Pricing is one of the most powerful - yet underutilized - strategies available to businesses. A McKinsey & Company study of the Global 1200 found that if companies increased prices by just one percent, and demand remained constant, on average operating profits would increase by 11 percent. Just as important, price is a key attribute that consumers consider before making a purchase. The following 10 pricing tips can reap higher profits, generate growth and better serve customers by providing options. 1. Stop marking up costs. The most common mistake in pricing involves setting prices by marking up costs ("I need a 30 percent margin"). While easy to implement, these "cost-plus" prices bear absolutely no relation to the amount that consumers are willing to pay. As a result, profits are left on the table daily. 2. Set prices that capture value. Manhattan street vendors understand the principle of value-based pricing. The moment that it looks like it will rain, they raise their umbrella prices. This hike has nothing to do with costs; instead it's all about capturing the increased value that customers place on a safe haven from rain. The right way to set prices involves capturing the value that customers place on a product by "thinking like a customer." Customers evaluate a product and its next best alternative(s) and then ask themselves, "Are the extra bells and whistles worth the price premium (organic vs. regular) or does the discount stripped down model make sense (private label vs. brand name). They choose the product that provides the best deal (price vs. attributes). 3. Create a value statement. Every company should have a value statement that clearly articulates why customers should purchase their product over competitors' offerings. Be specific in listing reasons...this is not a time to be modest. This statement will boost the confidence of your frontline so they can look customers squarely in the eye and say, "I know that you have options, but here are the reasons why you should buy our product." 4. Reinforce to employees that it is okay to earn high profits. I've found that many employees are uncomfortable setting prices above what they consider to be "fair" and are quick to offer unnecessary discounts. It is fair to charge "what the market will bear" prices to compensate for the hard work and financial risk necessary to bring products to market. It is also important to reinforce the truism that most customers are not loyal - if a new product offers a better value (more attributes and/or cheaper price), many will defect. 5. Realize that a discount today doesn't guarantee a premium tomorrow. Many people believe that offering a discount as an incentive to trial a product will lead to future full price purchases. In my experience, this rarely works out. Offering periodic discounts serves price-sensitive customers (which is a great strategy) but often devalues a product in customers' minds. This devaluation can impede future full price purchases. 6. Understand that customers have different pricing needs. In virtually every facet of business (product development, marketing, distribution), companies develop strategies based on the truism that customers differ from each other. However, when it comes to pricing, many companies behave as though their customers are identical by setting just one price for each product. The key to developing a comprehensive pricing strategy involves embracing (and profiting from) the fact that customers' pricing needs differ in three primary ways: pricing plans, product preferences and product valuations. Pick-a-plan, versioning and differential pricing tactics serve these diverse needs. 7. Provide pick-a-plan options. Customers are often interested in a product but refrain from purchasing simply because the pricing plan does not work for them. While some want to purchase outright, others may prefer a selling strategy such as rent, lease, prepay, or all-you-can-eat. A pick-a-plan strategy activates these dormant customers. New pricing plans attract customers by providing ownership options, mitigating uncertain value, offering price assurance and overcoming financial constraints. 8. Offer product versions. One of the easiest ways to enhance profits and better serve customers is to offer good, better and best versions. These options allow customers to choose how much to pay for a product. Many gourmet restaurants offer early-bird, regular and chef's-table options. Price-sensitive gourmands come for the early-bird specials, while well-heeled diners willingly pay an extra $50 to sit at the chef's table. 9. Implement differential pricing. For any product, some customers are willing to pay more than others. Differential pricing involves offering tactics that identify and offer discounts to price-sensitive customers by using hurdles, customer characteristics, selling characteristics and selling strategy tactics. For example, customers who look out for, cut out, organize, carry and then redeem coupons are demonstrating (jumping a hurdle) that low prices are important to them. 10. Use pricing tactics to complete your customer puzzle. Companies should think of their potential customer base as a giant jigsaw puzzle. Each new pricing tactic adds another customer segment piece to the puzzle. Normal Normans buy at full price (value-based price), Noncommittal Nancys come for leases (pricing plans), High-end Harrys buy the top-of-the-line (versions), and Discount Davids are added by offering 10 percent off on Tuesday promotions (differential pricing). Starting with a value-based price, employing pick-a-plan, versioning and differential pricing tactics adds the pricing related segments necessary to complete a company's potential customer puzzle. Offering consumers pricing choices generates growth and increases profits. Since pricing is an underutilized strategy, it is fertile ground for new profits. The beauty of focusing on pricing is that many concepts are straightforward to implement and can start producing profits almost immediately. What better pricing windfall can your company start reaping tomorrow morning? Rafi Mohammed, Ph.D is the author of The 1% Windfall: How Successful Companies Use Price to Profit and Grow (HarperBusiness). He has been working on pricing issues for the last 20 years. Mohammed is the founder of Culture of Profit LLC, a Cambridge, Mass.-based company that consults with businesses to help develop and improve their pricing strategy.
The quick climb of the Canadian dollar is making many manufacturers quite nervous, and not without cause - our price advantage over the U.S. due to a lower valued dollar has been eliminated. Volatility in the exchange rates has created uncertainty and risk for Canadian companies who, because of U.S. sales, have working capital that consist of U.S. dollar assets. As the value of the Canadian dollar rises, the comparative value of U.S. cash and receivables decreases, resulting in companies reporting significant foreign exchange losses. In most cases, the U.S. cash and receivables are periodically converted to Canadian funds to cover operating expenses, fund capital expenditures and service debt. The result is that these are not merely accounting losses, but true realized losses. These losses also affect suppliers, as manufacturers with less money to spend seek out salary concessions and reduced pricing. All this, coupled with rising U.S. sentiment of "buy domestic," means troubled times ahead for Canadian manufacturers. There are, however, ways to mitigate financial risk. 1. Develop a hedge strategy Enter into a forward exchange contract to help mitigate risk. This is an agreement to sell a pre-determined amount of U.S. dollars on a pre-determined date at a pre-determined rate. Taking out the uncertainty in transacting in American dollars is the first step in being able to plan with more accuracy. For businesses where sales are predominantly made in U.S. dollars, companies will generally forecast their periodic need for Canadian funds for operational purposes and enter into contracts to sell the required amount of U.S. funds. Having a better understanding of your operational costs can go a long way by ensuring only the required amount is converted, and keeping the rest in U.S. funds. Another hedging strategy is to offset U.S. dollar assets with U.S. dollar liabilities. If your U.S. dollar assets are decreasing in value against the Canadian dollar, so are your U.S. liabilities. Losses on assets become gains on liabilities. Most companies require a credit facility to fund receivable balances. In many cases, these loans are negotiated in Canadian funds, regardless of the currency of the asset being financed. Consider negotiating the terms in U.S. dollars. This not only creates a hedge against potential exchange losses, it reduces the need for Canadian funds since the principal payments and interest expenses are funded in U.S. currency. 2. Improve the collection process With the recent downturn in the economy, the majority of companies have experienced an increase in the aging of their receivable balances. But, the longer it takes to collect, the longer a company is exposed to the risk of an exchange rate change. Close the gap between the U.S. sales and the funds being received. Tightening up your credit policy is also good business practice. Periodically assess the credit limits of your customers. Slow payment not only increases exchange risk, it can be a signal of financial uncertainty. Incentives for paying early, such as discounts, are one option to change payment habits. We are an attractive buy Canada is fiscally strong. Our banks are solid, our economy is improving and our natural resources are bountiful. This is a formula for a strong currency. However, this does not have to translate into a weakened export sector. An adjustment to business strategies may be needed to make sure this sector holds onto its brawny stance in the Canadian economy. Graham Williams is an accounting and assurance partner with Toronto-based accounting and business advisory firm Stern Cohen LLP.
The manufacturing sector is battered and bruised, but it’s fighting. And it’s fighting hard. That was the consensus at Manufacturing AUTOMATION's fourth annual editorial board roundtable. The board brought a variety of perspectives to this year's table, namely from the education, government, association and private sectors, and each seemed relatively certain that a recovery is upon us, albeit a slow one. "Last year around this time, people were cautiously optimistic. This year, there's a pretty solid sense of optimism out there," says Al Diggins, president and general manager of the Excellence in Manufacturing Consortium (EMC). "Companies are starting to hire people back, work share is winding down. Things are looking up." Cheryl Jensen, vice-president of technology, apprenticeship, and corporate training at Mohawk College agreed, saying that the hiring of grads and co-op students is one of the college's best barometers for feeling out the state of the economy - and companies are starting to hire again. "Last year we saw a drop in the number of co-ops that were available for traditional manufacturing jobs," she says. "This year, demand is coming back - and much more quickly than we thought it would be." While things weren't rosy last year, Jensen believes the situation wasn't as grim as the recession in the mid-1990s - at least from a co-op standpoint. "In a downturn, co-ops are the first to go," she says. "We didn't see that this year. Most companies knew they needed their young people to stay with them and they went to great lengths to do that." While this recession isn't the worst on record, it caused quite a bit of devastation. Many manufacturers who weren't able to adapt to the new global marketplace didn't survive the downturn. Others were forced to employ less popular measures to stay afloat - including reducing payroll. Even more continue to cling on for survival. This notion of survival seemed to be the unofficial theme of the discussion. What are the things that companies can do today to not only make it through the remaining portion of this recession, but thrive as well? Below are our board's thoughts. 1. Get to know your customers better. In an effort to trim costs, many manufacturers have opted to reduce the amount of product sitting on their plant floors. The problem with this strategy is that instead of "just-in-time", reduced staff and inefficient production processes have resulted in "not-quite-in-time" delivery. This has put a lot of strain on the supply chain. "Right now, we can't get parts. Suppliers are reducing inventory and they're short on parts," says Bill Valedis, manager of automation and training for Precision Design, Build and Services Inc. "We're not even talking specialty items - it's the off-the-shelf items we're having trouble with. The supply chain isn't communicating - companies aren't listening to their clients." The board recognizes that, while it doesn't make sense to keep an over abundance of product in stock when times are tough, enhancing communication lines would go a long way. Many members believed that suppliers should be on top of their clients' forecasts and stock their shelves accordingly, if they're going to reduce their inventory. Getting to know your customers a little better can help your business thrive in other ways, too. "Companies have to know who their customers are and what their needs are," says Sherman Lang, industrial technology adviser at the National Research Council Canada. "The more successful companies have taken that understanding of their clients and uncovered new markets with it." Uncovering new markets - whether they're geographical or another client base - is one of the most cost-effective means of survival. You're essentially producing the same product for a different group of customers without dishing out a lot of extra cash, Lang says. Understanding customer needs and markets could also lead to new partnership opportunities - a chance to reach a brand new market by combining your efforts with another supplier and offer a completely unique experience. 2. Hire more students. While more companies are opting to hire co-op students, that number should be higher, according to the editorial board. The thinking is that those companies that are going to survive this downturn - and the changing manufacturing landscape in general - are going to need access to a fresh set of eyes, and individuals with a lot of working years ahead of them. Fresh out of school with no previous habits to unlearn, students see things differently. They can shift your organization's thought processes outside of the box. "If you want innovation, hire more students," says Valedis. "It shouldn't be something companies are afraid of." Lang agrees. "Many companies are underinvesting in IT right now. Young people are the perfect solution to this," he says. "They excel at navigating social media and Enterprise 2.0." Some of the board members recognized that it's not always easy to hire students - especially when co-op programs don't coincide with varying economic climates. "It comes down to timing - and getting the right people at the right time," says David Green, managing partner at Stratmarc Associates. "Often, by the time you get students out of school it's a downturn and you're unable to hire them." Jensen agrees, but said that colleges are constantly working toward finding a solution to this common problem. "Colleges need to be more responsive to the changes in the economy. I think right now colleges are good, but they need to be better," says Jensen. She adds that Mohawk - along with other colleges - is working on becoming more responsive to changes in the economy. To truly succeed at this, however, a strong partnership is needed between education and industry. She encourages companies to get involved with their local colleges. Jensen has seen the benefit of this cooperation first hand. Through this type of partnership, Mohawk has tweaked its programs - and launched new programs - to ensure local industry is getting the type of students it needs. A couple of examples of strategic partnerships include the Golden Horseshoe Strategic Energy Alliance - where Mohawk is collaborating to make Southern Ontario the nation's solar sunbelt - and CANMET, Canada's largest research centre for clean, renewable energy. 3. Invest in your existing workforce. While it's important to bring new blood into a company, investing in your existing workforce is important too. And that's something companies are beginning to realize as they slowly emerge from this recession. "We realize that over the last year and a half a lot of things had to be put on hold," says Valedis. "Companies are finally realizing that they needed training yesterday." Training employees - whether it's on new equipment, safety practices or skill sets - is important not only to ensure a smooth-running company, but for employee engagement as well. Whether you opt for a private training company or the "continuing education" arm of a local college, allowing your employees to learn updated skills can increase their productivity and give them a new perspective on their jobs. Similarly, more companies are opting to enrich the jobs of upper management by joining associations like the EMC - where they have the opportunity to learn about lean best practices and other business strategies from other member companies. "We've seen a lot of new members recently - maybe a 12-15 percent bump in membership," says Diggins. "This is an indication that people are starting to see the value in sharing ideas - in sharing best practices." 4. Take advantage of government programs. While they appear to be laden with more red tape than they're worth, government programs can help your company save a lot of money and prepare for the future. "All those improvements your company made during the recession qualify for the SR&ED program," says Lang. "A lot of companies find that, while it's quite a bit of effort to apply for the program, in the end it forces them to put more discipline into record keeping and documentation, which only helps their business in the long run." The EMC offers resources for its members to help them make successful SR&ED claims - oftentimes helping their members get more money back than they would get with a large accounting firm, primarily because the association has a deep understanding and experience with manufacturing-based businesses. Other programs - such as AIME (Achieving Innovation & Manufacturing Excellence), which is a joint effort by the Yves Landry Foundation and the Ontario government - offers added incentive to companies. Jensen, who is an assessor of proposals for the project, thinks it's a great way to encourage companies to move forward on the innovation front. "Essentially the program offers maximum $50,000 grants to qualified applicants," she says. "Companies can submit proposals regarding how they'd like to make their company more efficient and productive through innovation. They have to show what they've committed to the cause themselves - whether it's through training in lean manufacturing or investing in new equipment. We're seeing a lot of well-executed programs." While a recovery is definitely on its way, members of the editorial board agree that it's not going to be a fast and easy one. Many believe we won't see pre-recession levels anytime soon, due to the extreme decimation that ensued over the last year. That being said, confidence is up - and confidence, it seems, is contagious.
G.N. Plastics is a leader in the design, development and manufacture of thermoforming machines and tools. After moving to Chester, N.S., from Austria in 1968, the company now produces plastic products and packaging for the foodstuffs industry (which is 95 percent of its customer base). Between 70 and 80 of its systems are sold yearly. Today, customers in more than 60 countries trust in G.N. Plastics' solutions. The Maritimes-based machine manufacturer offers common development and production of prototypes as well as application-specific support. "Although G.N. is involved in a niche industry, competition in the global marketplace is strong with the largest competitors based in Germany, Italy and the U.S.," G.N. general director Georg Nemeskeri explains. INCREASED EFFICIENCY Thermoforming machines are normally used to process plastic sheets that are first heated and formed and then cut and stacked. From wrapping for fine foods to sweets, all types of packaging can be produced. "In the past, we often used several different solutions for our machines, which increased the time required for programming and commissioning," Nemeskeri says. High-quality plastic packaging is the result of a multi-layered production process. High forming speeds and precise positioning of the plastic are important factors when processing various foil materials. In cooperation with B&R Automation, G.N. Plastics was able to combine progressive machine design and maximum performance in a very short time. In 2005, G.N. Plastics began collaborating with B&R. Using its Automation Studio software, the company greatly simplified management and control of the automation system. It was then possible to considerably reduce the programming time required for the various components - and annoying interfaces became a thing of the past. G.N. Plastics and B&R's first joint project was the fundamental reconstruction of a robotic stacking unit. This was followed by the development of a new automation system based on a B&R Power Panel and ACOPOs servo drives and servomotors. Advantages of the new concept include its "extraordinary user friendliness and reliability." A MULTI-LAYERED PRODUCTION PROCESS "In particular, the use of Automation Studio allows simple integration of a control solution that can be ideally adapted to all of the requirements of our thermoforming machines," Nemeskeri explains. Additionally, Christian Kastinger, an applications manager with B&R in Mississauga, Ont., says the new 15-inch, colour HMI provides an enhanced graphical representation of process parameter and diagnostic information, and the B&R System Diagnostic Manager provides web-based access to diagnostic information. Additionally, G.N. "reduced cabinet space and wiring effort due to the power panel technology" with the combined HMI and PLC and by using compact X20 slice I/Os. The main steps for plastic processing include: • Heating the plastic material: The plastic is unwound from a roll and fed into the forming area. Here it is trapped in place by a double toggle mechanism that closes the forming press. Compressed air is injected through the mold ensuring complete contact of the plastic material with the heating plates. Adds Kastinger: "Besides a higher throughput (parts/min.), the new B&R software-based temperature controller provides outstanding stability of the temperature zones [that] is crucial for the product quality." • Forming: As the plastic material reaches the optimum forming temperature, air is exhausted from the mold. Air pressure is then applied through thousands of tiny holes in the heating plate assembly. This forming pressure forces the plastic into the mold cavity. • Cutting the formed plastic: As the forming air is vented, a second toggle movement forces the knife blade of the cutting die through the plastic sheet. • Ejecting the completed part: After cutting, the press opens and the formed parts are ejected using pressurized air. • Material transport: The formed parts, which are still connected to the material web, are transported to the stacking station. • Stacking: The stacking units can easily be attached to any thermoforming machine in order to accurately count, stack and deliver the formed parts. The integration of B&R technology ensures consistency. In addition, the components' modularity makes it possible to quickly adjust machine solutions to specific requirements. As for challenges, the biggest came to testing the control program. "All possible operator inputs at any step of the process had to be tested in order to ensure highest possible reliability and repeatability of the thermoforming process," Kastinger says. The first updated machine was shipped to a European customer familiar with G.N.'s machines and with high expectations. "The machine has been working well since Day 1 and satisfied the customer's expectations," he adds. It was even possible for G.N. technicians to monitor production parameters of a machine operating across the Atlantic Ocean and to even implement and download minor program advancements. "Because of the success of our partnership during the projects, we decided to use B&R components for all of our machines' needs in the future," Nemeskeri says, a process that is well underway. "Based on modularity and the excellent availability of all the B&R components, we are now able to make powerful systems available right on time," he adds.
An all-in-one machine and motion controller is helping an innovative machine builder set new levels of performance in the stone cutting sector. Farnese Australia has been manufacturing stone cutting and polishing machines for 10 years. For its latest product, the Quantum bridge saw, the company switched to an Ethernet-based controller from Baldor Electric Company. The controller provides all of the resources required for the real-time interpolated control of four servomotor axes, all of the I/O on the machine, plus an ActiveX interface to the unique Windows user interface that Farnese developed to simplify stonemasonry. The new Quantum bridge saw provides X, Y and rotational motion for the fast and efficient shaping of stone kitchen and bathroom surfaces. Four servomotors control the motion of the rotary saw tool, which moves over the worktable on a gantry. Two synchronized axes are used to drive the gantry along the worktable because of the weight and rigidity of the tool that is required for precision sawing over such a large operating area. The other two axes provide transverse movement along the gantry, and rotational motion of the tool head. The latter axis eliminates any need to reposition the workpiece or tool to change cutting direction, and can make angular and circular cuts to radii as small as 10 mm. The four axes employ single-phase Baldor MicroFlex e100 drives, driving the company's BSM series servomotors. These axes, plus all of the sensors and actuators required on the machine, are controlled by Baldor's all-in-one motion and machine controller, NextMove e100. This controller uses the deterministic real-time Ethernet Powerlink Network. Baldor's controller was selected for three main reasons: It provides a single-box motion and I/O control solution for this four-axis interpolated machine; Farnese makes a range of cutting and polishing machines, and Baldor's controller makes it possible to use the same platform for almost any conceivable new machine or cell, with up to 16 interpolated axes; and Baldor's development environment, Workbench, comes with the controller, and includes support for ActiveX, making it easy to interface with Farnese's existing PC/Windows-based user interface. Programming the real-time motion control was made easy by Baldor's Mint language, which offers high-level keywords for the complex movements that Farnese requires, such as angular and circular cuts. Workbench also provides tools that allow Farnese to provide remote support for its machines, allowing diagnostics to be run and drives to be tuned. The user interface is a key feature underpinning Farnese's success in its home markets of Australasia. It makes selection of the right shape cutting process very easy, avoiding much of the risk of operator error. A range of pre-programmed shape cutting sequences are provided to cover common requirements, eliminating the need for skilled operator programming by the kitchen and bathroom surface suppliers that typically purchase these machines. The interface also supports more complex applications, allowing programming using G-code, as well as manual control. "We've used Baldor controllers for many years," says Alessandro Farnese of Farnese Australia. "The latest Powerlink controller gives us a really versatile platform to help develop our machine building business." "The NextMove e100 provides a very versatile and economic platform for producing three- and four-axis machines, such as those from Farnese Australia," says Jason de Souza of Baldor. "In this case, the multi-axis control capabilities and the I/O that comes as standard provided all the control resources needed, keeping the bill-of-material costs very low. It will also operate standalone, or in conjunction with a PC host, providing great flexibility of application for the small machines sector." Farnese Australia is currently in the process of starting up a manufacturing plant in Vietnam to produce machines for the global market.
A Canadian boxboard manufacturer is at the forefront of making high-speed equipment safe, with help from Rexroth’s innovative Safe Motion technology. You don’t want to mess with a die cutter. “It’s probably the most vicious thing you can imagine,” says Corey Mackenzie, Electro-Mechanical Engineering Technologist with the Cascades Boxboard Group, a division of Cascades Canada. “It moves at almost 6,000 RPMs, running around the speed of a household blender. If you got your hand in there, it’s not going to be an injury you walk away from.” That’s why safety is the number one priority at Cascades’ plant in Cobourg, Ontario, Canada. The plant prints cereal boxes, coffee cups and packaging boxes for a number of different consumer goods. Their presses and die cutters must work at high speeds, cutting the products in perfect synchronization. But those speeds don’t always equal safety, and that just isn’t an option for Cascades. “There is no way, at the end of any shift, Cascades, from the Corporate level on down, want anyone of our employees to get hurt” says Eric News, plant manager of the facility. “Truly responsible management must take that into account. You should be taking every precaution along the way.” That doesn’t mean productivity and safety have to be mutually exclusive. The team at Cascades recently learned that new technology exists to allow them achieve the speed and productivity they need, while still providing the utmost safety for operators. The discovery started after Cascades purchased a used high-speed printing press from a company in England, and needed to retrofit a die cutter onto the line. They arranged for an integrator from the United States to integrate the die cutter with the press, but when the system arrived, they discovered it wasn’t going to be up to the challenge. A need for speed — and safety When it came time to integrate the die cutter system with the press, Mackenzie found that two major issues arose. One was that the drives were too slow for the press to be able to reach top speeds, even though it was a new drive and control system. “It didn’t have any functionality and the drives were erratic,” he says. The drives were meant to synchronize the die cutter with the printing press, but the drive system simply couldn’t keep up with the press. The second challenge was safety. Because the die constantly cuts boxboard and cardboard packaging, residue builds up. To clean it, operators would have to stop the machine, clean part of the die, re-engage the machine, rotate the die, turn the machine back off, clean another section, and so on until the die was cleaned. The time-consuming process not only caused downtime, but there was potential for an operator to disregard the rules and not turn the machines off in an effort to speed up the process. The system also uses small cameras to make quick adjustments to the dies, and those cameras need periodic adjustment and cleaning. Operators have to be allowed into the area while the machines are running — something the original drive system was unable to allow. Mackenzie came to the conclusion that the control system they had ordered to help integrate the press and the die cutter just wasn’t going to work. “We took that control system and, basically, threw it in the garbage,” Mackenzie says. “We said, ‘we’ve got to make this a lot safer for our employees.’” A true integration Mackenzie and News turned to a local Bosch Rexroth Certified System Integrator, Automated Products and Supplies (APS) to help resolve those two major challenges. Mackenzie worked closely with APS’s Trevor O’Meara to find a new drive system that would allow the press to reach top speeds and integrate both safety and ergonomics. O’Meara, too, understood how important it was to integrate safety into the control systems. “Safety is legislated, mandated and monitored in this country,” he says. “If you don’t have safe equipment, you have to upgrade it to be safe by the new standards.” The first step was to install new drives — this time choosing ones that were properly sized to ensure the press could reach full speeds. O’Meara and Mackenzie worked closely with Bosch Rexroth Canada’s engineers to select a 3 axis Rexroth IndraDrive system with Synax control. With the drives now able to bring the press up to speeds of approximately 1,500 feet per minute, it was time for Mackenzie and O’Meara to turn their attention to safety. Allen Rutherford P.Eng, senior applications engineer with Bosch Rexroth Canada, had the answer: safe motion. Bosch Rexroth’s Safe Motion technology provides advanced safety functions that Cascades could integrate directly into the IndraDrives. The Safe Motion technology complies with the latest international standards for safe stopping and safe motion. The team implemented Rexroth’s IndraDrive based Safe Motion technology, enabling all three axes to stay powered up but still lock out safely. It allows operators to get into the machine and make the needed adjustments without shutting down the power. The great teamwork and cooperation between Cascades, APS and Bosch Rexroth, along with Rexroth’s easy to apply Safe Motion technology, resulted in a successful upgrade. “The black-box external type of safety system can cost big money and be a nightmare to commission,” Rutherford says. “This commissioning was very easy since there is no programming required. We simply parameterized the Safe Motion parameters and in four hours the system was up and running.” Full speed ahead Once the new press and die cutter were properly integrated, and the drive and control system was up and running with Safe Motion, Cascades was soon able to realize the benefits of the installation. Those benefits include: • Increased speed and decreased product rejects. The new motors and drives are sized more accurately, which Mackenzie says helped them increase the speed of the press and decrease the amount of product rejects. The Synax synchronization system from Bosch Rexroth also helps the press and die cutter work in tandem to ensure a perfect product almost every time. • Increased productivity for operators. The system’s Safe Motion gives operators access to the machine for adjustments and maintenance without having to turn off the power, which saves time for the operators. And the less time it takes to adjust or maintain the machine, the more time that machine can be running. • Engineered safety in the control system. The new system no longer has to rely on operators performing in a safe manner. With Safe Motion, safety is integrated directly into the press and die cutter, making it virtually foolproof. “If the operator has full access to his machine and can make adjustments, his job is a lot easier,” Mackenzie says. “He just has to worry about making the right adjustments. He doesn’t have to worry about getting in there safely.” In the end, Cascades found it could have both safety and performance without compromising a thing. “In this case, you can have your cake and eat it too,” says News. “You can create the safest possible environment you can, and still improve productivity.” Bosch Rexroth Canada is the Canadian partner company of Bosch Rexroth AG, one of the world’s leading specialists in the field of drive and control technologies. Under the brand name of Rexroth the company supplies more than 500,000 customers with tailored solutions for driving, controlling and moving machinery used in industrial and factory automation as well as in mobile applications. Bosch Rexroth is a partner for industrial applications and factory automation, mobile applications and using renewable energies. As The Drive & Control Company, Bosch Rexroth develops, produces and sells components and systems in more than 80 countries. In 2008 Bosch Rexroth AG, part of the Bosch Group, achieved sales of around 5.9 billion Euro with 35,300 employees. For more information please visit: www.boschrexroth.ca
This year, with all of the economic challenges facing manufacturers, staying competitive is going to require cost reductions, increased productivity and efficiencies, innovation and the adoption of new technologies to help achieve these goals. We asked five industry experts to name the top five technologies and trends that will impact Canadian and worldwide manufacturers in 2010 and beyond. Author and Topic Index Jim Pinto 1. Industrial wireless. 2. Embedded intelligence and M2M. 3. Cloud computing and software as a service (SaaS). 4. Plant and factory security systems. 5. Robots are coming. Eric Byres 1. Industrial security and safety integration. 2. Industrial wireless. 3. Virtualization. 4. Industrial cloud computing. 5. Host Identity Protocol (HIP) for control systems. Marc Ostertag 1. Integrated safety. 2. Energy-efficient drive systems. 3. Predictive maintenance. 4. Remote machine monitoring and maintenance. 5. Embedded communication services. Anders Lif 1. Usability enhancements. 2. The integration of the “top floor and shop floor.” 3. Convergence of IT and SCADA. 4. Mash-ups. 5. Shrinking workforce tech. Sal Spada 1. Adaptive production machinery. 2. Design tools integrated with automation for mechatronic optimization. 3. Robotic safeguarding solutions. 4. Sensor networks become viable options. 5. Motion control safety functionality improves machine utilization. Jim Pinto Jim Pinto is an industry analyst and commentator, writer, entrepreneur, investor and futurist. Read his predictions, as well as excerpts from his book, Pinto’s Points, at www.jimpinto.com. 1. Industrial wireless. Wireless is an enabling technology for new applications beyond just wire replacement. The new ISA standard has finally been tested and approved; this will, hopefully, stimulate broader applications for a variety of end users. My hunch is that new applications, with changed processes and procedures, will adapt to the new wireless capabilities. This could generate revenue breakthroughs for burgeoning wireless networking technologies waiting in the wings. We’ll see more wireless products announced in this coming year, and it could spark a new phase of growth that will re-energize industrial automation. 2. Embedded intelligence and M2M. The “pervasive Internet” is still emerging, and in spite of the economic slowdown, will burst through in the coming decade with a plethora of products and applications. Embedded intelligence and connectivity is what machine-to-machine (M2M) is all about. Large assets will include self-monitoring procedures, reporting up the hierarchy with information such as uptime and downtime, diagnostics, usage and failure patterns, and more. All this invisible information about assets, costs and liabilities will become available at an affordable price, generating new revenue growth for leaders. 3. Cloud computing and software as a service (SaaS). This is a burgeoning new area in the commercial and office business environments, and growth will spill over into factories and process plants. All but the most critical components will be run “in the cloud” — it’s simply a matter of how local or how distant the hardware and software resources are located. The switch to cloud resources will occur because of the growing obsolescence of capitalized hardware, plus continuing support for rapidly changing software. Something’s got to give, and what will change is the mix of local, capitalized hardware and software versus cloud resources. Albeit with some lag, industrial automation will follow the growth in this fast-growing arena. 4. Plant and factory security systems. Most of today’s automation and control systems use the same hardware (Intel), operating system (Windows) and communications (Ethernet TCP/IP) as broadly deployed personal, corporate office and administrative networks. This generates steadily increasing problems. Worms and trojans can enter through mainstream operating systems and software, plus there may be deliberate external or internal intrusion. Good network security environments include high-security routers and firewalls that block outside intrusion but do not affect required performance. Automation-systems security has become an urgent issue, perhaps even a critical one. Providers of effective security protection solutions and services will generate good growth over the next several years. 5. Robots are coming. Robots with integrated vision and touch dramatically changes the speed and efficiency of new production and delivery systems. Robots have become so accurate they can be applied where manual operations are no longer a viable option. The biggest change in industrial robots is that they will evolve into a broader variety of structures and mechanisms. In many cases, configurations that evolve into new automation systems won’t be immediately recognizable as robots. For example, robots that automate semiconductor manufacturing already look quite different from those used in automotive plants. Eric Byres Eric Byres, CTO of Byres Security, is an expert on SCADA and critical infrastructure security. He has been responsible for numerous standards, best practices and patents for industrial networks. 1. Industrial security and safety integration. In many companies, there is a growing realization that industrial safety and industrial security are actually two sides of the same coin. Whether the cause is an unsafe act or a security breach, the impact is the same — personnel safety is in jeopardy. Adopting a common methodology for both is more cost-effective engineering. Expect to see combined safety-security consultancies to dominate the SCADA/process security markets and the emergence of new audit and analysis methods that tightly integrate safety and security on the plant floor. 2. Industrial wireless. This has been on everyone’s lists for several years now, yet product in the field has always seemed to be another year away — so why include it again? Because with the ratification of the ISA100.11a Wireless Systems for Industrial Automation: Process Control and Related Applications standard in September and the release of a WirelessHART Device Registration Procedure document in August, it means real products for both wireless standards are going to start appearing in earnest. Once they do, then we will see wireless migrate from a curiosity to a core technology on the plant floor. 3. Virtualization. A virtual machine (VM) is a software implementation that executes programs just like a physical machine. For example, my laptop contains several VMs that act as virtual PLC programming and network analysis laptops; they allow me to keep my personal computer, my office computer and my field laptop all independent (making application conflicts far less likely and my regular PC far more efficient) yet only carry one laptop. But the real benefits are in server applications: you can replace dozens of lightly loaded “hard” servers with one powerhouse server and then run multiple applications in their own VM. It is having a major impact on automation, and the cost savings in hardware and management can be enormous. 4. Industrial cloud computing. While there is little chance that we will soon see the direct control of processes (no cloud PLCs), there are lots of support applications in industrial plants where cloud computing makes sense. For example, today’s long-term data historians and asset management systems can be situated on servers almost anywhere in the company intranet, so pushing the data storage and access out to secure, externally managed server in the “cloud” is not a big technical shift. The challenge is trust. As standards develop for ensuring good third party management of data and engineers realize the real cost of maintaining a secure server and trust those whose only job is maintaining that server, the shift will happen. 5. Host Identity Protocol (HIP) for control systems. Every list needs a long-term, crystal-ball prediction, and this is mine. The trouble today with the Internet (and TCP/IP in general) is that it is too easy to impersonate any device or person on the network and send spoofed and harmful messages — just look at your spam folder. HIP is a new protocol that will allow devices to automatically prove their identity in a secure manner. Once their identity is proven, they are allowed to access other systems and services based on the rights associated to that identity. Marc Ostertag Marc Ostertag is the North American president at B&R Industrial Automation. 1. Integrated safety. Safety will further progress to an integrated part of the control solution. Besides the obvious benefits, such as reduction of wiring, project commissioning and maintenance, this will really start to change the way machines react to various safety-related events, such as breach of light curtains, etc. Machines will be able to react smarter by going into a safe state versus coming to a grinding halt. In the end, this not only increases the safety of the machine but vastly reduces downtime — and this is where the smarter safety will very quickly pay off. 2. Energy-efficient drive systems. Energy efficiency will continue to be a major driving factor for all industries. The biggest source for energy losses is in motion-related system parts, such as servo drives. While it has become common practice to link servo drives and help share one drive’s excess energy while braking with another drive that is accelerating, the new generation of drive systems can take this further and put energy back into the power grid. Such drives with power factors close to one will greatly reduce the energy used by manufacturing lines. The savings realized per year quickly outgrow the cost of the drive system by a large margin. 3. Predictive maintenance. More and more we will see machines that can monitor their actual state with regards to maintenance. The big driving factor here is downtime versus uptime. Every time a machine requires unscheduled maintenance, the costs are huge since most are part of manufacturing lines that are consequently shut down. If, for example, the machines that had to be shut down could have already announced their maintenance needs, all service work could be executed at the same time. This reduces lifetime costs by a huge factor. The technology is there; it requires machine builders and end users to define the execution. 4. Remote machine monitoring and maintenance. This is not a brand-new technology, per se — it has been around for years. Most control systems will have the functionality built-in to allow for remote access in order to be able to monitor the machine and troubleshoot any potential problems. Unfortunately, in many cases the machines are not hooked up to the company-wide Intranet and even if they are, they often are not granted any outside access. What is needed is a sensible policy at the site that takes security concerns into consideration as well as trying to reap the potential benefits remote access promises. 5. Embedded communication services. More and more, PLCs are becoming more intelligent. One good example is integrated communication services, such as OPC servers embedded in the PLC. This brings the realization of site-wide data connection and data collection to the controller level and can, in many cases, make additional PCs obsolete. It also allows for a much cleaner integration and thus helps make processes and operations more transparent. Anders Lif Anders Lif is the global director of product and industry marketing with IFS, which offers a range of ERP and manufacturing software solutions. 1. Usability enhancements. Designing business applications for improved efficiency lets IT support departments and manufacturing staffs handle greater responsibility with the same or fewer staff. Human-computer interaction has become an important science when designing IT systems for optimum usability and for driving employee efficiency as an important part of the system design. We have seen usage of systems increase after usability enhancements as well, with more than 100 percent following the redesign of an OEE (overall equipment effectiveness) software module, which allows a manufacturer to get more value from their investment. 2. The integration of the “top floor and shop floor.” This has been discussed and developed for at least the past decade, but there are more and more examples of integrations between automation equipment and business applications that really make sense. The classic example is predictive or condition-based maintenance, but you will also start to see examples where you are able to automate administrative work processes based on data exchange between PLCs and business applications. 3. Convergence of IT and SCADA. IT systems are getting more and more “real time.” Even if we never talk about micro seconds update in business applications, we have access to information in a much more transparent way than before — and this also drives a redesign of the user interface to deal with more information in the same screen. IT systems are looking more and more like SCADA systems as speedometers, trends and different graphical representations are used to illustrate more complex data patterns. 4. Mash-ups. These integrations of business software and web functionality will become more and more frequent. An example is the mash-up combination of existing Internet maps, like Google Earth and Microsoft Bing, with work order systems in an EAM/CMMS application. Suddenly, users are able to see work orders plotted geographically across a map, enabling much more efficient planning for field service technicians performing after-sales service at customer sites. Mash-ups are often a cheap way of creating new functionality by combining already-existing technologies and solutions in new ways and can be expected to be more common in the coming years. 5. Shrinking workforce tech. In Western economies, the baby boomers are about to retire, leaving a smaller generation to replace them. This leaves many companies in an interesting situation, but IT and automation can help them handle the same (or more) work with fewer people. Manufacturers will also need to capture the “tacit knowledge” of their retirees through social networks or Web 2.0; tools like forums, wiki articles, blogs and other devices are all great at involving and engaging people in debates where their tacit knowledge is released and stored for future reference. These are also becoming an interesting part of the business-applications design in upcoming years as they prove to be an efficient way to interact and collaborate within companies and over borders. Sal Spada Sal Spada is a senior analyst with the ARC Advisory Group. His focus areas include motion control, material handling, machine safeguarding, robotics, servo drives, and packaging machinery and operations. 1. Adaptive production machinery. In practice, there are innumerable process issue considerations to take into account when seeking to implement a solution. The complexity of the process is the primary reason major CNC suppliers won’t get directly involved with adaptive machining solutions. The issues with regard to tooling include tooling profile, tooling coatings, tooling variation, work piece material, work piece material variation, machine tool characteristics and surface finish quality. These process variables are not an area of expertise for the CNC suppliers, so major CNC suppliers do not want to get engaged directly with the end-use manufacturer. 2. Design tools integrated with automation for mechatronic optimization. Mechatronic support services include comprehensive simulation tools for testing primary as well as alternative machine concepts. Such tools create a virtual machine environment to test a prototype and production machine performance. In this phase, machine builders can run tests for machine cycles, sectional speed capabilities, bottlenecks and safety. As a result, machine builders can modify or configure machines for optimum performance and high productivity. Mechatronic support services can not only eliminate the need for building multiple physical machines prior to production, but can also speed actual machine deployment. 3. Robotic safeguarding solutions. Robotic suppliers are introducing innovative solutions that provide protection from the inside out rather than the pervasive outside-looking-in approach. These innovations are based on the concept of “work envelope limitations,” which is more akin to a designed-in safety approach, than an add-on safety approach. A designed-in safety approach provides an opportunity to improve the productivity of the work cell by constraining the movement of the robotic arm based on the location of the production worker and the perimeter fencing. 4. Sensor networks become viable options. IO-Link is a low-cost, point-to-point wired sensor network that offers improvements in deployment, continuous operation, and diagnostics for the most widely used types of sensors. An IO-Link sensor transmits standard digital or analog output signals and provides additional serial data communications with the control unit as master to exchange parameters such as the measuring range, sensitivity, time delay and operating mode. Because the serial data transmission needs no additional wires and the output signals are compatible, it is possible to use standard cables and connectors and combine or mix IO-Link devices with standard devices. 5. Motion control safety functionality improves machine utilization. Integrating safety functionality into servo drives and other motion control equipment is one of the most intriguing drivers in the machine safeguarding market. Embedding a safety controller and safe I/O right into a servo drive eliminates the need for a separate safety controller and I/O. Safety functions are integrated directly into the drive, eliminating the need for external power contactors and speed monitoring equipment and enabling local control. Many view this trend not as a threat the machine safeguarding market, but as a move toward incorporating increasingly more safety functions in machinery.
Okay, you’ve tackled PLCs, and now you can program them with one hand behind your back. So what’s next? What’s the next logical challenge? Think SQL and relational databases. Why? You’d be amazed the similarity; it’s the next logical progression. You might ask how it is they’re even related. For one thing, relational databases can sort of be an extension of PLC memory. There, live values can be mirrored bi-directionally. Historical values and events can be recorded there as well. But operators and managers can interact with them, too. I’ve spent more than 20 years of working, living, breathing and thinking PLCs, but during the past six years, I’ve delved heavily into SQL and learned a lot about relational databases. I’ve discovered that working with SQL is remarkably similar to working with PLCs and ladder logic. SQL has four basic commands and about a hundred different modifiers that can be applied to each, which can be applied in various ways to achieve all types of results. Here’s an example: Imagine effluent from a wastewater plant with its flow, PH and other things being monitored and logged. That’s what you typically see. But now let’s associate other things with these, such as discrete lab results, the name of the persons who did the lab work, the lab equipment IDs and calibration expiration dates, who was on shift at the time and the shift just prior, what their certification levels were, what chemicals where added and when, who the chemical suppliers were, how long the chemicals sat before use, and so forth ad infinitum. All of this becomes relational data, meaning that if it’s arranged properly in tables, you can run SQL queries to obtain all types of interesting results. You might get insight into the most likely conditions that could result in an improper discharge so it could be prevented in the future. In my explorations of SQL, I found myself looking at the layout of my tables and evaluating the pros and cons of each layout. I massaged them, turned them on their side, upside-down, and finally ended up with the most appropriate arrangement for my application. And similar to PLC programming, I explored innumerable what-if scenarios. I was struck by the amazing similarity in my approach to developing solutions for PLCs. This has been a lot of fun — in fact, exhilarating — just like PLCs used to be. It’s the next logical progression, you know. SQL is a high-level language that isn’t very hard to learn, and you can be very clever with it. I prefer to think of it as a natural extension to my PLC programming skills. Now that you have the machinery running, what did it do? Furthermore, relational databases and SQL pull people and processes together. Machines don’t run alone; they’re merely part of a containing process and that process was devised by people. SQL and relational databases form the bridge to integrate processes, machinery and people together. I don’t believe a COTS (commercial-off-the-shelf) package can do it any more than you could offer a COTS palletizer program and have it be of any use. It just doesn’t work that way. Every machine is different, and every business process is different. That’s where the SQL comes in: it has to duplicate or augment existing process flows and these are intimately connected to the machinery. And that’s why the PLC programmer is best suited to implement solutions involving PLCs and relational databases. So where do you start? I would suggest picking up a book at the bookstore, like one of those Dummies books, then download and install the open-source MySQL database server along with the MySQL Administrator and Query Browser. It only takes a few minutes to install and then start playing. At the end of an evening, you’ll probably be very excited with all of your newfound knowledge and be thinking of endless ways to employ it in your own field of practice. Happy SQLing! Steve Hechtman is the president of Inductive Automation.
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