February 19, 2019 [Logistics View Points] - Royal Vopak is a leading independent tank storage company founded over 400 years ago. It specializes in bulk storage of liquids including oil, chemicals, vegetable oils, biofuels, and gas.
The Rotterdam based company had revenues of 1.3 billion Euros at the end of their last fiscal year and operates 66 global terminals, mostly near ports.
They are a public company and thus publish an annual report. The annual report states that they are “making substantial investments to deliver the full benefits of the digital transformation.” These include investments in Big Data, dashboarding analytics, optimization technologies, new sensors at their terminals, mobile technologies, and smart robots and drones.
Their terminal in Savannah Georgia serves as one of their test bed sites for developing and implementing new digital technologies. Savannah is where Vopak piloted a project with Atomiton called the digital terminal to reduce their energy usage and help meet their sustainability goals. A week and a half ago, at ARC’s Driving Digital Transformation forum in Orlando, Diana Salguero – the IT Director for the Americas at Vopak – and Jane Ren – the CEO at Atomiton – spoke about this project.
Ms. Salguero said “technology leadership is a strategic pillar” for Vopak. And technology leadership requires innovation. Based on business challenges, proof of concepts (POC) are reviewed and approved. Some of these PoCs move to a pilot, and if successful Vopak then scales the technology across the remaining terminals that have a need for the solution and are capable of using it.
The company has enabled a group of bright people across operations and IT to work together with startups or leading innovative technology companies through a variety of proof of concepts and pilots. These vendors can include suppliers that would have historically been considered too young or too small for this conservative 400-year-old firm to work with.
These vendors help Vopak understand what might be possible. The innovation team has enough funds to work on number of proof of concepts. In deciding which POCs to tackle, they create user stories to share with the business to gauge the interest and potential value of a project. If a POC is deemed successful, they create videos to share across the business. The goal of these videos is to create excitement, and to get other terminals with similar problems to pony up the money for a pilot.
A Digital Transformation at the Savannah Terminal
In this case, the challenge involved getting visibility of electricity usage in real time. Peak time energy costs are higher, but these hours were also when Vopak’s operational activities were at its peak. The goal of the project was to reduce peak energy usage and energy costs, and shift activities like heating (and some cooling) to non-peak hours while reducing energy usage. To do this, they needed real-time energy consumption across different machines and activities. The equipment included legacy meters that were not digitally enabled, but the company did not want to spend millions of dollars to swap them out.
This is where the Atomiton solution came in. The Atomiton platform allows for communication with sensors, actuators, devices and machines and then provides a programming language to help make this data intelligible and usable. Then the software uses analytical predictions to recommend optimal scheduling to reduce peak energy.
From a material flow perspective, multiple trucks come to the terminal each day. As customers scheduled their daily or weekly activities for product movement, the planner at Vopak now had enhanced visibility through the Atomiton platform. The planner was able to schedule the daily activities so that more work could be done outside peak electricity usage.
At the terminals, some products in the tanks required heating to the right temperature to make them viscous enough to travel through the pipes. The pipelines and the pumping stations are also big users of electricity.
In the proof of concept, the goal was for the planners to see the energy usage, and then intelligently shift operations off peak hours to lower electricity costs. Historically, because there was not visibility to both heating operations and the slot booking schedule, the tanks were heated on an ongoing basis to keep them in the required temperature range.
The project started as a proof of concept at just one substation at the terminal. This POC did not generate the savings Vopak was looking for. “But a proof of concept never fails,” Ms. Salguero said, “you just learn from it.” The issue with this POC was that it was limited to one area of the terminal, which limited the ability of planners to shift heating operations off peak hours. This was because shifting energy usage for this specific substation was not productive unless all the substations were also added to the platform.
Machine Learning and Optimization Enable a Digital Transformation at the Savannah Terminal
Nevertheless, the company decided to move forward with the pilot. They believed they had learned enough to predict that if the visibility extended across the entire terminal, there would be significant savings. During the pilot stage they also employed machine learning to discover just how long it takes for a tank with a particular product stored in it to cool.
The Atomiton platform’s machine learning also factors in external conditions like ambient temperature and humidity. The machine learning feedback loop is still in place. The platform continues to improve its ability to predict how fast materials will cool.
One of the goals of this project was to develop of an application that helps with the optimization of the operational activities. The problem was complex enough – material/tank cooling properties, a week-long slot booking schedule, the weather forecast, and a set of linked tank heating, pipeline movement, and pumping activities – that manual planning was not going to lead to optimal savings.
They were right to proceed! The pilot achieved a 25% reduction in peak energy, 20% in overall energy savings, and a 5% increase in labor productivity. Vopak will soon finish the evaluation and decide whether to scale this across multiple terminals. While Ms. Salguero did not definitively say they would proceed further as this decision will be made by the Global Operational Department, the project was so successful it certainly seems likely. For Vopak, the phrase ‘digital transformation’ is not empty rhetoric.
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