How Companies Use AI and IoT to Boost Construction Machinery Efficiency, Reduce Costs and Increase Profitability By Yohann Desalle

For artificial intelligence (AI) and internet of things (IoT) technologies to deliver on their potential for digital transformation, they need to be applied to specific business challenges. Both of these digital technologies are extremely useful when applied to challenges caused by manual processes and disconnected, siloed solutions.

AI adds value to IoT through machine learning and improved insights for better decision-making. IoT adds value to AI by delivering the connectivity, signaling and data exchange that delivers the data that fuels AI. Used together, these two technologies can help companies deliver results and achieve savings when applied to specific uses cases in business.

This article describes two customer use cases that use IoT and AI to improve the visibility and efficient operation of construction machinery. In each case, solving a business challenge was the primary goal. Once the challenge was understood, the technology was designed to support the operations and to ensure efficiency.

Use Case #1: Improve machine cost allocation and decrease capex through improved visibility and automation

A construction company own more than 5,000 machinery and tool assets. Some were very large, such as excavators, drum rollers and self-propelled spreaders, and cost half a million euros each. Others were small and difficult to track, such as handheld drills. The company wanted to more efficiently track and allocate these assets across the different construction jobs the company managed. With improved visibility, management was hoping to gain a better understanding of the costs of machinery on-site and its effect on the profit margin for each contract.

The company also wanted to know the savings it could expect to attain with better management of hand tools such as drills and ramset guns. When these tools were needed and not available on-site, they were purchased locally. These last-minute purchases were an added expense to the contract, and they were often for a lower-quality asset. Management wanted to improve the ratio of use of the company’s assets and reduce reliance on rentals.

The challenge: Siloed and inaccessible machinery and equipment data

In this construction company, the Work Manager is in charge to list the tools and machine he needs to achieve the job. The Spare Parts Manager have to supply the hand tools needed for the week, and the Fleet Manager is responsible for the construction machines. The Fleet Manager must ensure that the right machine is delivered to the right location for the right period of time, whether it is a machine owned by the company or a machine rented externally.

The goal is to have the assets in the right place at the right time so that work is not interrupted. And although having the right equipment is important, it is also necessary to allocate those assets only for the time they are needed. This allows the company to manage the margin for the contract. While there might be a temptation to keep an asset for a week when it’s only needed for two days, equipment allocation must stay on target to ensure profitability as well as asset availability.

The company had the following tracking routines in place:

 ·        All construction machines were equipped with telematics devices or tracking boxes (from many different providers).

·        Some hand tools were tracked with radio-frequency identification (RFID), providing data about when they left the company but not with whom, and not about where they went.

·        Accountancy was done on a single information technology (IT) system that was separate from the customer relationship management (CRM) system where the contracts were registered.

·        Fleet managers were monitoring the booking of construction machines on spreadsheets. No consolidation of this information was done at the company level.

·        Tool and Spare Part Managers were also monitoring the use of tools on spreadsheets, with a low level of accuracy.

To track all the assets and get a holistic view of operations, we needed to gather information from the following data sources and store it in a single repository:

·        A CRM system contained the addresses of job sites and the dates when each contract would start and end.

·        Telematics provided data on machine location, and geofencing that linked each machine to a specific contract (in the CRM system) for the duration of use.

·        Telematics provided information about when a specific machine was switched on and off, delivering its time and usage.

·        An accountancy system registered the costs — providing the basis for calculating the real cost per construction contract.

·        Spreadsheets were used for the booking of machines and tools, which included required information; however, they were inconsistently used.

·        RFID tags were on some but not all hand tools, and they did not deliver the level of information that the customer requested.

The solution: Create a single map of machinery assets and automate tracking

Once the data sources were connected, Hitachi delivered a visualization of the assets on a single map. While this level of visualization was useful to the customer, the solution needed to offer additional analytics to deliver new insights. This required a deeper level of discovery for on-site delivery and usage of each piece of equipment for each construction project.

Now, when a contract is signed for a construction project, the system automatically uses geofencing to check the assets for the address associated with the site and allocates them to the contract. For example, the system can draw a digital circle around the construction address — 200 meters, 500 meters, 2 kilometers or more, depending on the size of the construction project — and track the assets in this area during the period of the contract.

The geofencing system tracks two data points:

1) how long the asset has been on the construction site, in days, and

2) how long the asset has been in use (that is, how many hours the engine has been switched on).

With this data, the company’s management can allocate a cost based on real usage of the assets for each contract.

The solution also tracks machines that are switched on outside of a geofenced area. With this information in the CRM system, the company can make sure that contracts are properly fulfilled and that no one is using a machine outside the designated construction site.

To improve operations, Hitachi suggested a single booking tool for assets (machines and hand tools). The construction site manager can book a machine or tool from a smartphone using an internal application, which enables fleet managers to easily allocate the right machine for each contract.

In addition, the hand tools are equipped with dedicated tracking devices. These trackers are attached to each hand tool and connected to the visualization map and booking tool. The tool and spare parts managers can use the trackers and the mobile app to register their tools instead of using spreadsheets, which saves them time and increases the accuracy of the data. The tracking devices are small, in order to be attached to every kind of hand tools, and they have autonomous battery system lasting approx. 7 years (more than the hand tool expected life).

The benefits of this visibility into the use of assets and equipment have also extended to the accounting department. Accounting personnel can see, for example, whether a pneumatic drill is available or must be purchased for a specific job site. With this level of visibility, the local purchase of hand tools has decreased by 90%. An up-to-date inventory of the assets is always available, as well as a record of purchase orders by construction site.

The results: Increased visibility improves efficiency and decreases capex

The new system delivers the increased level of visibility the company was looking for, as well as an improved ratio of use — made possible by the single booking tool. The fleet managers have access to the full list of assets, greatly improving the use of assets already owned by the company versus renting externally.

For example, site managers can see assets available for use across the entire system, which helps them control expenses. If a machine weighing 3 tons, is 1,000 km away and is needed for only two days, they can rent locally instead of incurring the larger expense of moving the equipment. In other cases, it will be less expensive to ship a machine than to rent one locally.

This solution helps the company decrease capex by optimizing use of the assets the company owns. For example, this holistic view of the fleet across the company helped to save money by changing how the company sources spare machines or parts in case of a breakdown. Before the solution was implemented, the company would keep a certain number of machines as spares on a site, ready to replace broken machinery or supply spare parts. Now, the company allocates only the machines it needs for active use and uses local companies to rent replacement machines when needed.

Use Case #2: Improve the ratio of use through remote monitoring of machines and delivery vehicles

A company that rents equipment to construction companies wanted to improve its ratio of use for the construction machines it rents out on a short-term basis. This company was already on its digital journey. Its management knew what solutions they wanted to implement and what savings they could expect to achieve. To help them meet their goals, Hitachi needed to understand the challenges the company faced.

The challenges: Excessive downtime and inaccurate invoicing

The company had two distinct challenges to solve:

1.   Reduce the time that machines were sitting unused and reduce travel time to deliver the machines to construction sites.

2.   Improve the accuracy of invoicing when a machine was used longer than it was initially contracted for.

The typical rental period for the company was from two days to two weeks. Most of the machines cannot be driven on public roads, so the rental company delivers them using a flatbed truck equipped with a crane and ramps.

In a standard rental process, a machine is delivered the day before the rental contract begins. If the rental starts Monday morning, the machine is usually delivered Friday afternoon. When the rental period is complete, the company then picks up the machine and takes it to the yard, where it goes through a visual inspection before being shipped to the next customer.

A challenge in this process was the number of days machines were in transit and not in use. It took one day for a machine to be delivered to the site and another day for it to be picked up and delivered back to the yard for inspection. This meant that for each machine, there were at least two days that it was not available because it was on the delivery truck or being checked by the repair shop.

Another challenge was the delay in picking up machinery. The pickup was often a few days after the contract ended due to scheduling complications for the delivery truck and crew. This was a significant amount of costly downtime. 

The solution: Create a data lake and deliver actionable insights to technicians

Fortunately, the machines were already equipped with telematics connected to a Controller Area Network (bus-CAN), which provided a very good quality and quantity of technical information. To help the company better track and use its machines, Hitachi created a data lake to store the information coming from the various telematics providers. Hitachi used the ISO 15143 protocol to understand the information coming from the bus-CAN. This gave the system access to all sensors and alerts, in real time, remotely.

Once the machine data was in the data lake, the next step was to make this information easily readable by technicians. This meant receiving real-time information from more than 1,000 sensors per machine, cleaning it, making sure the sensors were in range, and removing all false alerts in the system.

The results: Improved machine rentability and increased revenues

With the Hitachi solution in place, a technician can perform a remote diagnosis of any machine, no matter where it is located. Instead of bringing the machine back to the repair shop for inspection, the technician inspects it remotely — and the machine can go directly to the next customer if no repairs are needed. This reduces the number of days the machines are in transit, keeps the equipment in use longer and improves the machine’s profitability.

The telematics information for rental contracts is linked into one system — providing visibility into each machine and its contract agreement. Whenever a machine is on a customer site outside the rental contract period (such as when a machine has not yet been picked up by the delivery truck), an alert is sent to the commercial team. The team calls the customer to determine whether the machine is being used or whether it is parked and ready for return to the rental company. The decision can then be made to either extend the rental agreement for another day or to send a reminder to the customer that the rental contract is closed and that the machine should not be used while waiting for pickup.

The increased visibility into machine location and usage has allowed the company to reduce the time that machines sit unused between contracts, which improves the profitability per machine. Not only does this information help the company plan more effectively for future jobs, it paves the way for its long-term success and growth.

Summary

The use of AI and IoT to track construction machinery for these companies has enhanced their visibility and planning, saved them money, and opened up opportunities for future improvement and growth. With these solutions in place, both of these companies can now get the most use out of their equipment and minimize the downtime of machinery due to repairs, unnecessary travel time, and redundancy (such as renting equipment while company-owned equipment sits idle).

 Both companies were struggling to attain the optimal use of their construction equipment. Once they understood the benefits that could be gained by connecting assets, Hitachi worked with the companies to collect and analyze their data and design technology solutions to overcome their challenges. This demonstrates the power of digital solutions to support digital transformation — these two companies used IoT and AI in real-life applications and improved their efficiency, decreased their costs and established a path for growth.

 With decades of operational technology (OT) and IT experience, Hitachi brings the knowledge, technologies and industry leadership that can help companies develop a strategy for solving their most complex challenges using digital technologies. Our initiatives are designed to motivate and support construction and other companies that want to use more sustainable options. By improving efficiency in operations, companies of all kinds are in a position to not only increase their profitability, but to improve their use of energy and resources to benefit the environment and society overall. At Hitachi, we partner with our customers to drive our mission of powering good.