How could plant engineers increase their company’s profit?
1.1 The target from this article is to discuss how chemical engineers can increase their company’s profit either by decreasing the operation cost or to increase the revenue or both. Chemical engineers play a different roles in the industry and could contribute with cooperation with other engineers and stakeholders in increasing the overall companies or plants profits and adding value.
1.2 The article will focus on the general rules of thumb that can be applied for any industry but if it is needed to discuss this issue for a specific industry, I propose to make a new group related to this issue where all interested specialists from this industry can exchange their ideas in this regard and I will be glad to provide my support to such initiative if requested.
1.3 In this article I will start by listing the possible methods to add value then will discuss the proposed framework (process) required to achieve this goal.
2 How to increase the net profit
2.1 The simple formula of the net profit is the subtraction of the operational cost including all overheads from the overall revenue so, any methods to increase the revenue and decrease operation cost will increase the net profit.
2.2 Chemical engineers can play a different roles in the industry (plant operations, process engineering, HSE, Energy management and others) and could contribute positively in cooperation with other engineers to add value to their plants if they were arranged in the right frame and provided with the required tools.
3 Reduce operational cost (OPEX)
The overall operational cost consist of several items as manpower cost, utilities cost, feedstock cost and others but I will focus on the areas that can be controlled or explored by the engineers in the plant and the below list contains the major areas that can be investigated to decrease the operational cost:
- Possibility to use a lower price feedstock or fuel to the process.
- Possibility to use lower price utilities from other utility provider.
- Unit operations optimization – Tune the process unit parameters to maximize a specific parameter in our case the formula will try to run the operation units with maximum economical production rate. in some cases people tend to run the plant at maximum capacity (outside the operation envelop of the equipment’s) and this will result in non-economical operational cost as most of the equipment’s will be operating far from best efficiency point (BEP) and this issue need to be considered.
- Enhance control system – Installing advanced process control (APC) for the main loops could be small investment that would has a great impact on operation stability and efficiency and consequently profit.
- Set energy management system- setting energy system would have a great impact on the operation cost especially for intensive energy consuming industries and you can refer to my previous articles about how to build energy management system for your plant for further information via this link (https://www.linkedin.com/pulse/energy-management-steps-step-7-recognize-achievements-magdy-aly?trk=prof-post )
- Process integration- to find possibilities to integrate heat with small modification or recover wasted heat or tie-ins to increase operation flexibility between operation units is a valid integration exercise.
- Retrofit/ revamp old equipment/process- aged process equipment’s or outdated technologies could be a barrier to increase the profits and evaluating their retrofit with the new advanced technologies or minor modification could have great impact on performance and profitability. Most of the old plants parameters have been shifted from design operation point and revamp exercise could be helpful to remove any existing any bottlenecks and increase production rate with lower operating cost.
- Synergy with nearby plant- As they said together we could do more. It is recommended to explore all possible synergy with other nearby plants as usual this will result in a win- win situation could be beneficial for both of the plants and the below points could be credible synergy areas:
- Extra Utilities exchange.
- Production flexibility tie-ins.
- Waste utilization/processing/treatment in other plant.
- Energy sources and heat integration
- Benchmark with similar plants – the benchmark with similar plants could help to find new savings opportunities and exchange experiences.
- Industrial specific good practice measures- Each industry (cement, petrochemical, fertilizers, polymer and others) has its own good practice related to their specific process. Exchanging case studies and continuous communication with similar plants and technology providers will provide a good knowledge about this subject.
- Apply 3R concept on the existing waste- recycle, reuse and reduce concept could be applied to minimize waste water volumes then investigating the feasibility of applying zero discharge treatment technologies on it.
- People competencies- suitable invest to provide suitable/ continuous training and career development programs for all employees is a very important to keep running all the operation units at high level of efficiency and insure operational excellence.
4. Increase Revenue
4.1 Product diversification- explore the possibility to produce a new products or add value to the existing products after making required market survey and analysis will help the companies to increase their revenues.
4.2 Convert plant waste to useful products- in some cases with some small investment industrial waste could use converted to a sellable product for other industry or markets and this will require specific in-house study or consulting specialists in this field.
5 How to do it (Process)
5.1 Construct add value committee or work force that consist from different stakeholders (representative from all departments (technical and non- technical)) and led by senior management member to provide the required support from top management.
5.2 The team will write the terms of reference (TOR) for this task force to identify the targets and working mechanism.
5.3 Conduct regular brain storming sessions and receive all proposed suggestions from all stuff where the credible and valuable suggestions shall be rewarded and recognized.
5.4 Make the opportunities register that contains all the proposals.
5.5 Run a simple financial models for all the options to calculate the payback period, IRR then sort the proposals into categories according to the required CAPEX and feasibility.
5.6 Present low cost and quick wins option for the management for quick implementation and make implementation plans for the medium and large CAPEX items.
5.7 Repeat the process every 3 months or as per the TOR.
At the end I hope that you find those ideas helpful and please provide your thoughts or improvement proposals or comments for future consideration.