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Modern energy production following the footsteps of Frederick Taylor´s management practices

December 2, 2019
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Frederick Taylor (1856-1915) was one of the first management gurus with an indisputable impact on global industrialisation. While not an innovator in technology, he created a new scientific management method for the industrial age. What could we still learn today from a 19th century scientist?

At the tender age of 17, Taylor decided not to follow in his father’s footsteps as a lawyer. Instead, he left Harvard to work in a factory. As he learned the trade, he became fascinated with the contrast between efficient machines and the inefficient people using them. Workers were trained at the job, with their competence based on rules of thumb, beliefs and traditions. Each worker had their own method and everyone believed theirs was the best for each step in the production process. Taylor began to realise that emphasising such individual competence was a block to benefitting from economies of scale, and management had become a bottleneck to the industrial revolution. A management job, with less physical strain and a better salary, was simply a reward for years of hard work – all they had to do was keep the wheels rolling and the workers happy.

Taylor wanted to apply a more scientific approach to management. He began a detailed assessment of working methods, breaking down working phases and optimising everything. Taylor created new guidelines based on the optimised phases, taking productivity to a whole new level. The results from Taylor’s ‘scientific management’ were totally unheard of: for instance, the daily production of a steel factory soared from 12.5 tonnes to 47 tonnes while the number of workers was reduced from 600 to 140. The maintenance costs for boilers used in steam production were reduced from 62 dollars to 11 dollars, in the currency of the time. Henry Ford’s car assembly line in 1913 directly builds on Taylor’s management theory.

For today’s industry, Taylor’s management theory still carries weight in the pursuit of economies of scale and cost efficiency through assessing, analysing and developing operations. Examples of modern Taylorism include automation of industrial processes and the more widespread use of digitalisation, areas where the energy industry still has some way to go. According to a McKinsey Global Institute report, 44% of all operations in the ‘Utilities’ sector have potential to benefit further from technical automation.

Are you the winner in the fourth industrial revolution?

At Nevel, we’ve made heavy investments in the automation of power plant operations. Just a few years ago, the operators of Nevel’s power plants were adjusting processes in three shifts, much like the 19th century steel factory workers, each relying on situational approaches learned on the job. It’s no surprise that the day shift operator made and timed their adjustments slightly differently from the night shift operator, not to mention the less experienced morning shift operator.

The working phases of an automation system can be optimised, just as Taylor did with what he had at his disposal at the time. At Nevel, we have centralised our energy production operations to achieve cost efficiency and benefit from economies of scale. Instead of having 30 operators at seven power plants across Finland, there are now five competent and highly educated professionals working at our remote operation centre. With the high-level of automation, each power plant only requires about 30 minutes of manpower instead of eight hours, and there is now time to spare for development. The level of process automation has brought unequalled productivity and operational quality. With the major increase in the level of production predictability, any changes can be predicted with the on-site sensors, and any adjustments to operation parameters are carried out automatically in just a few milliseconds. Taylor was a driving force for the second industrial revolution. At Nevel, we are passionate about driving the digital transformation so that our customers can be winners in the fourth industrial revolution we are now living through.

As we know, the fourth industrial revolution is not only about improving productivity. The Blue Ocean Strategy is about bringing cost-efficient modern technology to customers in a unique way. To this end, we offer our operations service to all large scale energy asset owners. Vatajankosken Sähkö Oy was the first to implement the Nevel solution, with its potential to bring millions in savings for any power plant. According to the Future Perspectives study by Tieto Corporation in 2016 and 2017, nearly 40% of Finnish executives consider their companies pioneers or early adopters in implementing new technology. Where does your company stand?

Read more about our remote operation service.

Markus Hassinen
Managing Director, Nevel

1. Taylor introduction adapted from ‘Team of Teams: New Rules of Engagement for a Complex World’ by General Stanley McChrystal
2. McKinsey Global Institute / A Future That Works: Automation, Employment, and Productivity
3. Tieto Corporation / Future Perspectives study