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Cognite - how digital tools can help suppliers

Thursday, April 22, 2021

Cognite is helping equipment suppliers get useful data about their products in operation. One project, involving oil and gas operator Aker BP and pump supplier Framo, shows how data sharing can lead to a different business relationship between oil companies and their suppliers.

Cognite, an industrial software company based in Oslo, has an interesting project with Framo, a manufacturer of oil and gas / marine pumps based in Bergen, Norway.

Using Cognite's main software product, Cognite Data Fusion, Framo is able to access live data about its pumps in operation for its client Aker BP. This enables Framo staff to spot emerging problems, give advice, and better learn about how its pumps behave in real operating conditions. It supports a different working relationship with its customer, for example where it gets a bonus based on the uptime of the pump.

Aker BP gathers together data from sensors on all of its equipment, including Framo pumps, using Cognite's platform. The Cognite system 'contextualises' the data (puts it together with other related data so it is more meaningful). It can then be provided to Framo engineers in a way which is useful to them.

'The data Framo collects is used to get an overview of the condition,' says Trond Petter Abrahamsen, managing director of Framo. 'We can roughly say that we use this for two purposes. One is the real-time monitoring to see the status of the pump condition here and now. In addition, we look at the historical data to be able to predict what will happen in the future.'

'If a component fails or behaves irregularly, we can take action immediately, providing large potential cost savings. Learning from historical data also allows us to predict possible future events such as required maintenance and equipment failure.'

Until now, most equipment suppliers did not know much at all about their equipment whilst in operation - only finding out after a major problem, such as a failure.

Now they can get an understanding of how it is running and give advice to their customers about whether something should change. They can predict failures which may occur if pre-emptive maintenance is not done.

Lars Atle Andersen, VP Operations - Technology & Digitalization in Aker BP, says that his company's vision is to 'digitalize all our operations from cradle to grave' - with key elements being 'transforming business models and activities, using digital technology and liberation of data flows.'

We have the same flow of information and access to live data whether we are at home, at Framo or on the platform. We have control over all parameters', says Hans Christian Søraas, project engineer in Framo Services AS.

The project was run by a 2 man team, with one subject matter expert and one data scientist, to build models.

Cognite's software gathers and manages data from different systems, preparing it for further analysis. Framo receives the data clean, enriched and contextualized, about different aspects of its pumps. Since the data is available in the cloud, it can be accessed on PCs or mobile devices.

Using the data

Framo uses the data to make sure equipment is being used the way it is supposed to, and perhaps warn the client about impending problems. They can spot trends, such as performance of a piece of equipment slowly declining. There can be automatic alerts sent to customers.

Framo probably has more expertise about how its pumps operate than its customers do. So the service is putting the data in front of the people best equipped to make decisions from it.

Data can also be used to find ways to improve product design. It shows equipment performance in real conditions, which are always different to the test conditions. It may identify areas to improve reliability, seeing where problems repeatedly occur over the fleet of equipment. Conversely, it may use the data to identify where equipment is over engineered. 'This is super interesting for all equipment manufacturers to understand,' says Kevin Gaze, director of product management, DataOps at Cognite.

They can use the data to build models, which may reveal a range of trends which often occur before part failures happen, so as to better predict failures in future.

Business models

The standard business model for how a company like Framo works with customers is based around two components, sales of the product and the 'aftermarket' - selling spare parts and services after it has been sold.

The weaknesses in this model are well understood - if the manufacturer does not care too much about the long term relationship, it has an incentive to focus on sales above all else (even if it sells a product which is not fit for purpose), and then try to force the customer to use the manufacturer as an exclusive channel for spare parts (even if the same parts are available cheaper somewhere else), and maximise the amount of maintenance done, even if it is not needed. You may recognize the same pattern from your car dealer.

But if a manufacturer can access data about its products in operations, the service delivery model can change. The manufacturer can have confidence engaging in different business models, such as where the customer pays part of the purchase cost based on uptime of the equipment in operation, or its total cost of ownership, rather than just the cost to purchase the equipment.

This model can be more efficient for all, because the company which knows most about the equipment (the supplier) is managing it, and the oil company is only paying for what it is using, and the supplier carries the cost of poor equipment or poor installation - by having higher repair costs.

Suppliers have reasons to be wary of a full 'cost of ownership' payment system too - because the operator will probably want to follow its own procedures and methods while doing maintenance, and make a final decision about what gets done. Also, while a supplier may have best knowledge of their equipment, they do not necessarily have expertise for keeping a large fleet of their equipment in reliable operation.

But there are intermediate steps between a contract based purely on product sales, and a contract based on paying for up-time. There can be an intermediate option, where the customer is paying for the products, and agrees to pay a bonus or receive a penalty payment according to the level of uptime achieved.

In this case, Framo and Aker BP staff have weekly meetings over Skype where they discuss data. They have signed a 'smart' contract for 6 years with an option for a further 6 years.

Aker BP is pushing many of its suppliers to move to these new ways of working. Although not all suppliers want to change, Mr Gaze says. 'Many suppliers are happy with the way they work today.'



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» Cognite
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