DSM—not total cost, but total value of ownership

WIB-NL presentation weighs-up technology cycles and expected lifetime of plant equipment.

The Netherlands-based WIB—a.k.a. the international instrument users association held a ‘mini-seminar’ in The Hague last month to debate getting the best of obsolescence in plant instrumentation and equipment. WIB members include ExxonMobil, BP, Shell, Total Wintershall, DSM, Saudi Aramco and many others.

Frank Pijnenburg explained how DSM evaluated obsolescence risk as the product of the likelihood of equipment failure and the impact of such an event.

DSM weighs up technology cycles and the expected life of plant with an evaluation matrix of business horizon (years) vs. the risk of a breakdown. A second matrix shows the effect of different strategies—‘reactive’ (hoping it will not fail), adaptive (can be updated/parts are available), and proactive (upgrade system). Each has its place in the plant strategy—the trick is to stay on the straight line with an appropriate level of action over time. DSM uses an in-house developed Excel tool to rank its plant’s controllers, consoles and network modules. The tool combines mean time between failure (MTBF), and effectiveness of repair into a ‘years of functionality’ scorecard.

DSM considers its plants are now ‘risk positioned’ i.e. the overall migration effort is understood, allowing planning and costing and mitigating risk by positioning spares appropriately. This has allowed DSM to translate its costs into ‘value creation opportunities,’ allowing the company to think in terms of ‘total value of ownership.’ Evaluating how components contribute to the business baseline , helps evaluate suppliers’ efficiency and differentiate offerings. Read the WIB presentations.

This article originally appeared in Oil IT Journal 2012 Issue # 4.

For more information or to comment on this topic email here.