PE: How are manufacturers and their agents responding?
Scott: It is getting increasingly difficult to embed high levels of conventional service at no cost, while maintaining very low acquisition prices. To meet the customer’s expectations, many manufacturers are therefore focusing on reducing manufactured and supply chain costs. Service levels have increased to generate performance gains and manufactures have begun to offer a direct delivery model to reduce supply chain costs.
Local agents are adding more value-added service types to assist their business models and are morphing to the needs of the market by supplying services, rather than imbedding them into the product cost. The goal is to augment the more transparent and lower acquisition costs.
“Although the technology to warn users of potential dangers on some pumps currently exists, we will see many further advances in this area. I believe it will become much more automated then it is right now. Digital systems that contain continuous learning will be important.”
PE: How do you see the mechanical seal market changing in the future?
Scott: As there will always be an incentive to lower the total cost, I believe it is important to consider the factors and items that can, and will, drive that movement. In general, you will see technological advances continue. Rotating equipment life has more than doubled in industries over the years and is still progressing and energy costs will be an increasing focal point.
With this continual progression, I believe that we will see a shift in how we manage our existing equipment as well. Rather than devoting significant amounts of time to repairing older damaged and worn out equipment, I foresee some companies adopting the same processes that are generally accepted with valves. It is not unusual to see valves with pipe diameters of 10-inch scrapped. The amount of time that it takes to process the documentation of the damaged equipment, ship it to another facility to be repaired, and then evaluate what is in spec and not, repair it, can be incredibly costly, especially in the soft cost areas such as logistics costs. What is becoming more common is to simply scrap the old equipment and purchase new ones. Low cost, swap-out programs are also becoming more popular to allow plants to swap-out their equipment for upgraded technology.
The streamlining of equipment acquisition is another development I foresee for the future. As the market continues to mature, you will see more direct ordering from manufacturers. Agents are currently taking steps to move into other services to offer more value to end-users who have been working with pumps and mechanical seals for many years and have made great strides in reliability.
PE: Are there any items that can be disruptive to the future?
Scott: Digital Transformation will be a game changer both on the commercial and technological side.
The potential commercial impact of digital transformation on pumps and seals is often overlooked or minimized. As we have seen with SAP’s Ariba, Grainger and now Amazon, digital marketplaces are changing entire markets. Right now, over half of Granger’s sales are done online and Amazon’s business-to-business marketplace exceeds 500 million SKUs. The adoption of b-b e-commerce will accelerate and it will impact rotating equipment. Technology selection and AI will help users, especially millennials, review product selection and other technology alternatives. The ability to connect with endusers and manufacturers to lower total costs, in a variety of ways, will always be a top priority. It is important that manufacturers focus on the needs of end-users and move quickly in response to them. Essentially, the e-market will create an entire new sector for change.
Another area, that has the potential to be disruptive, is the Industrial Internet of Things (IIoT). The use of embedded sensors that continuously learn and assist end-users to minimize reactive breakdown maintenance will become prevalent on most types of rotating equipment. Although the technology to warn users of potential dangers on some pumps currently exists, we will see many further advances in this area. I believe it will become much more automated then it is now. The ability to interface with users, both in their ease of use and connectivity, will be a critical success factor. End-users are busy enough without having a multitude of sensors that have difficult to use platforms and dashboards to layer on top of their existing workloads. An adaptive and continuously learning red, yellow and green alert system works well with effective dashboards and the ability to drill down into very detailed levels to help conduct root cause analysis.
A secondary benefit of IIoT will be the potential for connecting plant equipment to the business side of the plant. Industry 4.0 is focused on this area. Already, we are seeing the impact, as we now have inventory systems in-place that automatically reorder from vendors when parts are removed from an inventory shelf. As one planner recently told me, when my job is automated that may be a problem. By digitally connecting what is physically happening in the plant with the commercial side of the plant, great strides will be made to improve plant efficiency and lower total cost in automated ways. The digital transformation of business will continue to accelerate over the years to come as we are only at the beginning.