, Ajit Pandal, GM (logistics), Blue Star said, “Some of the new things that came up here are—(say) IGST (Interstate GST), then another completely new thought— whether we need 3PL at all!” Sachin Puri, VP (marketing), Anand Automotive Systems applauded the presentation on GST by Majumder. However, he could not trace out how would the GST implementation strengthen the organised distributors to penetrate more than the unorganised players in the distribution field. R Ravichandran, DGM, head (SC & Logistics), ESP, L&T conveyed, “The information sharing about GST by Mr. Majumder was very good. I wanted to understand more about GST, he has given a very clear picture about that.” NN Phabiani, manager (deployment planning) informed, “3PL industry is the only industry that can help manufacturers reach the customers everywhere. There is no reason to think whether we need this or not. A baseless thought.” n
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cover story
Actuators Make
Smart Moves
The new generation of actuators has come a long way from being mere mechanical devices to initiate a movement. Innovative designs and the use of new materials and technologies have widened their scope of applications. by satish chavan
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- technology management for decision-makers
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Picture courtesy: www.avpvalve.com
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s a device articulating motion, actuators are an important link in any control system. Be it in plant automation, or the control system of an aircraft or an automobile. Actuators receive a low power command signal and energy input to amplify the command signal as appropriate to produce the required output. Their applications range from simple low power switches to high power hydraulic devices operating flaps and control surfaces on aircraft and car steering. Over the years, actuator designs and materials, and their power sources, have evolved substantially as they found newer applications. “The technology of actuators has undergone tremendous changes to employ the latest available drive elements, prime movers and control electronics,” says Seshagiri Ramchandran, CEO of Gears & Gears. While actuators initiate momentum in machine tools, material handling and servicing equipment etc, which use mechanisms requiring lifting, lowering, feed and swivel applications, they also have important applications in process industries for plant automation, control systems and valves.
Linear Motion
Among the most important uses of actuators is their applications in drive trains to initiate and control motion of all types. “Linear actuators, also commonly known as screw jacks, form an important link in drive technology used in automation and load handling devices,” says Ramchandran. New cars are now fitted with electric power assisted steering rather than the hydraulic system, which was the only system available till recently. Linear electric actuators are now being used in car braking systems. This shift to electrical systems is also evident in the aviation industry, but the very high power densities and forces required from some actuators mean that these applications will be much more complex to develop. In certain linear motion applications, ball screws are used instead of trapezoidal screws. This has the advantage of achieving high speed of movement, accurate positioning, smooth operation and very high efficiency requiring lower power motor. As prime movers; DC motors, stepper motors and servo motors find applications, which work over a wide range of speeds and allow for control of speedtorque characteristics. Ramchandran says, “Control electronics have helped in designing actuators for applications with exacting requirements. Accurate positioning, end position control and position feedback have improved applications, particularly in lifting systems.” While manual actuation can be made directly on the axis of a handwheel or other devices,
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a manufacturers’ concept of a linear actuator now includes a manual gearbox, a mechanism that provides greater torque based on more turns. In fact, now it is normal to couple gearboxes in electric or pneumatic actuators to increase their features.
Actuators and Plant Automation
As automation is adopted more widely in process industries, its role is becoming very critical. The need for valve actuators to provide the interface between the control intelligence and the physical movement of a valve has now become crucial. The principles of control valve and actuator technology have developed in an evolutionary way during the last twenty years. New design ideas, improved production methods, new materials and extensive use of computer systems have led to significant improvements. Modern valves are more compact, have higher shutoff capability, and use more advanced sealing technology. Their resistance to erosion and corrosion has also improved, and the anti-cavitation and noisereducing trims are more advanced these days. While lowering the totalcost-of-ownership (TCO), compared to valves from the older generation, these advances have also made control valves more reliable and have expanded their lifecycle. “Many manufacturers of pneumatic actuators are now guaranteeing 7.0 million cycles without fail. Also, now electric actuators can be used for over 1,00,000 cycles of operations,” says Avinash Kawle of Avcon Controls, a company specialising in small size valves. The use of digital technology in actuators has also spawned significant advances in valve positioners. Foundation fieldbus and Profibus have now expanded the scope of actuator functions by enabling their integration into modern plant asset management systems with the help of latest developments in wireless technology. Most importantly, valve actuators ensure plant safety. Certain critical valves need to be opened or closed rapidly in the event of an emergency. Only valve actuators can prevent serious environmental catastrophes as well as minimize damage to facilities in such circumstances. According to Kawale, “The basic users of these types of actuators are control valve manufacturers, and
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cover story ball valve and butterfly valve manufacturers. Many types of actuators are used for specialized applications, such as pharma valves and plug type valves.” The biggest problem in control valve technology is flashing and cavitation, which can quickly destroy the valve. Depending on the cavitation level, several methods can be employed to reduce or eliminate its effects. Flashing can be prevented by adjusting the process conditions. Special materials can also be used to prolong the life of a flashing or cavitating valve. Basically, there are four fundamental types of valve actuators. These are a combination of the type of power applied and the type of movement required in the valve. Electric multi-turn actuators: Electrically powered multi-turn actuators are among the most common actuators. They are capable of operating very large valves quickly. To protect the valve the limit switch
turns off the motor automatically, when the torque sensing mechanism switches off the electric motor on exceeding a safe torque level. These valves have a declutching mechanism and a hand wheel to operate them manually in case of a power failure. Their main advantage is that they have all functions packed in a compact housing, which is water tight, explosion proof and submersible when required. Their only drawback is that—should a power failure occur, the valve remains in the last position and the fail-safe position cannot be obtained without a backup source of stored electrical energy. Electric quarter-turn actuators: Similar to an electric multi-turn actuator, their main difference is that the final drive element is usually in one quadrant that puts out a 90° motion. The newer generation quarter-turn actuators include most features found in sophisticated multi-turn actuators. Quarter-turn actuators are compact and can be used on
Pneumatic Actuators to Find High Demand
D
espite the economic slump and declining industrial output in the European manufacturing sector adversely affecting the automotive sector in the short term, government-funded projects for energy generation and medical applications will revitalise the European pneumatic actuators market in the long term, informs a recent report titled ‘European Pneumatic Actuators Market’ – based on a research carried out by Frost & Sullivan. The automation of production lines in Europe to enhance the reliability of applications has significant potential for pneumatic actuators. “The burgeoning demand for customised pneumatic solutions from the food and beverage and packaging sectors has boosted growth in the pneumatic actuators market in Europe,” says the analyst of this research. “Industrial and infrastructural developments in Brazil, Russia, India and China (BRIC) have enhanced the demand for pneumatic actuators by promoting the export of original equipment manufacturer (OEM) machinery.”
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A pneumatic actuator trickles fluid flow through a flow control valve. According to the report, stringent environmental policies of the European Commission (EC) and a rise in energy prices – have impelled the European manufacturing sector to shift to automation of production lines. Process optimisation through the deployment of pneumatic actuators is perceived by end users as an effective measure to reduce
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operational costs. The cost-benefit ratio obtained through the use of pneumatic actuators is higher compared to the spiralling manual labour costs in most European countries. The analyst also observes, “European pneumatic manufacturers have been facing a challenge in maintaining their profit margins due to fierce market competition. In such a situation, the deployment of alternate manufacturing technologies in the production process is considered a better way of sustaining profit margins.” Product portfolio encompassing complete automation solutions with diverse pneumatic actuators is the key for growth in the European pneumatic actuators market. “Competitive pricing and valueaddition to justify the pricing are the primary methods to achieve differentiation in the market,” concludes the analyst. He also comments, “Strategic procurement of actuators from East Asian countries, and the assessment of logistics costs will help manufacturers in retaining competitive pricing.”
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Emerging Trends
“New principles are being applied in actuators. These include, magnetostrictive actuators and voice coil actuators for precision control,” says C S Venkatesh, CEO of Bangalore Integrated System Solutions. The fundamentals of actuator technology are unlikely to change radically. They will continue to develop in an evolutionary way, finetuning the areas of design, production and application of new materials. According to Ramchandran, “The latest materials, heat treatment and high capacity bearings and motors, have reduced the size of actuators and improved their performance.” Case hardened steel worms ground to high accuracy, aluminium bronze worm wheels, hardened and tempered lifting screws, roller thrust bearings or tapered roller bearings, now allow actuators to perform under extreme load conditions. “Gearing is becoming very important in manufacturing electric actuators. Now, actuators with internal gears are becoming more popular because they occupy small space and provide the same torque as large actuators,” Ramchandran adds. “In actuator design, the latest trends are diaphragm-based actuators, integrated head actuators and hydrostatic actuators,” adds Venkatesh.
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Picture courtesy: Everest Valves
smaller valves. They are typically rated to around 1,500 foot pounds. An added advantage of a smaller quarter-turn actuators is that, because of their lower power requirements, they can be fitted with an emergency power source such as a battery to provide failsafe operation. Fluid power quarter-turn actuators: Pneumatic and hydraulic quarter-turn actuators are extremely versatile. These find applications where electric power is unavailable or where simplicity and reliability are essential. These actuators have a wide range of applications, such as the smallest can deliver a few inch pounds of torque, while the largest are capable of producing in excess of a million inch pounds of torque. Almost all fluid power actuators utilize a cylinder and a mechanism to convert linear motion to a quarter-turn motion. The main types of mechanism are scotch yoke, lever and link, and the rack and pinion. The rack and pinion type gives constant torque output, which is useful in smaller valves. The scotch yoke is effective for larger valves where a higher torque requirement is needed at the beginning of the stroke. Pneumatic actuators are usually controlled by solenoid control valves mounted on the actuator. A positive failure mode can easily be affected with a pneumatic or fluid power actuator, by adding an opposing spring to ensure a positive shut down in an emergency. Fluid power multi-turn actuators: These actuators are used mostly when multi-turn output is required to operate a linear type valve such as a gate or globe valve. Frequently electric actuators are used for this type of valve. In the absence of electric power supply, pneumatic or hydraulic motors can be used to operate multi-turn actuators.
Cryogenic butterfly valves used in process industries.
Choosing the Correct Valve
I
t is the process or product that dictates the basic choice of a correct valve, its closure element, trim requirements and material of construction. The next consideration is the application’s automation requirements, which boil down to two basic valve operations from an actuator’s perspective. l Rotary or quarter-turn operation. This group includes plug valves, ball valves, butterfly valves, as well as quarter-turn dampers. Mostly, this requires a simple 90 per cent movement at the prescribed torque. l The other group is multi-turn valves. These have rising non-rotating stems or non-rising rotating stems. In other words they require multiple turns to move the valve closure element from open to close. This group would include globe valves, gate valves, knife gates, sluice gates, etc. Alternatively, linear, pneumatic or hydraulic piston operators, or diaphragm pneumatic actuators, could be used. For end-users, the question should focus on which type of actuator (pneumatic, electric or hydraulic) is the most costefficient and reliable for a given process. After considering all the pros and cons, experts feel that pneumatic actuators are the best solution in large processing plants, in which a compressedair supply network already exists for other tasks. These actuators are compact, exceptionally rugged, reliable, require little maintenance and are excellent value for their money. They can be used in hazardous areas without any complications and have an inherent failsafe action. In places where a compressed-air supply network does not exist and just a few control valves are to be actuated, the electric actuator is probably the most cost-effective solution. The scope of use for hydraulic actuators is relatively small. They find use in applications where extremely high positioning forces, and long and fast stroking actions are required.
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cover story “The newest actuators are suitable for bus operations, using profibus, fieldbus and other bus systems. There is also wide scope for new materials, such as polyamides for pneumatic actuators to make them more durable and light weight. This is especially true for small size actuators where space is a problem,” says Kawle.
Nanotechnology is also offering new types of actuators. A team of French researchers are using multiwalled carbon nanotubes (MWCNTs) reinforced with polyvinyl alcohol (PVA) to develop ultra-lightweight actuators for aerospace applications. The team has developed a paper-like sheet, which bends when the material is electrically stimulated. According to one of the researchers, “The porous nature of the CNTPVA composite allows the ions of the liquid electrolyte to enter and swell the film when the device is electrically stimulated. The system expands at both positive and negative voltages, but the expansion is more pronounced, when we apply a negative voltage.” Besides aerospace applications, these findings could be used for robotics or in automotive systems. Major innovations will most likely occur in valve positioners. In the near future, more powerful sensors will be used in combination with positioners to detect valve faults and failures precisely. Currently, such failures can only be identified indirectly. The two other areas where future developments will have a major impact on control technology are; wireless communication and safety instrumented systems (SIS). New systems being built are leveraging wireless technology. Also, SIS is quickly gaining importance with end-users. Other important trends are
Volume Distribution of the
Source: Actuator Companies
Indian Actuator Market
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Fabricating a valve actuator.
Picture courtesy: renewvalve.com
Trends in R&D
the developments in systems for contactless energy transfer in actuators.
A Nascent Market
The market for actuators in India is still developing. While local manufacturers meet almost 80 per cent demand for actuators in India, about 20 per cent of the requiremnts are still imported, which are mostly high-end actuators meant for specialised applications. According to industry sources, due to the wide variety of actuators manufactured in India, it is not easy to estimate the total value and volume of the Indian market. “It is very difficult to estimate the demand, because we do not have access to such data,” says Kawale. “No accurate data is possible since it is a developing market in India,” Ramchandran confirms. According to Nirav Shah, managing director of Rotex Automation, “The market in India during the recession had sunk a bit. But now it is opening, and I believe by the end of this financial year, it will be in full swing.” According to industry sources, the growth for actuator demand is expected to grow around 20 to 25 per cent. Linear electric actuators and rotary pneumatic actuators are in maximum demand in India. The maximum demand for small size electric actuators is from airconditioning and refrigeration industries. In addition to the process control industry, other major consumers of actuators are the textile, paper and packaging industries. They are the major users of linear actuators. Worm gear screw jacks particularly in lower lifting capacities of 1 to 10 tons are in maximum demand among steel mills, pipe manufacturing plants and lifting system manufacturers. n
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materials & processes
Glazed Production of Ceramic
The recent boom in real estate has spurred massive growth in the Indian glazed ceramic tile industry. How are these varied and beautifully finished tiles manufactured? by wolfgang jaegel
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T I L E S
A
natural item made of clay, water, and several other natural materials, ceramic tiles have been used from decades to grace the floors and premises. Nowadays, ceramic tiles have become much more popular, since day by day manufacturers introduce highly sophisticated ceramic tiles that stand out in its design and durability.
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A variety of ceramic tiles are now available in different sizes, shapes, thicknesses, and designs. Among which, the most popular category of ceramic tiles is glazed ceramic tiles. In contrast to an unglazed ceramic tile, a glazed tile contains a special ceramic coating on its body, which in turn provides the tile colour and a superb finish.
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Since it offers endless decorating options, this type of ceramic tile has now become one of the sought after options to beautify walls as well as floors. Discussed further in this article are the steps involved in the production of ceramic glazed tiles as well as some of the benefits of these tiles.
Production of Ceramic Glazed Tiles
Production of ceramic glazed tile is same as the production of ordinary ceramic tile, except for it includes a step known as glazing. In other words, production of ceramic glazed tile primarily consists of five steps: Mining, Blending plus Mixing, Pressing, Glazing and Firing. In the mining process, the raw materials inclusive of clay and other natural ingredients are mixed together. The next step is the blending of clay and mineral ingredients to form a semi fine powder, to which water is added to make a mud-like item. Later, this mudlike item is pumped into a large dryer whose result is fine clay powder that takes after fine sand. Pressing is the next step, and in this phase the tiles are known as green tiles. The fourth step is perhaps the most important step in the
A screen printing machine for ceramic tiles. www.industry20.com
production of ceramic glazed tiles. In this phase, a glaze liquid made from coloured dyes and glass derivatives, known as flirt, is applied on the tile, either using a high-pressure spray or by directly pouring on the tile. This in turn gives a glazing look to the ceramic tile. Heating completes the manufacturing process of ceramic tile, and in this step, the tiles are fired in the kiln at a temperature of around 2000 degrees Fahrenheit. If tiles are fired after applying the glaze liquid, then it is called monocottura tile, and ceramic tiles in which glaze liquid is applied after having heated the green tile is known as bicottura tile, also known as double fired tile. After firing, glazed ceramic tiles attain a hard as well as nonporous, water-resistant surface. Glazed ceramic tiles are available in a plethora of finishes: abrasive slip-resistant, high-gloss, and matte finishes. Glazed ceramic tiles are also manufactured either with a hand-painted design or a pattern.
Comparison of Ceramic Tiles
When compared to other types of ceramic tiles, a glazed ceramic tile provides a host of benefits. Foremost is that—it offers durability, i.e. an appropriately installed ceramic tile can last for a longer period of time. Another great benefit of glazed ceramic tiles is that they are easy to care, as they can be cleaned with an ordinary sponge and mop or any other common cleaning materials. Further, glazed tiles are scratch resistant, especially
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Ceramic Tiles Industry in India l India ranks in the top five list of countries in
terms of tile production in the world. l The Indian tile industry, despite an overall
slowdown of the economy, continues to grow at a healthy 15 per cent per annum. l The organized sector comprises approximately 16 players. The current size of the unorganized sector is about Rs 3000 crores. l The unorganized sector accounts for 55% of the total industry bearing testimony of the attractive returns from this sector. The size of the unorganized sector is approximately Rs 3500 crores. Source: Indian Council of Ceramic Tiles (ICCTAS).
grade III and grade IV, as they are less prone to cut or wear. Since glazed ceramic tiles are produced using natural materials—and do not retain allergens, bacteria, or odours, they are considered environmentally friendly.
Application Areas
Despite a great option to beautify walls and floors, ceramic glazed tiles have now been widely used to decorate kitchen floors and countertops, as they are fire resistant and are not affected by hot pans or skillets. Water resistance is also one of the prime features of ceramic glazed tiles. Above all, ceramic glazed tiles are beautiful and versatile, and are available in a range of colours, sizes and shapes to compliment any room decor. From the aforesaid discussion, it is evident that no other tiles or flooring options can outshine ceramic tile for its matchless aesthetic beauty, flexibility and unique designs. In other words, no wonder why majority of the people consider ceramic glazed tiles as a functional as well as a practical option to decorate their homes and office areas. n Article Courtesy: www.articlesbase.com.
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management & strategy
Optimizing
Knowledge Sharing in a Factory Network Designing a manufacturing network entails devising and managing flows of innovation and know-how—not just determining what to produce and where—and organizing the resulting logistics flows. by arnoud de meyer and ann vereecke
A
Illustration: Chaitanya Surpur
gainst the backdrop of the economic downturn, many global manufacturers are shuttering or downsizing factories to cut operating costs quickly. That focus is understandable and, for some companies, necessary. Yet when senior managers make decisions about closing, opening, or relocating plants, today’s preoccupation with costs shouldn’t obscure the longer-term importance of other strategic factors—particularly the role of individual facilities in fostering and disseminating innovation across a manufacturing network. Indeed, the strength of a multinational manufacturing company lies precisely in its ability to exploit a network of knowledge to spread process innovations and best practices and, ultimately, to create innovative products and services. Companies that make footprint decisions without considering the way individual factories fit into a broader knowledge network therefore risk sacrificing long-term
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innovation for short-term gains. A better understanding of the way factories interact to create and transmit knowledge can help senior executives not only to spark innovation by balancing portfolios of plants but also to maximize efficiency by locating production resources appropriately. Moreover, our research suggests that the importance of actively participating in the creation of knowledge is increasing for individual factories. Those that actively develop and share it offer their companies greater strategic flexibility and seem to have a more stable future.
Four Kinds of Factories
To learn more about the role of knowledge in global manufacturing networks, we conducted a longitudinal study of eight multinational manufacturers based in Europe. The first phase, carried out in 1995 and 1996, examined the 59 factories around the world that these companies then owned. Our research included in-depth interviews with their manufacturing and supply chain executives, as well as surveys of the top managers and management teams of the factories. In 2005 and 2006, we revisited the eight companies to learn how the network had evolved over time. During the first phase of the research, we classified the factories according to their role in transferring knowledge among the plants in the network and corporate headquarters. We considered both explicit knowledge (including product, process, and managerial innovations) and informal knowledge (measured, for instance, by levels of communication between the managers of different factories). Four kinds of factories emerged. Isolated factories (22 per cent of the total in 1995–96) receive few innovations from other plants
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in a network and transfer few if any innovations themselves. Few manufacturing staffers visit or receive visits from them, and levels of communication between their staffers and the managers of other factories are low. Nonetheless, many isolated factories are very efficient. One company we studied, a producer of aluminum cans, had quite a few of these factories. They were typically high performers, supplying commodity products to their local markets and relying on themselves to improve their own manufacturing processes. Some were efficient, reliable, and independent greenfield units. Fifty-three per cent of the factories we studied in 1995–96 were receiver plants, which get many “innovation injections” from other factories in the network, from headquarters, or both, although they don’t transfer innovations. Some receivers were underperformers and needed external support. Others were satellite factories supervised by neighboring ones. Still others relied on external support to keep pace with rapid changes in technology. One steel cord plant we studied served as a model factory of the future and thus received significant support from corporate development teams and other factories. The very different hosting network factories (16 per cent of the total in 1995–96) have strong network relationships, communicate and exchange innovations with other plants actively, and receive frequent visits by colleagues from other units and headquarters (in many cases, the hosting network factory was the plant closest to it). A lot of these facilities were centers of excellence where engineers and other employees came for training. Active network factories (8 per cent in 1995–96) communicate
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more intensively and share more innovations than hosting network ones do, and their staffers are more likely than those of any other kind of factory we studied to pay many visits to other plants. One luggage maker’s active network factory, for example, was located near the company’s product design center, in its European headquarters. This plant, which served as a pilot center for new designs of luggage, compensated for its relatively high labour costs by excelling in small runs of new products with short delivery times. As these products matured,
strength
The of a multinational
manufacturing
company lies precisely in its ability to exploit a network of knowledge to spread process innovations and best
practices.
the factory transferred its knowhow to low-cost factories in Eastern Europe.
Implications for Senior Managers
How can managers use an understanding of these four models to manage factory networks? Our longitudinal study, along with our later work with senior managers around the world, suggests two important insights.
A Balanced Portfolio
First, our work underscores the importance of balance in a company’s portfolio of factories and suggests how companies might achieve it. Hosting network players, for example, appear to be necessary for a company’s sur-
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management & strategy vival, for their innovations are the primary source of improvements in manufacturing operations. Yet such factories can be large enough to create diseconomies of scale, and when they are situated close to corporate headquarters, they may not be optimally located to tap into new trends. In such situations, companies often rely for that purpose on active network factories, which probably explains why European pharmaceutical giants have subsidiaries in California or Boston, close to new developments in fields like biogenetic engineering. Similarly, automakers in Europe and the United States use their active network factories to learn about the new manufacturing processes of the Japanese carmakers with which they partner. Still, active network factories are relatively expensive. Their managers spend a lot of time traveling, visitors disturb their operations, and training people and sharing best practices are time-intensive activities. These factories must have extra capacity to fulfill their roles as developers and distributors of knowledge. Since it’s foolish to allow this kind of inefficiency in all facilities, companies should complement their active network factories with isolated plants operating in a
very lean, efficient, and low-cost way. In fact, our work suggests that isolated factories help companies to control the overall cost of their manufacturing networks while offering greater strategic flexibility. The isolated factories we studied often served, for example, as bricks in building an international presence: by replicating the practices of isolated factories in a new market, a company can gain rapid access to it, learn about its trends, and use that knowledge to develop innovations in network plants. (This copy-and-paste approach is particularly common for mature manufacturing processes used to make relatively low-value products.) By the same token, isolated units are easy to relocate, as the textile industry’s shift of production from North Africa and Mexico to Mauritius to Bangladesh and, most recently, to China has shown in recent years. As for highly efficient receiver factories, they help manufacturing networks in similar ways, particularly when technologies— including the process technologies associated with manufacturing—change rapidly.
print, managers must consider geography. Do specific types of factories have natural geographic locations? For hosting and active network plants, our research suggests that the answer is no. In fact, active network factories in particular could, and probably should, be located all over the world; the main question is finding the most interesting sources of knowledge. For isolated and receiver factories, however, the situation is different, at least in one respect: while they can be located anywhere, in the long term they are much less sustainable in highwage countries (such as Japan) than in low-wage countries (such as China). In the face of overcapacity or other setbacks, it will be obvious where to cut these kinds of facilities: a Belgian factory in our study, a receiver that absorbed practices from other plants to improve its performance, was the first victim during a period of downsizing. Broadly, our research and experience suggest that isolated and receiver factories will struggle for survival in high-wage countries or gravitate toward low-wage ones.
The Geography Question
A Dynamic View
Of course, to optimize a company’s manufacturing foot-
A Trend toward Active Networking
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Of course, a company’s network of factories evolves along with broader changes in its context and strategic direction. In fact, manufacturing networks are remarkably dynamic. During 1995–96, the eight European multinationals we studied operated 59 factories. A decade later, they operated 83, and nearly all the net additions, reflecting the increased globalization over the period, occurred outside Europe. Meanwhile, 18 of the original 59 factories had disappeared a decade later. A majority had been shuttered; others were transferred through M&A or partnerships.
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Follow the Advantages
To determine which forces influenced the closure of the old plants and the sitting of the new ones, we studied the primary advantages that managers of factories attributed to their location in 1995–96, and again in 2005–06. During both periods, proximity to markets trumped a range of other factors, including proximity to suppliers, the supply and cost of labour, and the availability of skills. The cost of labor was the primary driver for the location of just eight of the factories that the eight multinationals owned in 2005–06. While this finding doesn’t imply that only these factories were located in low-cost countries, it does mean that the globalization of manufacturing networks is driven more by a search for markets than by relocation in search of low labour costs. Moreover, factories whose main advantages were market proximity and the availability of skills and know-how have survived at a higher rate than factories whose main advantage was labour costs. Not surprisingly, three of the four factories that seemed to have no real location advantage in 1995–96 have disappeared. It’s clear that skills, know-how, and market proximity are relatively stable location advantages. Low labour costs is a less stable one, and of course the absence of any major advantage is a source of instability. What has been the fate of the four different types of factories we identified earlier? Notably, we found that over the past decade, the proportion of active network players has increased while that of isolated factories has decreased. This finding suggests that today more factories are regarded as sources of know-how for their networks and thus as
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assets for their companies. Only one of the factories that disappeared from the networks since 1995–96 was a network plant; nearly all of the departed were isolated or receiver factories. A comparison among the survivors strongly suggests that some isolated factories—and possibly a few receivers—developed into network plants, especially active network plants. Evidence for this shift also came from our interviews with factory managers, several of whom stressed the importance of networking and of efforts to promote the sharing of experiences and best practices through means such as working groups, audit teams, physical and virtual meetings, intranets, and databases. Our interviews suggest that the development of stronger network relationships resulted from a clear and explicit strategy—and was in some cases regarded as necessary for corporate survival. Taken together, our findings suggest that the companies in the sample preserved their competitiveness by shedding some factories that didn’t contribute to their stock of knowledge and by committing a larger part of the corporate manufacturing network to its creation.
Increasing Strategic Flexibility
A greater focus on the creation of knowledge doesn’t mean that companies should eliminate all of their isolated factories or receivers. On the contrary, over the decade the companies we studied created and disposed of quite a few such factories—four per company over the decade—which suggests that they make the strategic architecture of an overall factory network more flexible. Of course, this possibility is cold comfort to plant managers of isolated or receiver factories.
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How can they improve their odds of survival? In high-wage countries, one strategy seems to be building and maintaining relationships with other factories in the network. Innovativeness in itself appears insufficient for survival; the willingness to share its fruits with the other players in the network is crucial. Control over the dynamics of a network of factories should not be left solely to their managers, however; ultimately, senior managers at headquarters must orchestrate the coordinated evolution of the network’s nodes and flows. For senior executives, this means that
globalization
The of manufacturing networks is driven more by a search for markets than by relocation in search of low labour costs. decisions about the design of a company’s manufacturing network aren’t limited to what it should produce and where, and how to organize the resulting logistics flows; they are also about the design and management of flows of innovation and know-how. Executives must not leave this to chance. Facilitating, building, maintaining, balancing, and managing network relations among factories may prove to be the key to competitiveness. n Arnoud De Meyer is the director of Cambridge University’s Judge Business School, and Ann Vereecke is an associate professor and partner at Vlerick Leuven Gent Management School, as well as an associate professor at Ghent University, Belgium. This article was first published in September 2009 on The McKinsey Quarterly Web site, www.mckinseyquarterly.com. Copyright © 2009 McKinsey & Company. All rights reserved. Reprinted by permission.
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management & strategy
Getting Ready for the
The government of India, in its Union Budget 2009-10, has reiterated its commitment to introduce the Goods and Services Tax (GST) by April 1, 2010. Under dual GST, a Central Goods and Services Tax (CGST) and a State Goods and Services Tax (SGST) will be levied on the taxable value of a transaction. This dual structure will ensure a higher involvement from the states, and consequently their buy-in into the GST regime, thus facilitating smoother implementation.
GST Regime G by gagan seksaria
oods and Services Tax (GST) is a broad based and a single comprehensive tax levied on goods and services consumed in an economy. This is levied at every stage of the production-distribution chain with applicable set offs in respect of the tax remitted at previous stages. It is basically a tax on final consumption. To put at a single place, GST may be defined as a tax on goods and services, which is levied at each point of sale or provision of service, in which, at the time of sale of goods or providing the services, the seller or service provider may claim the input credit of tax—which he has paid while purchasing the goods or procuring the service. It is seen as the panacea for removing the ill-effects of the cur-
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rent indirect tax regime, prevalent in the country. If adopted and implemented in its true spirit, GST may neutralize the existing problem of taxes being levied on top of taxes. For instance, when a shoe company produces a pair of shoes, the Central Government charges an excise duty on them as they leave the factory. At the retail level, the state where the outlet is located, charges Value Added Tax (VAT), without giving credit on the excise duty levied earlier (the state tax is levied on top of a central tax). Also, different states charge different rates of VAT. In the GST system, both Central and State taxes may be collected at the point of sale. Both components (the Central and State GST) may be charged on the manufacturing cost.
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The government is planning to introduce dual GST structure in India. Both the tax components will be charged on the manufacturing cost. The government is deliberating on the value of combined GST rate at the moment, which is expected to be between 14 to 16 per cent. After the combined GST rate is decided, the Centre and the States will finalise the CGST and SGST rates. All kinds of goods and services, barring some exceptions, would be under the GST purview.
Impact of GST on Industry
Indian manufacturing sector is one of the highest taxed sectors in the world. A complex and high taxation structure has the tendency to render products uncompetitive in the International market, or it eats up large por-
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tions of the cost arbitrage available in manufacturing set ups in low cost economies such as India. For instance, the manufacturing cost of most products in India is nearly half than in the west. But, the incidence of multistage taxation i.e., Customs duty on imports, Central excise duty on manufacture, Central Sales Tax (CST) / Value Added Tax (VAT) on sale of goods, Service tax on provision of services and levies such as entry tax, octroi, cess by the State or local municipal corporations and related costs such as loss of tax credit, compliance and litigation cost chips away at this advantage to the extent of almost 50 per cent.
Cascading Impact of Taxes on Landed Costs
Let us understand the cascading impact of indirect taxes through an example of a typical value chain. There are multiple incidences on taxes and cascading impact on the cost of Finished Goods. l Custom Duty + Counter Veiling Duty + Cess paid on imported Goods. l Sales Tax / VAT paid on domestic purchases, which include the excise duty paid by the raw material manufacturer. Sales Tax / VAT are also charged on the excise duty element. l Excise duty on the cost of manufactured goods. So, this excise duty also gets levied on the sales tax element (or custom duty & cess for import) paid on raw materials. l Service tax on transportation. l Sales Tax (CST or VAT) on the sales of finished goods cost, which also includes the excise duty elements, sales tax paid on raw materials and service tax paid on transportation. Practically, the sales tax at this stage gets levied on all the taxes paid in the previous steps.
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Multiple Warehouses, Inefficient Distribution
Besides these tax implications, complex state-wise tax structures have meant that manufacturers base their inventory and distribution decisions based on tax avoidance, instead of operational efficiency. Accordingly, most manufacturers maintain warehouses in different states to evidence movement of goods from one warehouse to another to save on the CST. Also, quite a few entities set up warehouses in locations like Pondicherry or Daman, often impractical from a distribution point of view, as the CST rate at such locations were previously lower than the rates prevalent in other states. Typically, most large consumer durables or FMCG companies in India operate with 25 to 50 warehouses all over the country, which is a very large number compared to developed economies (less than 5-8) or even developing countries (less than 10-15) with similar geographical expanse. This has severe implications on cost structure and operational efficiency levels, which is ultimately borne by the end consumer either in terms of cost-quality trade-offs. l More sum total space & inventory requirement: It is estimated that if tax avoidance is not a factor for deciding distribution network, the total warehouse space can be reduced by 20 to 50 per cent immediately. l Small & inefficient warehouses: Given the large spread of 4,000 to 10,000 sq ft warehouses, the average size of a warehouse has remained small causing duplication of overheads and making it unfeasible for owners and operators to introduce racking or automation. According to a broad estimate, scale economies start to positively affect warehouses
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statewise tax structures have meant Complex
that manufacturers base their inventory and distribution decisions based on tax avoidance.
only when they are larger than 30,000 sq ft. l Distribution cost and inefficiencies: There are significant cost and inefficiency implications of running a distribution network over a spread of 25 to 50 warehouses in terms of smaller loads, smaller trucks, state boundaries being the determinant of transportation routes. l Higher IT cost: Due to such a situation, there is high cost of ERP linkages throughout the warehousing network to ensure real time visibility of inventory. l Higher material handling cost: It happens due to multiple
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management & strategy handling across the various layers of distribution. l High compliance cost: Complexities and multi-layered compliance requirements add to cost by way of compliance related overheads, litigation costs and corruption.
The State of the Logistics Industry
A Crisil Research report released in September 2009 estimates that the Indian logistics spend was at Rs 2.7 trillion in 2008-09, which includes only primary transport mode and infrastructure. This is equivalent to around 8.2 per cent of the Gross Domestic Product, and this shoots up to 10.7 per cent—if the secondary movement (from the hub to various depots) is also included. This is significantly higher than those of developed nations—
GST will incentivize logistics companies and
3PL service providers to invest in scale, service focus and technology and align their service offering to supply chains of customers. 30
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where it averages 5 to 7 per cent and for all the wrong reasons. The Indian logistics industry is plagued by fragmented ownership and unorganized structure, the poor state of physical and legislative infrastructure, value and quality erosion due to extreme intra-industry competition, underinvestment further fueled by thin margins and a penalizing taxation structure. A lot of these challenges have been directly created by its customers’ extreme focus on today’s cost as opposed to longer term spends and trade-offs between price and efficiency, in turn driven by the current complexities in our current indirect taxation structure. A manufacturer already running a sub-five per cent margin business due to a combination of cost pressures created by taxes and infrastructure deficiencies, pricing pressures created by the Indian consumers’ cost consciousness, and the extreme competition created by the Indian entrepreneurship ecosystem—is not able to stand up to an experiment based on a power point presentation by a sincere logistics company. He is not able to accept higher costs of automation, technology and consultancy based on potential savings on an annual basis. Even though the multinationals, for whom this is not an experiment anymore, are driving change in this behaviour, this forced and helpless short-sightedness of the consumer to the Indian logistics industry has led to deep-grained challenges like: l Suboptimal investment in building scale, automation, human capital and technology l Reluctance of Indian manufacturers, traders and exporters to partner with quality 3PLs l Few integrated logistics players offering through and through as well as value-added services l Infrastructure gaps in roads,
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rail, ports and coastal areas l Insufficient use of hub and spoke mainly driven by the customer’s tax avoidance motives
The Advent of GST
In a recent speech, Dr Vijay Kelkar, Chairman of the 13th Finance Commission, listed down the benefits of GST. According to him, it will bring about a change on the tax firmament by redistributing the burden of taxation equitably between manufacturing and services. It will lower the tax rate by broadening the tax base and minimizing exemptions. It will reduce distortions by completely switching to the destination principle. It will foster a common market across the country and reduce compliance costs. It can provide a fiscal base for local bodies to enable them to fulfill their obligations. It will facilitate investment decisions being made on purely economic concerns, independent of tax considerations. It will promote exports. GST will also promote employment. Most importantly, it will spur growth. l Logistics re-arrangement: GST will allow manufacturers to see India as one large geographical expanse—on which to store and distribute with no state boundaries. This will, in turn, allow them to aggregate every four to six small state level warehouses into one large, regional warehouse and increasingly use the hub and spoke distribution model that offers proven cost and operational efficiencies in geographically large markets. On the other hand, this will incentivize logistics companies and 3PL service providers to invest in scale, service focus and technology and align their service offering to the widely changing supply chains of their customers. It will also catalyse much needed consolidation in the sector:
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l Tax credits: Under GST, manufacturers would be entitled to input tax credit of all inputs and capital goods purchased from within the state as well as interstate, from a registered dealer for setting off the output tax liability on the sale of their finished products. Similarly, distributors would also be able to pass on the duty burden to their customers. This would ensure that there is no cascading effect of taxes, and would result in a reduction in the cost of doing business. Currently, they cannot claim a credit for the service tax paid on their inputs. Restrictions also apply on claiming credits for VAT on inputs other than goods for resale such as free samples. l Inventory costs: Another major benefit to, especially to FMCG and consumer durables companies,—would be the reduction in their inventory costs. Currently, the CENVAT is included in their inventory costs, which has to be financed by them. Under the new structure, the GST paid on inventory would be fully recoverable immediately as input tax credit, reducing the inventory financing costs. l Cash flow benefits: GST will offer cash flow benefits to dealers and distributors. They would be collecting GST from their customers as they make sales, but would be required to remit it to the government only at the end of the month or the quarter, when they file their returns. This extra cash float would allow them to achieve scale and invest in making their operations more efficient. l Lower price: This is likely to result in a reduction in the prices of commodities in the long run as manufacturers and distributors would pass on the benefits of the lower costs of carrying on their businesses to the consumers. l Government revenues: Under GST, all goods and services would
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be subject to tax, unless specifically exempted. Further, it is also anticipated that the number of exemptions would be significantly reduced. Accordingly, the total revenue collections are expected to go up, as already proven by post GST scenarios in several other countries. The cost and complexity of administration, which is inversely proportional to compliance levels, will benefit. It would however be imperative for all stakeholders to deliberate upon their processes to ensure a smooth transition into the GST regime, instead of being caught off-guard after its launch. While the government is actively preparing for the new law & procedures, businesses would also need to gear up to be able to manage this change well. Some of the key steps would be to relook at the supply chain infrastructure and set-ups and consider, in a new light, their reluctance to outsource to professionals and experts. Some businesses may have to re-work their pricing strategies with the changed tax regime—higher credits coupled with possible change in rate of tax on output. For credits, each item of expenditure could yield credits, changing
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GST will bring about a change on the
tax firmament by redistributing the burden of taxation equitably between manufacturing and services. the approach towards capturing, recording and documentation. Preparedness would also be required in terms of training personnel, as well as understating documentation to be generated or maintained including updating of ERP packages. Indeed, this will entail a thorough revamp of the existing business model—not only in terms of the business strategies, including debate on continuity of the special exemptions presently availed, but also from a practical standpoint involving changes in the wider software systems, invoicing mechanism, rate changes and re-assessment of trade-offs between distribution costs and service levels. n Gagan Seksaria is a partner of Supply Chain Leadership Council—www.sclc.in.
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management & strategy
The outlook for
Solar Power Don’t be fooled by technological uncertainty and the continued importance of regulation; solar will become more economically attractive.
by peter lorenz, dickon pinner and thomas seitz
A
new era for solar power is approaching. Long derided as uneconomic, it is gaining ground as technologies improve and the cost of traditional energy sources rises. Within three to seven years, unsubsidized solar power could
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cost no more to end customers in many markets, such as California and Italy, than electricity generated by fossil fuels or by renewable alternatives to solar. By 2020, global installed solar capacity could be 20 to 40 times its level today.
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But make no mistake, the sector is still in its infancy. Even if all of the forecast growth occurs, solar energy will represent only about 3 to 6 per cent of installed electricity generation capacity, or 1.5 to 3 per cent of output in 2020. While solar power can certainly help to satisfy the desire for more electricity and lower carbon emissions, it is just one piece of the puzzle. What’s more, solar power faces challenges that are common in emerging sectors. Several technologies are competing to
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win the lowest-cost laurels, and it’s not yet clear which is going to win. Rapid growth has created shortages and high margins for early players, such as the silicon refiners Dow Corning, REC Solar and Wacker, as well as the component manufacturers First Solar, Q-Cells and SunPower. Fueled by ever-increasing flows of new equity from venture capital and private-equity firms—$3.2 billion in 2007—innovative new competitors are entering the sector, and with them the potential for excess supply, falling prices, and deteriorating financial performance for some time. With competition heating up, the companies building the equipment that generates solar power must relentlessly cut their costs by improving the processes they use to manufacture solar cells, investing in research and development, and moving production to low-cost countries. At the same time, they must secure access to raw materials without tying themselves to the wrong technology or partner. The evolution of technology looms large for utilities as well. If they hesitate to undertake large long-term investments until the dust clears, they risk losing customers to players such as panel installers willing to put up and finance solar units on the roofs of buildings in return for a share of the savings the owners enjoy. As always in the utility sector, it will be essential to deploy smart regulatory strategies, which in some regions might mean including solar investments in the capital base used to set rates for consumers. Government policies will also continue to influence the sector’s development heavily. Deciding when and how to phase out subsidies will be critical for creating a vibrant, cost-competitive sector. Even in the most favourable regions, solar power is still a
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few years away from true “grid parity”—the point when the price of solar electricity is on par with that of conventional sources of electricity on the power grid. The time frame is considerably longer in countries such as China and India, whose electricity needs will require large amounts of new generating capacity in the years ahead—and whose cheap power from coal makes grid parity a more elusive goal.
The Birth of a Sector
The solar sector includes a diverse set of players, including the manufacturers of the silicon wafers, panels and components used to generate much of today’s solar power, as well as the
the high cost of generating solar power would prevent it from competing with electricity from traditional fossil-fuel sources in most regions. But the sector’s economics are changing. Over the last two decades, the cost of manufacturing and installing a photovoltaic solar-power system has decreased by about 20 per cent with every doubling of installed capacity. The cost of generating electricity from conventional sources, by contrast, has been rising along with the price of natural gas, which heavily influences electricity prices in regions that have large numbers of gasfired power plants. These regions include California, the Northeast
subsidies
Government have played a prominent role in the growth of solar power. Producers of renewable energy in the United States receive tax credits. installers who put small-scale units on individual roofs, utilities and other operators setting up enormous solar collection systems in deserts, and start-up companies striving for breakthroughs such as lower-cost thinfilm technologies. All are operating in a dynamic environment in which long-held assumptions— subsidies, the primacy of incumbents, and the predominance of silicon-wafer-based technology— are being eroded.
Beyond Subsidies
Government subsidies have played a prominent role in the growth of solar power. Producers of renewable energy in the United States receive tax credits, for example, and Germany requires electricity distributors to pay above-market rates for electricity generated from renewable sources. Without such policies,
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and Texas (in the United States), as well as Italy, Japan and Spain. As a result, solar power has been creeping toward cost competitiveness in some areas. California, for example, combines abundant sunshine with retail electricity prices that, partly as a result of the state’s policies, are among the highest in the United States—up to 36 cents per kilowatt-hour for residential users. Unsubsidized solar power costs 36 cents per kilowatt-hour. Support from the California Solar Initiative cuts the price customers pay to 27 cents. Rising naturalgas prices, state regulations aiming to limit greenhouse gas emissions, and the need to build more power plants to keep up with growing demand could push the cost of conventional electricity higher. During the next three to seven years, solar energy’s unsubsidized
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management & strategy
The growing competitiveness of solar power.
34
cost to end customers should equal the cost of conventional electricity in parts of the United States (California and the Southwest) and in Italy, Japan, and Spain. These markets have in common relatively strong solar radiation (or insolation), high electricity prices, and supportive regulatory regimes that stimulate the solar-capacity growth needed to drive further cost reductions. These conditions set in motion a virtuous cycle: growing demand for solar power creates more opportunities for companies to reduce production costs by improving solarcell designs and manufacturing processes, to introduce new solar technologies, and to enjoy lower prices from raw-material and component suppliers competing for market share. We forecast global solar demand by estimating the payback period for customers in
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different countries and regions. (Payback estimates rest on projected system costs and power prices, as well as local sunlight and incentive schemes.) Our analysis suggests that by 2020 at least ten regions with strong sunlight will have reached grid parity, with the price of solar electricity falling from upward of 30 cents per kilowatt-hour to 12, or even less than 10 cents. From now until 2020, installed global solar capacity will grow by roughly 30 to 35 per cent a year, from 10 gigawatts today to about 200 to 400 gigawatts, requiring capital investments of more than $500 billion. Exactly where within this range actual installed capacity falls will depend upon the evolution of solar costs, carbon costs, and power prices (which in turn are heavily influenced by natural gas prices). Even though this volume represents only 1.5 to 3 per cent of global electricity
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output, the roughly 20 to 40 new gigawatts a year of installed solar capacity would provide about 10 to 20 per cent of annual new power capacity over that period. This level of installed solar capacity would abate some 125 to 250 megatons of carbon dioxide— roughly 0.3 to 0.6 per cent of global emissions in 2020.
Evolving Technologies
Our demand and capacity forecasts assume continued improvement in solar-cell designs and materials, but neither a radical breakthrough nor the emergence of a dominant technology. At present, three technologies—siliconwafer-based and thin-film photovoltaics and concentrated solar thermal power—are competing for cost leadership. Each has its advantages for certain applications, but none holds the overall crown. Major innovations and shifts in the relative cost com-
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petitiveness of these technologies could occur. Companies that use either of the current photovoltaic technologies, which generate electricity directly from light, are striving to reduce costs by making their systems more efficient. In power conversion, efficiency means the amount of electrical power generated by the solar radiation striking the surface of a photovoltaic cell in a given period of time. For each unit of power generated, more efficient systems require less raw material and a smaller solar-collection surface area, weigh less, and are cheaper to transport and install.
Silicon-wafer-based photovoltaics Although 90 per cent of installed solar capacity uses silicon-wafer-based photovoltaic technology, it faces two challenges that could create openings for competing approaches. For one thing, though it is well suited to space-constrained rooftop applications (because it is roughly twice as efficient as current thin-film photovoltaic technologies), the solar panels and their installation are costly: larger quantities of photovoltaic material (in this case, silicon) are required to make the panels than are to make thin-film photovoltaic solar cells. Second, companies are starting to approach the theoretical efficiency limit—31 per cent—of a single-junction silicon-waferbased photovoltaic cell; several now achieve efficiencies in the 20 to 23 per cent range. To be sure, there is still room for improvement before the limit is reached, and clever engineering techniques (such as concentrating sunlight on solar cells or adding a number of junctions made of different materials to absorb a larger part of the light spectrum more efficiently) could extend it, though
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many of these ideas increase production costs.
Thin-film photovoltaics The other important photovoltaic approach, thin-film technology, has been available for many years but only recently proved that it can reach sufficiently high efficiency levels (about 10 per cent) at commercial production volumes. Thin film trades off lower efficiencies against a significantly lower use of materials—about 1 to 5 per cent of the amount needed for silicon-waferbased photovoltaics. The result is a cost structure roughly half that of wafer-based silicon. This technology also has significant headroom to extend the cost gap in the long term. But challenges are abound. The lower efficiency of thin-film modules means that they are currently best suited to large field installations and to large, flat rooftops. Furthermore, the longevity of these modules is uncertain; silicon-wafer-based photovoltaics, by contrast, maintain their output at high levels for more than 25 years. Of the most promising thin-film technologies, only one—cadmium telluride— has truly reached commercial
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scale, and some experts worry about the toxicity of cadmium and the availability of tellurium. A final complicating factor is that a new generation of nanoscale thinfilm technologies now on the horizon could significantly increase the efficiency and reduce the cost of producing solar power.
Large solar farms are making an appearance in the USA and Europe.
Concentrated solar thermal power The third major solar technology, concentrated solar thermal power, is the cheapest available option today but has two limitations. Photovoltaic systems can be installed close to customers, thereby reducing the expense of transmitting and distributing electricity. But concentrated solar thermal power systems require almost perfect solar conditions and vast quantities of open space, both often available only at a great distance from customers. In addition, the ability of concentrated solar thermal power to cut costs further may be limited, because it relies mostly on conventional devices such as pipes and reflectors, whose costs will probably fall less significantly than those of the materials used in semiconductor-based photovoltaics. Nonetheless, several European utilities now regard
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management & strategy concentrated solar thermal power as the solar technology of choice.
The Road Ahead
The extent and speed of this emerging sector’s growth will depend on its ability to keep driving down the cost of solar power. No single player or set of players can make that happen on its own. l The necessary technological breakthroughs will come from solar-component manufacturers, but rapid progress depends on robustly growing demand from end users, to whom many manufacturers have only limited access. l Utilities have strong relationships with residential, commercial, and industrial customers and understand the economics of serving them. But these compa-
stimulate continued efficiency improvements, as well as operational excellence to drive down manufacturing costs. Furthermore, in view of the technological uncertainty, established siliconwafer-based companies should hedge their bets by investing in advanced thin-film technologies. Some manufacturers have considered establishing partnerships or vertically integrating— approaches that could give them access to supplies, customers, and financing but might also lock them into the wrong technology. To make the right trade-offs, the manufacturers of components for silicon-wafer-based and thin-film technologies should focus on fundamentals, such as manufacturing costs, efficiency improve-
technological
The necessary breakthroughs will come from solar-component manufacturers, but rapid progress depends on robustly growing demand from end users. nies will have difficulty driving the penetration of solar power unless they have a much clearer sense of the cost potential of different solar technologies. l In some regions, regulators can accelerate the move toward grid parity, as they did in California and Germany, but they can’t reduce the real cost of solar power. Poor regulation might even slow the fall in prices. Although these considerations make it difficult to predict outcomes and to prescribe strategies, certain economic principles do apply.
Solar-component Manufacturers
The fundamentals are clear for photovoltaic-component manufacturers that hope to remain competitive: there’s no escaping significant R&D investments to
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ments, and the movement of prices for raw materials.
Raw materials Polysilicon is the main raw material for silicon-wafer-based solar-cell manufacturers, which now consume more of it than the semiconductor industry does. Over the last two years, shortages and price spikes have been the result. High margins have encouraged incumbents to add capacity and have attracted new entrants. Many observers have therefore been predicting that global polysilicon production capacity will at least triple from 2005 to 2010, while our forecasts indicate that demand for the material will only double during the same period. This mismatch suggests that the spot price of polysilicon could drop from over $200 a kilogram to levels previously seen in the semiconductor
- technology management for decision-makers
industry—as little as $30 to $50. Of course, if global demand for silicon-based modules surged, or if announced capacity additions did not materialize or were delayed (due to cancelled projects, quality issues, or the sorts of engineering and construction delays that are currently prevalent in many other capital intensive industries), the price effect might be dampened significantly. Industry participants should therefore screen supply and demand developments continuously.
Production process technology The way companies manufacture solar cells has the largest impact on the cells’ efficiency and their cost. Many incumbents have invested heavily in developing proprietary manufacturing processes. Some start-up cell manufacturers, by contrast, buy entire manufacturing lines from equipment companies such as Applied Materials. Cell manufacturers are valuable partners for equipment companies hoping to tap into the growth of the solar sector. The equipment companies need formal partnerships that will allow them to retain ownership of the intellectual property associated with their manufacturing processes—a difficult trick that these vendors tried (and failed) to pull off in the semiconductor sector. The same thing could happen again unless equipment providers can figure out how to make their offerings extremely cost competitive and difficult for operators to imitate or enhance.
Producing in low-cost regions Many leading silicon-waferbased photovoltaic solar companies are located in high-wage countries. These manufacturers produce cells that are typically more efficient than those produced in lower-wage countries;
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for example, many German and US cells achieve an efficiency of 20 per cent or more, compared with 15 to 16 per cent for Chinese ones. Yet countries like China and India will inevitably gain an overall cost advantage by developing the skills needed to produce more efficient cells. Companies in regions with high labour costs should therefore constantly monitor the benefits and risks of locating their next plants in an area that offers lower-cost labour and generous subsidies.
Utilities
Although the distributed nature of solar power might seem to clash with the utilities’ business model of centralized electricity generation, these companies do have assets in the solar era, starting with strong customer relationships. They are also in a good position to integrate electricity generated at large numbers of different locations (such as rooftops) into the existing network. Many utilities could use their advanced metering infrastructure
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to calculate the full value of solar power during peak times. One way of leveraging these assets would be to form partnerships with component manufacturers. Building profitable partnerships will require utilities to develop new skills, such as installing and managing solar-generation capacity, as well as deciding which solar technologies best suit their service territories. The technology that currently seems most attractive for utilities is concentrated solar thermal power, because it involves centralized electricity generation—much as traditional coal, nuclear, and hydroelectric facilities do—and is today’s low-cost solar champion. Its long-term cost prospects, though, are less favourable than those of some emerging photovoltaic technologies, so choosing it now is in effect a strategic bet on how quickly relative costs and local subsidy environments will change. While the natural tendency might be to postpone investments until the technology picture
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becomes clearer, sitting on the sidelines poses risks for the utilities. As the cost of solar energy decreases, the growing number of companies that will probably enter the business of installing solar equipment could cut off some utilities from their customers. Installers buy solar panels, mount them in homes and businesses, and then lease them in return for a stream of payments lower than prevailing electricity rates but still high enough to earn a healthy return on the panel investment. Since people who now pay the highest electricity rates would be the most likely to switch, utilities would lose their most valuable customers. One way of coping would be to forge relationships with solarcell and -module manufacturers that could help utilities claim a portion of this emerging business while they gain experience integrating distributed generating capacity into the grid. It should be in their interest to strike up such partnerships quickly, before disintermediation reduces their
The global solar market in 2020.
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management & strategy goals. Once regulators have identified and prioritized them, appropriate policies can be developed to stimulate specific parts of the sector.
Reward production, not capacity Subsidizing capacity rewards all solar-power installations at the same rate, regardless of their cost-efficiency. Production-based programs, which reward companies only for generating electricity, create incentives to reduce costs and to focus initially on attractive areas with high levels of sunlight.
Phase out subsidies carefully Concentrated solar power systems require vast quantities of open space.
attractiveness as partners, since savvy manufacturers will pit them against installers in a quest for the most favourable financial arrangements. Another approach for the utilities involves regulatory strategy—for example, they could try to persuade regulators to add solar investments to their rate base (the expenses and capital investments that regulators use to calculate fair retail electricity prices). Although such a readjustment would raise electricity rates, utilities could argue that the long-term benefits would be significant: increasing their reserve margins while making conventional power generation investments unnecessary, dampening future rate increases from rising fuel prices, meeting environmental targets, and accelerating the decline in solar-power costs. This approach yields a fixed return on capital that might ultimately be lower than what would be possible if utilities bet successfully on the right technologies, but it also mitigates investment risk.
Governments and Regulators
The decisions of regulators will affect not only utilities but also the entire solar sector. During the
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march to grid parity, well-understood and targeted subsidies will be critical to build the confidence of investors and attract capital. The impact of government policies in rapidly growing emerging markets such as China and India will be particularly important for the pace of the sector’s growth. Our base-case forecasts do not include aggressive growth in these markets. But if China installed rooftop solar panels on, say, 13 per cent of all new construction in 2020, the country would add 15 gigawatts of solar capacity a year, about 40 per cent of the world’s annual increase. Similarly, government policies encouraging the use of electric vehicles may also accelerate the growth of solar demand. While the optimal regulations for different countries will vary considerably, all governments should focus on a few major factors.
Clarify objectives Before establishing policies, regulators must decide whether they want to increase energy security, lower carbon emissions, build a high-tech manufacturing cluster, create jobs for installers, or any combination of these
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In virtually every region of the world, solar subsidies are still crucial; in 2005, when they expired in Japan, capacity growth declined there significantly. But since solar power could eventually be cost competitive with conventional sources, regulators must adjust incentive structures over time and phase them out when grid parity is reached. Solar energy is becoming more economically attractive. Component manufacturers, utilities, and regulators are making decisions now that will determine the scale, structure and performance of this new sector. Technological uncertainty makes the choices difficult, but the opportunities—for companies to profit and for the world to become less dependent on fossil fuels—are significant. n Peter Lorenz is an associate principal in McKinsey’s Houston office, where Thomas Seitz is a director; Dickon Pinner is a principal in the San Francisco office. The authors wish to acknowledge the contributions of their colleagues Joel Conkling, Stefan Heck and Christer Tryggestad. This article was first published in June 2008 on The McKinsey Quarterly Website, www.mckinseyquarterly.com. Copyright © 2008 McKinsey & Company. All rights reserved. Reprinted by permission. (Picture Courtesy: www.esolar.com)
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facilities & operations
improving
Energy Efficiency in Plastic Industry
The biggest consumers at a plastics processing plant are the machines. There are three types of machines available in the market, namely, hydraulic, electrical and hybrid. Although, completely electrically operated machines are most efficient, at present they are very costly. Moreover, the electricity cost is also showing an upward trend. Three different cases explain ways to reduce energy consumption in plastic moulding machines. by rob van heur and mark verheijen
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- technology management for decision-makers
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T
wo hundred and thirty million tons of plastic are produced annually worldwide. Europe, including Switzerland and Norway, accounts for 25 per cent of total production, this being approximately equal to the production of North America (24 per cent). At 8 per cent, Germany is the largest producer of plastics in Europe, followed by the Benelux. The industry currently has to cope with price increases because of the high price of oil and a temporary shortage of raw materials. On average, prices have risen between 50 per cent [for polypropylene (PP)] and 100 per cent [for polystyrene (PS)] since the start of 2004. This increase has manifested itself in the increased price of plastic end products such as packaging, building materials (insulation, pipes, window profiles, etc.), automobile components, and a huge variety of other types of equipment. The consistently strong growth in the consumption of plastics in China, India, Central Europe, and Russia is certainly playing a role in this phenomenon. As a result, European plastics processors are not always able to secure the quantities of materials they wish to order.
Types of Products in the Industry
The relatively low density of most plastic materials means the end products are usually lightweight. They also have excellent thermal and electrical insulating properties. However, some types can and are being used as electricity conductors. Most plastics are resistant to corrosion. Some are transparent, and therefore have applications in certain types of optical equipment. They are also simple to mould into complex shapes, making the
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World Plastics Production
Source: PlasticsEurope, WG Market Research & Statistics
integration of different materials and functions possible. If the physical properties of a particular plastic do not adequately meet specific requirements, the composition can be changed with the addition of reinforcing filler substances, colours, expanding agents, flame retarders, softeners etc., to meet the requirements of the specific application. The main applications of plastics are: l Packaging (especially food packaging) l Construction (insulation, piping, etc.) l The automotive industry (fuel tanks, dashboards, airbags, etc.) l Textiles
Description of the Production Processes
Many different production and sub-production processes are used in the plastics industry.
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However, the main production processes are: l Extrusion l Injection moulding l Blow moulding l Rotational moulding l Thermoforming l Composites l Compression moulding The extrusion, injection moulding and blow moulding production processes are described in this article. These are the most common processes in the industry. Extrusion: This is a continuous process for the production of semi-manufactured products such as pipes, profiles, cable sheaths, films, sheets and plates. Although the design of the mould and some extrusion components are different, each product has the same production method. Plastic pellets are added to the extruder. A screw pushes the grains through a heated
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facilities & operations Extruder Unit Extruder
Extrusion mould
Granulate
barrel. The grains are pressed together and melt. To heat the barrel, thermal oil is often used, usually heated electrically. The plastic is pressed into the correct shape in the mould at the end of the screw and cooled by water or air. When the product has reached the desired length, it is cut to size. Energy consumers: The biggest energy consumers in the extrusion process are the motors, heating units, cooling processes, and compressors. To gain a clearer understanding of energy management, it is advisable to look at energy consumption in relation to time. It can then be seen if
Extrusion profile
energy consumption is commensurate with production. The large energy consumers (in particular) must be carefully matched to the process to ensure they do not operate unnecessarily. Injection moulding: This is a cyclical process mainly used for making plastic parts. Fluid plastic is forced into a mould using an injection technique. It is a fast process and used for the production of identical parts. The injection unit used for injection moulding corresponds to that of the extrusion process. The plastic is added, heated and forced through the nozzle into a mould. The difference between
injection moulding and extrusion lies in the mould. With extrusion, the mould is an opening where the plastic continuously flows out in a certain shape. With injection moulding, the mould is a template into which the plastic is forced. The mould consists of two parts that are electrically or hydraulically pressed against each other. After the product has hardened, the mould is opened, and the product is further processed. Energy consumers: Energy consumption with injection moulding can be divided into two phases. In the first phase, there is high energy consumption during the injection of the plastic and when the parts are removed. The other phase has lower energy consumption over a longer period when the plastic is cooled. The majority of the energy is used by the heaters and motors. The remaining energy is used by peripheral and other equipment. Blow moulding: This is used to make hollow objects such as plastic bottles. Molten plastic is blown by compressed air to form the desired shape. The injection unit is similar to that for extrusion and injection moulding. The most important blow moulding processes are: l Extrusion blow moulding l Injection blow moulding
Extrusion Process Diagram
Injection Moulding Process Diagram
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With extrusion blow moulding, plastic is extruded in the form of a tube. Then a mould closes around the tube and the plastic is blown by compressed air and pushed against the mould wall. The object is cooled while under pressure. In injection blow moulding, a preform mould is first filled by injection moulding. Then the preform is placed in a blow mould, where it is again heated and blown with compressed air. Blowing can also take place at other locations, for example—where the bottles are filled. This reduces transport costs. Energy consumers: The energy consumers for blow moulding are the same as extrusion and injection moulding because the main process to produce the plastic is essentially the same.
Types of Moulding Machines
In this section, three different drive concepts for moulding machines are examined:
Injection Unit 1
2
3
5
6
7
OPEN 1) Extruder, 2) Granulate, 3) Injection opening (nozzle), 4) Mould (lower part), 5) Product and 6) Mould (upper part)
l Hydraulic l Electrical l Hybrid
The machines are the biggest energy consumers at the factory. If one looks at the purchase price and consumption of a moulding machine, the purchase price
Example of Extrusion Blow Moulding
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of a moulding machine is lower than the energy costs of operating the machine over its working life. Energy-saving machines will save money in the long term. It is therefore not the purchase price that should be the top priority— when purchasing a new machine. The consumption or ‘total cost of ownership’ (TCO) should be taken as the deciding factor. The following paragraphs describe the properties of the different drive concepts. Hydraulic: The hydraulic drive is the oldest concept in terms of technical development. The older systems have a single hydraulic pump with a high capacity, and thus a high energy consumption. Continuous pressure is supplied by a pump so that the system can be used at any time. As a result, the electric motor is continually loaded. This results in a high no-load. In recent decades, multiple energy-saving pumps have been used in the hydraulic systems in combination with pressure regulating valves. With no-load, the system is provided with pressure by the smallest pump. Because multiple pumps are used, energy
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facilities & operations Blow Moulding Process
savings can be achieved of up to approximately 30 per cent compared to the older system with its single pump. These new, more economical hydraulic systems are generally used in most modern machines. The conversion of an older existing machine may be a worthwhile consideration. Electrical: Fully electrically driven injection moulding machines have been on the market for some time now. Servo motors are used to open and close the mould. Greater energy efficiency is achieved by eliminating the no-load losses. These losses are absent because continuous pressure does not have to be maintained anywhere within the system. Direct transmission is used for fully electrical machines. The initial cost of an electrically driven machine is generally higher than a hydraulic machine.
Energy Balance of a Plastics Processing Plant
However, the energy savings can make an electrically driven machine financially attractive in the long term. Besides energy savings, there are also the following advantages: l No hydraulic oil present that can soil the product l Lower maintenance costs. No storage, replenishment, drainage, etc, necessary for hydraulic oil l Less susceptible to failure l No start-up delay l Less noise l Lower water consumption Hybrid: The advantages of both techniques are applied in hybrid machines. Most hybrid machines have a hydraulic pump for clamping the mould. Servo motors are used to drive the screw. Hybrid machines are generally less expensive to buy than fully electrical machines. They are, however, not as energy efficient. This may change in the future because this technique is still seeing significant advances in applied technology.
Energy Data from the Pastics Industry
Energy consumption in the plastics processing industry is mainly electrical. Energy consumption is attributable to the following actions: l Melting of raw materials l Cooling (mould, gauges, oil, etc.) l Driving peripheral equipment such as grinders, compressors, pumps, pre-driers, mixers etc. l Vacuum formation of semimanufactured products Machinery, including periph-
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eral equipment such as grinders, hopper fillers, dosing systems and conveyor belts account for the majority of the electricity costs. The remainder is attributable to space heating, cooling, compressors and lighting. The energy consumption is specific to the processing technique. Energy consumption for the processor is an important factor because it represents a considerable operating cost.
Energy Measures
The energy consumption per kilogram of end product can be calculated for each plant. The illustration beside provides the relevant data for the examined production process in relation to energy consumption per kilogram. There is no major difference between injection and extrusion moulding. The average consumption per kWh/kg barely differs.
Energy-saving Measures
Extrusion: The following list can be taken into account in order to reduce energy consumption in extrusion processes. l Choose the right extruder. A poor choice of screw/mould combination results in higher energy consumption. l Optimize the speed of the extruder. l Switch off as many energy consumers as possible when there is no production. l This is mainly for the extruder’s heating and cooling. Stand-by power consumption is thus limited. l Make sure the housing of
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the extruder is well insulated. Keep the melting temperature of the plastic pellets as low as possible. l Try to minimize the use of compressed air. Use fans for cooling instead of compressed air. l Thermal heating is often mostly electrical. Compare this with using gas. l Use free cooling. Free cooling can be used when the outside temperature is lower than the cooling water that goes back to the chiller. This cools the water before it goes to the chiller. The lower the outside temperature, the greater the effect of free cooling. This means the compressors use less energy for cooling. Injection moulding: The following list can be taken into account in order to reduce energy consumption in injection moulding processes. Make sure the parameters for the object being produced are optimal: l Is the process stable? l Is the mould periodically cleaned? l Optimize the cycle time. Determine if the cycle time can be reduced. l Is the current installation still suitable for the product being manufactured? l Are procedures in place for switching off energy consumers during longer duration production stops? l Is the pressure set correctly for the product being formed? l Is the mould being used to its maximum capacity? (For instance, do not use a four-part mould to manufacture one product per cycle.) l Variable Speed Drive on motor (case) Blow Moulding: The energysaving measures described above are applicable to blow moulding. Blow moulding is after all a derivative of extrusion or injection moulding.
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Specific Energy Consumption for Some Plastic Processes
Practical Examples
Case 1: Frequency controller on injection moulding machine Introduction There are various manufacturers supplying frequency controllers on the market to limit the power consumption of moulding machines. The plastics plant discussed in this case has two frequency controllers assembled on a moulding machine. Current situation The moulding machines are set up with a 90kW motor not provided with frequency controller. Proposal The proposal is to fit the machine with a frequency controller to reduce power consumption. The graph on next page shows the difference between the power consumption of a moulding machine with and without frequency controller. During the whole moulding cycle, there is better energy efficiency, when the moulding machine is fitted with a frequency converter. In total, the cycle for manufacturing the product takes 71 seconds. The screwing process and cooling stage are not shown. The blue line shows the motor power consumption without frequency
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controller. The magenta line shows the motor power consumption with frequency controller. When the set point varies from 100 per cent, it means that the oil pressure of the pumps is excessive in relation to the required pressure in the current situation. Surplus oil will go back to the tank without being used. A frequency controller will control the oil pressure of the pumps according to the given set point. Hence, no excess oil pressure is produced and energy will be saved. During the closing of the mould, the full power of the pumps is required to generate sufficient pressure in a short time. The pumps now operate at full power. The graph shows that the power consumption is just about equal for both driving mechanisms. No energy saving is possible here. The biggest energy saving can be achieved during the holding and ejection processes. During the mould’s holding process, no machine activity is required. Pump pressure is only needed to keep the mould closed. Hence, the motor speed can be decreased, which results in lower energy consumption.
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facilities & operations Motor Power Consumption Moulding Machine
In the current situation, the pumps are switched on too early in the ejection process. The ejection of the product only takes place when the robot has given a command for this. This means the power consumption of the pumps is greater than needed. A frequency controller keeps the pumps at idling speed until they receive a command. The speed of the motor is then increased to the speed required for the removal of the product. Estimated savings When a frequency controller is used, savings can rise to 15.6 kW over the whole cycle. This halves the power consumption. Estimated investment The investment and installation cost of a 90 kW Variable Speed Drive is around EUR 20,000. Depending on the number of running hours, the payback time on this investment can be as low as two years. Case 2: Energy efficiency of production machines Introduction The energy consumption of production machines in the plastics industry amounts to 60 per cent of total energy consumption. The energy consumption of different machines was measured during an energy scan at an injec-
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tion moulding plant. The most important parameters are the power consumption (in kW) and the product produced (in kg/hour) per machine. Measurements were recorded for a total of 16 machines of different sizes. Measurement results The table below shows the measurements. Specific consumption It can be seen by the measurement values that the smaller machines have higher specific consumption.
The large machines have average specific consumption lower than 1.2 kWh/kg. If this value is compared with the Specific Energy Consumption chart, this value falls within the range of the chart. However, consumption when producing smaller parts is inefficient. We advised the use of smaller machines or applying multi-component injection moulding. The company will take this advice into account when ordering new moulds but decided not to replace the existing ones. It must be mentioned that a new mould is expensive and does not pay for itself with the reduction of energy costs. Case 3: Frequency controller on 22kW cold water pump Introduction The plastics plant discussed in this case mainly produces plastic components for the automobile industry and housings for electronic parts. These parts are produced by injection moulding. Parts produced range from a few grams to 1.5 kg. Current situation The factory has a 22 kW cold
Measurement Results Machine
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M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 M15 M16
Power consumption (kW) 5.5 6.8 12.4 11.9 9.2 28 12.1 25.5 10.1 18.8 15.6 22.4 27 2 37.8 17 18.7
Production / hour (kg/h) 0.65 1.2 3.23 4.99 4.21 16.84 9.4 19.88 8.54 16.24 14.31 22.35 7.65 40.78 27.36 30.4
Specific consumption (kWh/kg) 8.44 5.68 3.84 2.38 2.18 1.66 1.29 1.28 1.18 1.16 1.09 1 0.98 0.93 0.62 0.62
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When more production Cold Water Pump without Frequency Controller machines are switched on, Power cold water pump 22kW the pressure in the pipe Production hours a year 6,800 h/y will decrease. Annual consumption 134.6 MWh/y The pressure decrease Price of electricity EUR 90/MWh in the pipe causes the Cold Water Pump with Frequency Controller frequency controller to increase the speed of Machine capacity normal operation 65 per cent the pump until the set Electrical consumption at 65 per cent 47 per cent point is reached. This normal operation system means the (Calculated with simulation tool) 10.3kW power consumption of New annual energy consumption 70 MWh/y the pump depends on the Annual energy saving 64.3 MWh/y cooling demand. Annual cost savings EUR 5,787 Estimated savings Estimated investment To calculate the saving, it is The investment sum includes assumed that during the costs of a frequency controlnormal operation 65 per Estimated Investment ler, a pressure sensor and instalcent of the production Frequency controller EUR 1,600 lation. The costs are subdivided machines are running, Material costs switch box EUR 500 as atop the next column. n and as a result 65 per Pressure measurement EUR 200 cent of the cooling Unforeseen costs EUR 1,000 demand is needed. RV Heur and M Verheijen are from Laborelec Labour costs EUR 2,000 The savings are calcu- (www.laborelec.com). The proposal was Total EUR 5,300 lated as in the tables originally written for leonardo-energy project, Cost recovery time 0.9 years www.leonardo-energy.org. at bottom.
water pump. This cold water pump is designed for the total production capacity. Normally some 65 per cent of the production capacity is utilized. The pump always operates at its full flow rate and maximum speed irrespective of the production capacity and cooling demand. The pressure and flow rate are manually regulated using a valve. Proposal The proposal is to fit the pump with a frequency controller and control the speed based on the pressure in the pipe.
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- technology management for decision-makers | november 30, 2009
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information technology
Enhancing Productivity through
Web Collaboration
Web collaboration solutions act as highly efficient tools in keeping cost of travelling at bay, thereby it increases productivity and efficiency. by balaji kesavaraj
T
oday, there is an increasing need to adopt technology that helps cut costs on travel. Web collaboration, still in its nascent stage, presents a huge untapped market opportunity in India. The rapid increase in demand for web conferencing software and services can be attributed to economic slowdown and need for better system and software interoperability. Web conferencing facilitates geographically dispersed employees to collaborate online, and enhance productivity. It has also been a costeffective sales tool to reach new customers located remotely.
Web Collaboration Technology
The technology works on the SaaS platform. The technology is quite flexible and provides opportunities for businesses to upgrade
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the number of users on demand. In recent times, these services have experienced a dramatic surge of popularity. Organizations of all sizes have found that web conferencing can be used in any department and in all lines of business. Some of the most popular applications of the technology include— interactive training, off-shore manufacturing, out-sourced operations support, sales presentations and ad-hoc meetings. Collaboration technology has made inroads into several sectors such as manufacturing, retail, healthcare, pharma and education. The technology is applicable in the manufacturing industry to aid group meetings in virtual workplaces. It facilitates interdepartment communication, dealer meetings and vendor interactions. During a product launch a vendor can share marketing collaterals online with his channel partners, and is able to fine tune his marketing strategy. It is effective in creating team workspaces with adequate authentication and security mechanisms, enforcing policies, providing complete data security. Developers are able to enjoy the flexibility to roll out applications quickly, and customers can enjoy the freedom to choose from multiple vendors.
Challenges Faced by the Manufacturers
When improving communication, increasing productivity, reducing operational costs are the main challenges faced by the manufacturing companies today, a large number of manufacturers are now looking at collaboration software to help meet and solve these challenges.
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Application Areas of the Technology
The tool helps in achieving shorter turn around time for completion of product design cycle, supply chain and offshoring. It is extensively used for multi-party audio, data sharing, synchronous video conferencing, application sharing, dynamic power point presentation sharing and file sharing. A significant portion of large enterprises have adopted web conferencing and a growing number of smaller businesses are following suit. Manufacturers can leverage this technology to make sure the personnel are trained online with any new system, be it the new ERP system, control system, front office operation, supply chain and CRM software.
Promising Future of the Technology
The future of web conferencing is promising with global workforces using high-quality web conferences, complete with voice and file sharing on a mobile Smartphone. This helps empower workers in reaching new productivity goals, regardless of physical location. The adoption of web conferencing in India is rapidly increasing with service enablers looking at providing consistent experience to all users. Increasing broadband usage even in remote areas is another factor that will encourage the use of this solution. Moreover, with India being a potential market for web conferencing, it is now ready for the desired converged solutions. n Balaji Kesavaraj is the head of marketing (India), Cisco, WebEx Technology Group.
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information technology
“SOA
accelerates
manufacturing process”
The manufacturing industry is slowly gearing up to adopt service oriented architecture (SOA) to streamline various business processes. Shailender Kumar, Vice President, Oracle Fusion Middleware, Oracle India, in an exclusive interview with Reshmi Menon, traces the growth path of SOA in the Indian manufacturing environment. How would you describe the growth of SOA in the manufacturing industry? The growth of SOA has been slow among the Indian manufacturing sector. However, its adoption is increasing. For a manufacturing company, the main focus is on production activity. In the past, organizations and IT departments have perceived SOA more as an investment in technology than as a business investment. But, this trend is changing now, as companies have started understanding the importance and benefits of investing in SOA-based IT architecture—as it can help in reducing cost and increasing profitability.
What are the tangible benefits of adopting SOA for the manufacturing companies? Today, the biggest challenge for a company is to cater to the fastchanging consumer demands, by offering them a new set of products and services. This imperative holds true for manufacturing companies too. The speed to market is extremely
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Shailender Kumar Vice President Oracle Fusion Middleware Oracle India.
important for manufacturing organizations. Here SOA, which accelerates the manufacturing process, helps them roll out new products faster and meet increasing demand. The inherent strength of SOA is to integrate various applications and business processes like production planning and control, inventory management and so on. As shop floor applications hold extreme significance for manufacturing activities, these companies apply SOA to integrate the various shop floor functions. With the help of adapters they can mix and match different software components to achieve smooth information flow across processes. In addition, the SOA architecture for application development enables companies to optimize inventory levels, which in turn, help them conserve capital by keeping just-intime inventories.
What are the hurdles in the growth of SOA adoption in the manufacturing sector? One of the biggest challenges with
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adoption of SOA is that it is considered more of a technology requirement rather than a business decision. Enterprises need to understand the various issues related to SOA and implement it after analyzing the complete SOA lifecycle. In the existing IT infrastructure, for example, it may not be possible to extract service from an application. So, SOA may not be the right option to replace legacy systems. While standards form the cornerstone for SOA, companies need to take a standards-based approach to implement SOA for internal as well as external service delivery. Companies that want to embrace SOA should take a cautious approach—moving one step at a time from project to project—say, from sales order processing application to supplier payments. It may not be wise to take a revolutionary path to replace all applications at once with SOA. Rather, an evolutionary system that imparts learning as you grow can be beneficial. n
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supply chain & logistics
Integrated logistics parks
A Confluence of Conveniences By assembling all the necessary facilities in one location and enabling them to be shared, modern logistics parks significantly reduce expenditure, for manufacturers. by m prem kumar
Advanced warehouses in integrated logistics parks employ heavy duty racks for storing materials, and effectively utilize the available height to improve space utilization.
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e all have been talking about the growth of Indian economy. The country is going to be the next hub for manufacturing due to its ‘knowledge pool’ and low labour cost. I believe the ongoing economic crisis has been a boon to India. Now, when the whole world is trying to consolidate and cut cost in every sphere of business activities, the logistics cost has become the primary target in the ‘value chain’. We all know that the logistics cost in India is higher than that in the developed countries. However, we forget the vastness of this country. The major component of our logistics cost is transportation— because of the roads, decentralized tax regime, unorganized
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transport segment, fragmented transport players, bad equipment and so on. These are not all. We cannot attribute everything to transportation. The planning itself is really not to the world class yet. One of the factors for this is again the infrastructure available. The ports are clogged. The Container Freight Stations (CFSs) and Inland Container Depots (ICDs) are scattered.The warehouses are widespread. No single player is available. This increases the dependence on multiple vendors, and the risk of performance is also high. It may appear that we are nowhere. But India has moved ahead and things are changing fast. The Special Economic Zones (SEZs ) have given the manufacturers a relief from the tax regime. The Golden Quadrilateral has ensured that the major hubs are connected well. Although slow, development of the ports is also happening. The minor ports have been identified for upgrade. The air-
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ports are already under reformation. What we are left with are the CFSs and ICDs—and the warehouses. This is still largely in government hands through the Central Warehousing Corporation (CWC). The railways is still a major opportunity. The best news, if it is implemented, is General Sales Tax (GST). This will help companies to consolidate their distribution pattern. But do we have the infrastructure to support the demand? What does a customer require at this point to reduce his cost? Let’s have a look at the cost components in the ‘value chain’. According to a research conducted by Edelweiss Research: l Transportation contributes to 35 per cent l Inventory carrying cost contributes to 25 per cent l Losses in terms of insurance and transit damages contribute to 14 per cent l Warehousing and Value Added Services (VASs) contribute to 26 per cent These are all tangible costs
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As a value-added service, stickering is in progress in an integrated logistics park. that are visible, and can be monitored. But, what about the intangible ones, which are very critical too? While doing our costing, very few of us realize the factors like—the time spent on co-ordinating between different vendors, the communication cost, the process failures and the risks involved, the increase in manpower due to multi-contact points. Above all, there is the cost to manage inventory. How does someone take care of all these, and at the same time get the best of the output? The golden theory is—put them in one platform so that monitoring becomes easier. This has given birth rise to the concept of ‘Logistics Parks’.
What’s a Logistics Park?
A logistics park is nothing but a consolidation platform, which has all the amenities to cater to the domestic needs of a manufacturer or a trader. It has warehouses that can cater to different product needs. It has a capability to reduce the overhead by sharing the resources. It is easily accessible by rail and road. It is close to the port and to the manufacturing hub. It has both ‘bonded and de-bonded’ facilities. Moreover, it has the customs
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staff to clear the imports or the exports formalities. While a few already exist, but they are very small scale and fragmented. Some have only general warehouses, and do the
As customs officials are posted onsite, it reduces the time of clearance. By being an ICD, it reduces the chances of delay due to port congestion. The advanced warehouses in such complexes have heavy duty racked space for general cargo utilizing the height, hence they increase the space utilization. Automatically temperature controlled rooms in such parks offer appropriate storage facilities for sensitive cargo, including cold rooms for vaccines and pharma products. Extended open areas can handle odd size cargo and oil drums. Completely secured with CCTVs, access control facilities, fire sprinklers, fire alarm systems, water hydrants, mordern material handling equipment and excellent Warehouse Management
The idea of building large Integrated Logistics Parks in the midst of manufacturing hubs has already started taking shape in India. storage and cross docking. Other cater to bulk and are only a support for transit cargo.
Integrated Logistics Parks
The idea of building large Integrated Logistics Parks in the midst of manufacturing hubs has already started taking shape in India. Today, the customers need a one window solution: a provider who can carry their cargo from different countries, bond the cargo, clear it, do value additions like—stickering, serial number capturing, repacking, order management and distribution. An Integrated Logistics Park gives customers all these facilities under one roof. It helps customers get their cargo from the port and bond them.
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Systems (WMSs), such parks will definitely raise the standard of the Indian logistics industry to the world-class level. Customers too will benefit from the time saved due to single platform concept. Their communication costs will reduce—as it is just one vendor. Their overheads will come down due to sharing of resources. With (GST) coming in, and all other taxes getting abolished, Integrated Logistics Parks can cut down the multi inventory storage points. Hence, they will reduce the cost of carrying huge inventories and cross movements too. n M P Kumar is the group managing director and CEO of Uniworld Logistics Pvt. Ltd., (www. uniworld-logistics.com).
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supply chain & logistics
“Green logistics is a trend to stay� Logistics management plays a crucial role in the development of business and manufacturing economy. Today, companies are taking up measures to reduce logistics costs and increase profitability. Rolf Habben-Jansen, CEO, Damco, talks to Reshmi Menon about the growth strategy for success in logistics industry and the future trends to be witnessed by the industry.
Rolf HabbenJansen, CEO Damco.
Development of a robust and responsive logistics industry is considered to be key to the growth of a business economy. What is your comment on that? I completely agree that a robust and responsive logistics industry is critical to the growth of the business economy. Today, a typical manufacturing scenario comprises several components being sourced from different parts of the world, manufactured at the most cost competitive location and the final products being shipped to markets across the world. This would not have been possible without a robust and responsive logistics infrastructure to support it.
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We are witnessing various economies competing with each other to emerge as the preferred location to do business at. A key factor, which determines the overall competitiveness of these locations, is the total cost of doing business and one of the key components for this is the logistics costs. Economies, which have a good and competitive logistics network, tend to attract more business opportunities there by benefitting the overall economy.
India faces the hurdle of lack of good infrastructure for the growth of its logistics industry. What do you feel about this? Good infrastructure will definitely promote the logistics industry. Lack of infrastructure adds risks, affects reliability and in general, increases the overall logistics costs affecting the overall competitiveness of the economy. We must understand that India is a very vast country, where the manufacturing centres and consumption centres are spread across a wide geography. India’s
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trade is dominated by a few gateway ports and the road or rail connectivity to these gateway ports, which has limited capacity. But these conditions are quite similar to the other developing markets across the globe. We have seen several actions from the government in the past to invest in logistics infrastructure. The government has initiated projects, often with the involvement of the private sector, in areas like ports, railways and road infrastructure. The government and the private sector must continue such initiatives in the future.
What according to you are the factors contributing to the growth of a logistics company? We, at Damco, believe that there are some key factors, which would determine the success of a logistics firm in a competitive market condition. First of all, it is a matter of passion for customers. Different customers have different logistics challenges, and it is very important to address them specifically with tailor-made solutions. This requires the logistics service
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provider to work closely with the customer, listen and understand their specific challenges and have the capability to deliver a solution that will resolve these issues. Secondly, it requires dedication to service delivery. It is very important to maintain a high level of service delivery to customers. Thirdly, logistics industry needs energised people. This industry relies heavily on capable, smart and intelligent people to resolve the various challenges that come up everyday. Experience and expertise of dealing with such situations is critical in logistics industry. Therefore, investing in the right professional talent and developing them is very crucial. Lastly, it is important to offer a differentiated product in the market.
What is your opinion about the growth of green logistics? Green logistics is a trend to stay. It will stay not only due to consumer and governmental pressures, but most importantly because it is about finding efficiencies in the supply chain (increasing utilisations, using more efficient modes of transportation like ships or rail) and efficiency is, obviously, a constant quest for companies. In the past, companies were used to optimizing the supply chains only in terms of cost and service. Since 2007, Damco has included in this equation—the environmental component in the shape of carbon emissions. Companies, in general, have to make no investment to have greener supply chains. Therefore, cost savings related to becoming greener and more efficient have a direct impact on the bottom line. This is a win-win situation for the company and the environment. Finally, as global regulations in carbon markets hit the trans-
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portation industry and carbon is tagged with a price, there will be an increased focus towards being greener and reducing emissions. Therefore, we feel that green logistics is one of the trends that will shape future supply chains.
What will be the other new trends that the logistics industry will witness? There has been a very fundamental trend in the industry to improve efficiency and reliability in operations. This is a direct result of the fact that supply chain management has evolved over a period of time. Most companies have designed their supply chains to be highly efficient and have the minimum wastage. Factors such as IT and other support mechanisms have enabled the industry to become more efficient and reliable. Another trend in the transportation and logistics industry is the emergence of service providers, who can be a one-stop solution for all end-to-end needs. We often see that the customers have unique challenges and require unique solutions, which will tie in various aspects of the supply chain. This requires the logistics
Cost savings
related to becoming greener and more efficient have a direct impact on the bottom line.
service provider to have capabilities to provide a wide range of services from door-to-door. This also reduces the involvement of multiple parties in the supply chain, and hence makes it simpler, cost efficient and easy to deal with. Another emerging trend is the concern for security. The transportation and logistics industry and its customers have increasing concern over the security of the cargo. n
Advertiser Index VeriSign.................................................................................................. Inside Back Cover Cisco.................................................................................................................................. 3 Siemens India.................................................................................................................... 5 Havell’s India Limited........................................................................................................ 7 Premium Energy Transmission Ltd.................................................................................. 9 Elecon Engineering Co. Ltd.............................................................................................11 Power Build Limited........................................................................................................15 Pramet Tools....................................................................................................................21 TaeguTec India Pvt. Ltd......................................................................... Inside Back Cover Parametric Technology Corporation................................................................ Back Cover
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- technology management for decision-makers | november 30, 2009
53
opinion
paradigm shift
The Only Way to Survive
S
mall and Medium Enterprises (SMEs) are said to be the backbone to Indian manufacturing sector. They contribute 95 per cent of the total Industrial units in India. They contribute 45 per cent of the total output by the manufacturing sector in India. So, can you see a mismatch, 95 per cent of unit contributing 45 per cent of the output, while 5 per cent of large corporate units contribute 55 per cent of the total Industrial output? It’s because of a lot of inefficiency within the companies, and policy of the government, which affect these smaller companies. Isn’t it enough to say that the backbone of Indian manufacturing sector is weak? Let’s look at some of the basic characteristics of
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Indian SMEs, which are creating this inefficiency.
The Main Roadblock
If we analyze the main roadblock to the constant growth of the SMEs in India, we will find that—the person (promoter) who has built the organization so far is the main roadblock for its journey upward. When the organization is small, the promoter can handle and give decision to all individuals in the organization. But at times, the promoters didn’t realize that their respective organizations had outgrown from the then single point power center, and the heads needed to delegate power and responsibilities. This is the topmost reason for inefficiency in Indian small to medium scale organizations.
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They need to understand that what brought them here—will not take them there. But these promoters work hard with the same style of leadership and management to turn things around and have growth in the company and fell. Therefore, the first and foremost important success formula is that—the promoters or owners of the organization keep a constant transformation in the organization, and build a dynamic organization structure. As owner or promoter, they must realize that their job is to fix the destination (creating vision), where they want to reach in a given time frame, arrange the proper resources for it and give it to the people working for them. Then keep a track on the path and get the vehicle on the track if it
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Most of the Indian SME owners, in course of time, become the biggest roadblocks in the growth of their respective companies—as they don’t transform themselves in the process of moving upward. They keep on banging head against the wall, instead of finding a door to move out of their problems. by manish bang
gets detracted. They must sit on the driving seat, hold the steering to give direction, and use gears and brakes to balance the speed. Systems at their business place must be robust, so that the car automatically shifts direction and change speed when they desire to do so—and reaches the desired destination on time. This all can happen if the owners just remain open to create a dynamic organization structure, which can be moulded according to the demand, and not by their own wishes or gut feel.
Financial Discipline
Greed and Fear are two most important and dangerous elements of Indian SME businesses. Indian SMEs have limited resources (funds) to run their
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businesses. When they see any opportunity (even in real estate, stock market, commodity market etc.) they try to capture the same with the funds available. This diversion of funds creates an inefficient funds structure in the running business and derails them from the success path. Another instance of this financial indiscipline is found when they create expansion plans for existing businesses. In many instances, the Indian SMEs create fixed assets from the current working capital with their gut feel—that they will be able to manage the same in future. By the time they become ready with their plans, the expected funds from bank or other sources dries up, and they get stuck with non-utilization of capacity built up, and
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also impact the existing smooth running businesses. This financial indiscipline creates weak balance sheets, and does not allow the companies to attract the resources—when they are required most. Therefore, before taking any financial actions in the company, the owners must find what will be the implication of the same on the balance sheet. At all times, the effort must be to keep the balance sheet in good health, which attracts funds from banks as well as private equity. With regards to fear of Indian SMEs, these owners or promoters who have created a success in their respective businesses (started from scratch and reached at a turnover of 10 to 20cr), at a certain stage they just became fearful. They get fear of losing (in terms of money) what they have earned, fear of the social status they have earned, fear of un-success after this success. These fears put them in the state of mind—where they start playing very small and their energy goes in protecting what they have earned till the last day. Thus, instead of remaining creators of businesses, they become preservers of businesses.
Short Term Profit, Long Term Pains
Indian SMEs are not smart in understanding that profits in the books crates value of the company. They always run behind saving taxes and do not generate enough equity, which is required for future growth. It’s mentally so engraved that they are going to remain 100 per cent owner of the company till the company is going to survive. It is very important for a businessman to understand the term market capitalization. It gives you a multiplier effect in terms of generating funds through equity route. The average price to earn-
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55
opinion ing for most of the BSE companies is between 5 to 15. A simple example will elaborate on what is stated above. So, let’s say you made Rs100 as profit before Tax. You need to pay Income Tax of Rs 30 to Indian Government. On the balance Rs 70, if you attract a price to earning of 15 times, you can generate Rs1,050 as value of the company. So, on tax payment of Rs 30, you made a value of Rs1050—which is 35 times to your tax payment. What do you think, many large corporates have become large because of their profits or by saving taxes? The answer is a big ‘No’. They only became big by their market capitalization, which they smartly utilized to build the organization big.
Greed and fear
are two most important and dangerous elements of Indian SME businesses. Indian SMEs have limited resources (funds) to run their businesses. One needs to realize all the tools—which is important for their growth, and generating private equity is a tool to create exponential growth of the company.
Use of Technology
Once again, we will be talking here on cost benefit analysis that Indian SMEs are failing to do. This time it is the cost of having an integrated technology system (ERP) to the benefit of having an updated information flow, which allows better control system— which in turn improves the efficiency of all the resources (Man, Machine and Money). The cost of Information Technology (IT) is still high in the mind
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of Indian SMEs. An ERP system costs near about Rs 10 to 12 lakhs. According to them, with the same money they can buy another machine, which will increase their output by 15 to 20 per cent. Also, with the systems they themselves will get bind by the best practices, and they will not be able to do their adjustments which are must for them. But on the hind site, if this integrated system is in place, the owner of the SME, by sitting in his office on his laptop—will be able to get live information of what products are getting manufactured, what is the inventory available in the plant, which machine is giving what output, all kinds of financial information like whom to pay, from whom to receive the money etc. In other words, if the owner wants to decentralize the decision making, and still wants to keep a tab at all times, these technology solutions help them do that efficiently.
Dependency on Single Client
SMEs in India can also be described as ancillary to large corporates. There are auto ancillary companies—who manufacture parts for large auto companies, pharmaceutical companies—which makes bulk drugs for large pharmaceutical companies and so on. Being ancillary to large corporates, they become very dependable to large corporates and their margins, working capital cycle and entire business runs on the mercy of their (so called) parent company. In case they refuse or try to move out of this net, it becomes very hard for them to survive. It’s just like starting a life over again along with big baggage of debt and other creditors. Let me cite an example of a company from Maharashtra. This company was an auto ancillary to
- technology management for decision-makers
large auto manufacturing company. It reached to a total turnover of near Rs 100 crore. For 3 to 4 years, it had pleaded to its counter part on increasing the prices as its margin was getting squeezed. But finally, it had to break apart, the next year its turnover came down to Rs 20 crore, and the company went into losses. It will take at least five years to reach to that level, and quite possibly may vanish in the struggle. So, for all practical purposes, this saying works—“Don’t keep all your eggs in one basket”. So, with regards to the clientele of your products, you must have well spread clients and product portfolios, which make you shock-free and keep you in bargaining power.
Conclusion
To create successful and exponentially growing organizations, the SME owners need to follow some basic formulae. l Keep a dynamic organization structure. Every day (in the organization) is a part of a transition process—which must be allowed to happen. l Put a focused approach to the business, and allow resources to work efficiently. l Show healthy profits of the company to attract equity funding. Remember the multiplier factor. l Use technology to create efficient information flow on all resources of the business. l Create multi-client to improve the bargaining power and lower dependency. A healthy organizational structure and a sound balance sheet can attract all the required resources for exponential growth of any organization. Therefore, all the efforts in the organization must be towards building these two. n Manish Bang is the director of Expanza Access Ltd.
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product update Deburring Brushes
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eiler has launched Burr-Rx brushes with advanced filament technology, which provides maximum aggression. The product is manufactured using a new process, which results in a consistent flat brush face. The composite metal hub wheels provide 50 per cent higher filament density than traditional metal hub brushes. The product is constructed with a steel shell and a two-inch bore, which allows for
Vision Sensor direct mounting on equipment, eliminating the need for adapters. The unit is available in stem-mounted wheel, mini disc brushes and banded end brush configurations. The product is applicable for deburring materials such as inconel, stainless steel and titanium. Weiler Tel: +1-800-8359999 E-mail: info@weilercorp.com Website: www.weilercorp.com
Signal Analyser
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Otech has added the USB-based 672u signal analyser to its product line of 600 series signal analysers.
The new product includes 20 input channels with direct integrated electronic piezoelectric (IEPE) support. Each of the 20 analog inputs feature a 24-bit delta sigma ADC for resolution and accuracy.
The analyser also includes a 4 mA bias current with AC coupling for IEPE sensors. The product is compatible with eZ-Series software, viz., eZ-TOMAS and eZ-TOMAS Remote for rotating machine analysis; eZ-Analyst for real-time vibration and acoustic analysis and eZ-Balance for machine balancing. The unit is suitable for machine condition monitoring, rotating machine analysis, predictive maintenance and model analysis. IOtech Tel: +1-440-4394091 E-mail: sales@iotech.com Website: www.iotech.com
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anner Engineering has launched a sealed vision sensor, the PresencePLUS P4 OMNI, which withstands challenging industrial and washdown conditions. The nickel-plated aluminium housing of the product tolerates shock and vibration. The unit, which includes a comprehensive suite of inspection tools, does not require a separate controller. The sensor is available with 640 x 480 resolution or 1280 x 1024 for inspecting large areas. The functional options of the product include 2D and 1D bar code reading, optical character recognition/ verification and bead inspection.
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he Schaeffler Group has launched ball roller bearings, which minimise friction while allowing bearing mass and width to be decreased by 20 per cent. The product includes energy-efficient range of bearings that utilise spherical bearing elements, with their sides cut off. The unit offers axial load handling capabilities of fully spherical balls and a larger grease reservoir for improved sealing. The design of the ball roller is such that all areas of a conventional rolling element ball, which are not under load, are removed. As a result, 15 per cent of the ball’s diameter is cut off on both sides, thus providing a flattened ball. Schaeffler KG Tel: +1-49-913282-0 E-mail: info.de@schaeffler.com Website: www.schaeffler.com
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Martin Engineering Tel: +1-800-5442947 E-mail: martinone@martin-eng.com Website: www.martin-eng.com
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Banner Engineering Tel: +1-800-8097043 Website: www.bannerengineering.com
Ball Roller Bearings
Component Management Software artin Engineering has introduced PLUS Data Manager Program, which helps operating plants keep track of the components on and improve the performance of the belt conveyor systems. With a digital library of information about the components in a specific conveyor system, the new Data Manager Program helps improve scheduling of the plant maintenance department. The software starts with census of the components, all compiled in an online database. The library includes information of engineering drawings, installation instructions, component specification, maintenance procedures and bills of materials. The product helps the maintenance department improve its wrench time, which is the time spent actually working on equipment rather than looking for information on how to maintain the components.
The accessories offered with the product include lens covers and IP68 LED ring lights in infrared, red, green, white or blue. The product is available in colour and gray-scale models. The sensor handles applications such as label alignment inspection, colour verification and matching, flaw detection, packaging inspection, assembly verification, fill level detection and adhesive bead inspection. The product also finds use in vial stopper inspection, drilled hole inspection, orientation verification, part or model identification and error proofing.
Thermal Camera
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rocess Sensors has introduced the PTI-160 series of handheld thermal imaging cameras, considered ideal for preventive maintenance, research and development, building diagnostics and industrial manufacturing processes. Equipped with an integrated 160 x 120 UFPA detector, the cameras deliver sharp thermal images for on-site problem analysis. The product features auto-
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matic hotspot detection, provides temperature measurements optionally up to 1500°C and stores up to 1,000 radiometric thermal images. The other features of the camera include spatial resolution of 2.2 mrad, flip up colour LCD display and real time imaging at 60 Hz. Process Sensors Tel: +1-201-4858773 E-mail: irtemp@processensors.com Website: www.processsensorsir.com
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product update Engraving Machine
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ravograph has launched a new mechanical engraving machine, IS 900, for flat engraving of identification plates or cutting and engraving of sheets of any material, including aluminium. The product provides many
Spool Gun
new functions such as ´point and shoot´ and handling of strips without length limits. The device can engrave at up to 100 mm/s over a large 660 x 460 mm area. The material feed can be carried out from the open area, via the back of the machine. The engraver can be placed in the middle of a workshop, or against a wall, or in a corner between two walls.
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iller Electric has introduced a new Spoolmate 200 spool gun, designed for light-to-medium-duty aluminium fabrication and repair work. The new product features handle-based wire feed speed adjustment and a 20-foot power cable. The machine allows operators to adjust their wire parameters while working at a distance from their power source. The unit provides curved and extended barrel options. The product is considered to be ideal for sign makers, boat fabricators and others who frequently contend with tight and difficult-toreach joint configurations. The spool gun also contains a built-in gas solenoid, allowing users to switch processes without changing gas cylinders.
GravoTech Engineering Tel: +91-20-41030000 Website: www.gravograph.com
Miller Electric Manufacturing Co. Tel: +1-920-7349821 Website: www.millerwelds.com
Robotic Unwrapper
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leetwoodGoldcoWyard has launched a new robotic unwrapper, which removes stretch wrap material from a pallet load prior to depalletizing. The new product has the ability of unwrapping any stretch-wrapped load, including glass, plastic bottles and cans and shrink-wrapped cardboard boxes. The machine removes the stretch wrap by applying a focused heat source to the stretch wrap material on the load. The stream of heated air is directed at the stretch-wrapped load and guided by the robot to assure the right distance and speed is achieved to weaken the molecular bond of the stretch wrap, causing it to part. A fixed vacuum arm holds one end of the parted wrap as the robotguided heat gun completely parts the wrap. Once the wrap is parted, the end-of-arm-tooling on the robot clamps the wrap being held by the fixed vacuum arm and places it between a set of rollers. The rollers pinch the wrap, compressing it, and as the pallet rotates, they continue to collect the waste wrap and feed it in to the customer’s supplied waste bin or vacuum takeaway system. FleetwoodGoldcoWyard Tel: +1-630-7596800 E-mail: sales@fgwa.com Website: www.fgwa.com
UPS
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elta has launched the uninterruptible power supply (UPS) series, viz., NH Plus 20 kVA - 480 kVA. The new product provides easy inventory management and minimized Mean Time To Repair (MTTR). The unit maintains 94 per cent efficiency under 25 per cent loading conditions. Each power module delivers 20 kVA high power density in a 3U height chassis. Total power options include 20, 40, 60, 80, 100 upto
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480 kVA in two different cabinet styles. The product enables a maximum input current Total Harmonic Distortion (iTHD) of less than 3 per cent. The low iTHD helps reduce capital investment and also the installation cost of cabling and upstream circuitry. Delta Electronics India Tel : +91-124-4169040 E-mail: upsinfo@delta.co.th Website: www.deltaww.com
- technology management for decision-makers
Pneumatic Press
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enn Engineering has launched the Pemserter Series 4 press for installing selfclinching fasteners with new standard features, including laser pointer, stroke counter and lockable cabinet for storage of tools and accessories. The new product is suitable for short to medium production runs and delivers safe, accurate and cost-effective fastener installation. The product features an 18”/45.7 cm throat depth, which provides clearance for a variety of chassis configurations; rapid tooling changeover capabilities, which save time during production and
a ‘point-of-operation’ safety, which contributes to system integrity. The product can permanently install selfclinching fasteners with thread sizes #0 / M2 through 3/8” / M10 in steel and sizes up to ½” / M12 in aluminium panels or circuit boards. The insertion force is adjustable from 1,000 lbs. to 6 tonnes and 4.5 kN to 53.4 kN to cater to any application demand. Penn Engineering Tel: +1-800-2374736 E-mail: info@pemnet.com Website: www.pemnet.com
Tooling System
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unnen Products has launched a new precision hone tooling system, which includes an integral air gaging with an automatic shutdown mechanism. The system is meant for non-contact, in-process bore sizing to tolerances of 0.005 mm (0.0002 inch). The product is suitable for honing diesel cylinder liners, compressor cylinders, automotive engines, small engines and aircraft cylinder bores with diameters from 57 mm
(2.25 in.) to 300 mm (12 in.). The tool is available in three abrasive options, viz., metal-bond superabrasive (diamond or CBN), conventional abrasive (aluminium oxide/silicon carbide) and plateau brush (abrasive impregnated filament). Sunnen Tel: +1-800-3253670 E-mail: sales@sunnen.com Website: www.sunnen.com
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Oscilloscopes
Pressure Switches
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witzer has launched the GR series pressure and differential pressure switches to meet minimal space availability in skid mounted equipment such as gas turbines and lube oil systems. The new product is available in measuring ranges from Vac. to 700 bar through the judicious use of a variety of sensors and wetted parts.
The devices are suitable for measuring pressure difference from a few millibar to 15 bar. The product is available in different constructions for low, high and very high static pressure applications.
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luke Corporation has launched a digital multimeter with a detachable wireless display - the Fluke233 digital multimeter. The new product uses a 2.4 GHz ISM band wireless transmitter to send measurements to the detached display. The device helps improve safety and increase productivity for industrial and commercial electricians and electronic technicians. A user can slide the wireless display out of the meter body and can place the display, where it is most easily seen, up to 10 metres (33 feet) from the point of measurement. The low-power, 2.4 GHz-ISM band wireless signal that transmits measurement data is resistant to electromagnetic interference. The removable display is magnetic and has a flat bottom, so that it can be mounted or placed on a flat surface, where it can easily be seen. The product measures up to 1000V AC and DC and up to 10A. The unit features a 10,000 ÎźF capacitance range, measures frequencies up to 50 kHz and captures min/ max and average readings automatically. Fluke Corporation Tel: +1-425-3476100 Website: www.us.fluke.com
AC Drive ockwell Automation has launched the new Allen-Bradley PowerFlex 753 AC drive, which provides machine builders and manufacturers with versatile motor control, required for general-purpose applications. The new product supports multiple languages and complies with global standards and certifications. The device is suitable for many industries and applications, including fans, pumps and conveyors.
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ektronix has launched DPO7000 Series Oscilloscopes with new enhancements such as support for the mobile industry processor interface (MIPI) D-PHY standard and new UART/RS-232 protocol analysis software. The
Switzer Instrument Tel: +91-44-24340999 E-mail : sales@switzerinstrument.com Website: www.switzerinstrument.com
Digital Multimeter
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The product helps manufacturers minimize downtime because users can configure the drive to provide advanced notification of operating data on cooling fans, I/O relay cycles, motor run-time hours and potential fault warnings. The PowerFlex 753 drive is available in power ranges from 0.75 to 250 kW or 1 to 350 Hp at 400/480V AC and 540/650V DC input. Rockwell Automation Tel: +91-120-2895245 Website: www.rockwellautomation.com
product now includes four passive probes and three analysis tools as part of standard configurations. The MIPI D-PHY specification is suitable for manufacturers of wireless mobile devices as the communications bus across main components such as embedded controllers cameras and
displays. The specification helps device manufacturers reduce time-to-market. The MIPI solution comprises automated setup library and methods of implementation (MOI) for testing the D-PHY physical layer standard. The setup library for DPOJET jitter analysis software includes real-time scope measurements listed in the latest D-PHY conformance test spec (CTS). The new solution allows users to perform a variety of tests from verification and pre-compliance testing to in-depth characterization, with custom limits. The MIPI D-PHY and UART/RS-232 options are available for the DPO7000 Series, DPO/DSA70000B Series and the new MSO70000 Series. Tektronix Tel: +91-80-42922600 E-mail: india.mktg@tek.com Website: www.tek.com
Variable Speed Drive
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chneider Electric has launched Altivar 12, a small variable speed drive. The smallest model measures 72 mm wide, 102 mm deep and 143 mm high. The device consists of a compact, easy-to-use design, which suits the need of auxiliaries for industrial machines and for consumer machines. The new product consists of a built-in category C1 EMC filter, which provides integration into electrical network. The unit incorporates about 150 applicationspecific functions. The device is designed for easy drive installation and wiring. The cable installer needs one standard-sized screw driver to install both the control and power sections. The power section is wired up without removing the terminal cover. The other feature of the product is the navigation button. The small wheel on the front gives direct fingertip access. The drive can be configured in its packaging without making it power on. The BlueTooth link helps transfer configurations via PC or mobile. The speed drive finds use in a variety of sectors such as the food industry (ventilation of catering kitchens, bagging machines, bakers’ kneading machines, greenhouses), small handling applications (car washes, conveyors), medical and health sector (medical beds, running machines), machines with a single-phase socket (wood-working machines, surface polishing and cleaning machines, swimming pool or irrigation pumps, hydro-massage bathtubs) and simple mechanical applications (2-speed motors, DC motors, mechanical drives). Schneider Electric Tel: +33-0-1-41297000 Website: www.schneider-electric.com
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- technology management for decision-makers | november 30, 2009
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product update Component Counter
Force Tester
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ark-10 has introduced a force tester, Model ESM301L. The new machine is designed for product integrity testing in quality control, manufacturing and research and development areas. The device has a load capacity of 300 lbF (1.5 kN) and is considered ideal for testing applications such as spring testing, peel testing, tensile testing and wire pull testing. The product can be programmed and controlled via its front panel or via PC. The unit includes a ‘build-your-own’ configurability, which allows the user to purchase individual features at the time of order, or through a simple activation procedure in the field. PC control enables the user to control the force tester through a custom program or through legacy Nexygen TCD control software. Travel distance information is displayed on the front panel through an integrated linear scale. The product can be programmed to stop at or cycle between travel positions, force values or limit switches. Mark-10 Corporation Tel: +1-631-8429200 E-mail: info@mark-10.com Website: www.mark-10.com
almer Manufacturing & Supply has launched a new line of scrubbers for removal of amines and sulphur dioxide. The product provides 99 per cent removal efficiency with inlet loading of 335 ppm. The device is available in sizes of 2500, 4000, 6000, 10000 and 20000
anncorp has launched a newly designed high-speed surface mount component counter, MegaXP, housed inside an aluminium carrying case. The new product can be easily carried
from stock room to shipping area for incoming or outgoing order verification or off-premises inventory taking. The set up of the unit includes entering the component type and
icroE Systems has launched the Mercury II 5000 miniature optical encoder. The new product provides smooth velocity control with a short-range accuracy (cyclic error) of up to ±20 nanometers.
The resolution provided by the product is programmable, linear and ranges from 5 to 1.2 nm. The product includes a compact sensor - 11 mm in height.
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Manncorp Tel: +1-215-8301200 E-mail: sales@manncorp.com Website: www.manncorp.com
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cfm. Custom and larger sizes are also available. The product also features automatic charging and pH monitoring, fabrication from durable polypropylene, vertical design, colour touch screen, HMI Ethernet communication and an optional hinged window kit. Palmer Manufacturing & Supply Tel: +1-937-3236339 E-mail: sales@palmermfg.com Website: www.palmermfg.com
arris has launched an energy-friendly horizontal baler, the HLO 5443. The new product has a small foot print of 18’ x 7’ and is made for tight spaces. The 50 HP model of the product has an economy mode shutting down one of the twin 25 HP motors to save energy. The baler has a fast baling cycle time (dry cycle) of 7.6 sec with the twin 25 HP. The high volumetric displacement provides production rates of up to 14 tonnes/hour (2 x 25HP). The maximum operating pressure is 3000 PSI and ram face pressure is 114 PSI. The product also features high strength design and construction, rear access doors for accessibility to cylinders, enclosed power unit, hinged wire tie inserters and twister units for easy access. The machine also includes a stamper to automatically remove jams at shear knife. The vertical tie system in the unit provides bale stacking capability and leaves no exposed wire pigtails on the sides. Harris Tel: +1-800-3739131 E-mail: info@harrisequip.com Website: www.harrisequip.com
Optical Encoder
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presetting the quantity. After positioning the spindle posts to vertical, the reels are inserted as the taped components are threaded through the sprocket holes. The product and its rechargeable battery-powered sensor has the capacity to count up to 10,000 cph. The unit also features a built-in accessory compartment containing hand crank, battery charger and shoulder strap and a RS-232 link to an optional adhesive label printer that records vital inventory data.
Horizontal Baler
Scrubbers
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The adhesive-mount PurePrecision tape scales are designed to provide accuracy, robustness and rapid installation. Linear glass scales are useful for applications requiring high long-range accuracy up to ±1µm. The encoder finds use in applications such as assembly automation, automated optical inspection, metrology, medical / life sciences equipment and microscope stages. MicroE Systems Tel: +1-781-2665700 E-mail: info@microesys.com Website: www.microesys.com
- technology management for decision-makers
Particle Detector
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arker Hannifin has introduced a particle detector, Icount PD on-line analyser, which monitors cleanliness of lubricants and similar fluids. The new analyser uses laser particle detection technology to produce repeatable and reproducible results. The unit can be optionally fitted with an LED for moisture detection.
The product includes output options such as LAN, RS232 and CANBUS connectivity, 4-20mA and 0-5V analogue outputs, and relay contacts which can switch 5A at up to 24V dc. Parker Hannifin Tel: +1-216-8963000 Website: www.parker.com
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