Driving costs down by fully leveraging product knowledge
Air Products and Chemicals
Collective product knowledge is shared in an open, collaborative environment that benefits the entire enterprise
A new business approach – re-usable modules
Air Products serves customers in technology, energy, healthcare and industrial markets worldwide with a unique portfolio of products and services, providing atmospheric gases, process and specialty gases, performance materials and chemical intermediates. The company was founded on the strength of a revolutionary idea – the concept of producing industrial gases (primarily oxygen) on the customer’s site. This idea formed the basis for significant growth. But it also means that Air Products builds 60 to 100 new plants per year. They range in size from small, stand-alone plants that cost from $5 to $10 million to build, up to large regional sites that cost $30 million or more.
Air Products has an in-house staff to engineer its plants. Until the mid-1990s, the philosophy was to design each plant starting with a clean sheet of paper. By 1996, the engineering design labor for some of these plants was running as high as 15 percent of the total capital cost. In looking for ways to reduce this expenditure, Air Products determined that building plants from re-usable modules would drive design costs down to two to five percent of total capital costs – less than one-third of the cost of custom plant designs. It would also speed time-to-market and start the income stream running sooner. According to Frank Malvezzi, Air Products’ business program manager for Teamcenter® software, “Another driver behind the modularization initiative is time-to-market. If we have predesigned modules, we can not only give quotes to our customers faster but we can also quickly assemble the modules into a new plant. The estimating, bidding and construction phases are all shortened, which is a key competitive advantage in our business. The faster we can do that, the faster our customers can get online and the sooner we begin to see revenue.”
The infrastructure solution
Air Products’ next challenge was to implement an infrastructure that would facilitate modular plant design. A key consideration was finding a way to improve collaboration. At the time, individuals kept documents in files that weren’t always accessible by others. Much time was spent trying to find out if a document was current or if it had been updated. And with Air Products’ annual revenues of US $7.4 billion and operations in over 30 countries, the system needed to be reliable and scalable. Plus, it needed to be adopted quickly by all involved.
Simple document management was not the answer. According to Malvezzi, “A document management system imposes fairly rigid categories. We needed a system that would enable each user to see the documents in the way that made most sense to them – following a product structure. Instead of organizing documents, we wanted to organize objects that represent the physical world that each person works in.” Product lifecycle management (PLM) software would deliver that, as well as the collaboration solution Air Products needed to make modular design a reality. After evaluating several PLM solutions, the company selected software from Siemens PLM Software. That system delivered the functionality Air Products needed to manage the complexities of the plant construction process. The company has since evolved its implementation to make full use of the current PLM solution from Teamcenter.