Kuschnerus page1 ; ARC Conference Orlando January What Kind of Automation do the Chemical and Pharmaceutical Industries Need? Dr. Norbert Kuschnerus Senior Vice President, Bayer Technology Services President, NAMUR

Kuschnerus page2 ; ARC Conference Orlando January Bayer Technology Services – Facts and Figures 2003: Bayer Technology Services (BTS) is a company of Bayer Holding with: Employees worldwide, located in Leverkusen, Germany; Antwerp, Belgium; Baytown, Texas; Mexico City; Belford Roxo (Rio de Janeiro), Brazil; and Shanghai, Sales of 690 million Euros annually, A current portfolio of 70 products covering needs in process development, engineering and construction management, automation, logistics, production unit optimization, production unit maintenance, energy management, as well as turn-key construction of production units and infrastructure BTS operates in five areas: –Life Science –Crop Science –Polymers –Chemicals –General Process Industries

Kuschnerus page3 ; ARC Conference Orlando January What Kind of Automation do the Process Industries Want ? We do not want automation to “just operate the unit.” This is summed up by the comment of one unit superintendent about the traditional automation as “ CAS” System” (Colorful And Stupid). What does the customer really want? Our answer : “ Operate the unit that is embedded in a worldwide, integrated group of production facilities at best utilization of assets, at highest yields, at lowest raw materials consumption, at lowest energy consumption, at lowest personnel costs, with 100% safety, at highest reliability to produce in-spec products, at lowest inventories, ready to deliver at all times.” In One Word: Economically

Kuschnerus page4 ; ARC Conference Orlando January Automation leads to enterprise-wide process optimization Integrated Production Unit Operation Operation with Enterprise-Wide Supply Chain Optimization Real Potential SpotCombined Enterprise Performance Unit Operation 2-3 % 4-6 % % of Total Revenue Achieve the real potential by including the entire production process

Kuschnerus page5 ; ARC Conference Orlando January Total Automation in Process Industries Production Planning, Materials Management, Warehouse Management, Quality Management Enterprise Resource Planning (ERP), Advanced Planning Systems (APS) Manufacturing Execution System (MES) Information Exchange Production Unit Distributed Control Systems (DCS) Instrumentation (I&E)On-Line Analysis Supply Chain Optimization Logistics Advanced Process Control Performance Monitoring, Training Simulator

Kuschnerus page6 ; ARC Conference Orlando January Total Automation in Process Industries Production Preparation Production Execution (Batch) Production Data Analysis Asset Management SAP: Enterprise Resource Planning (ERP) WM Warehouse Management Manufacturing Execution System Information Exchange Technical Logistics (MIMS) Laboratory Automation (LIMS) Control Systems Electrical & InstrumentationOn-Line PAT Laboratory MM Materials Management QM Quality Management PP-PI Production Planning Process Industries PM Plant Maintenance Performance Monitoring Process Optimization Advanced Process Control APO Advanced Planner and Optimizer Raw Materials Logistics Training Simulator Sales Products LogisticsProduction Unit

Kuschnerus page7 ; ARC Conference Orlando January Total Automation Production- preparation Production- execution (Batch) Production- data- analysis Asset- management SAP: Enterprise Ressource Planning (ERP) WM Warehouse- Management Manufacturing Execution System Information exchange Technical logistics (MIMS) Plant - Unit - Process - Laboratory Laboratory- automation (LIMS) Control Systems Electrical & InstrumentationPAT-online Inprocess-control MM Material- Management QM Quality- Management PP-PI Production Planning Process Industry PM Plant Maintenance Performance Monitoring Process optimization Advanced Process Control APO Advanced Planner and Optimizer Raw material logistics Sales material logistics We do not need the overall scope for a specific project, but we need to understand the overall scope to ensure smooth development of further automation.

Kuschnerus page8 ; ARC Conference Orlando January Traditional Automation in Process Industries Production Preparation Production Execution (Batch) Production Data Analysis Asset Management SAP: Enterprise Resource Planning (ERP) WM Warehouse Management Manufacturing Execution System Information Exchange Technical Logistics (MIMS) Plant - Unit - Process - Laboratory Laboratory Automation (LIMS) Control Systems Electrical & InstrumentationOn-Line PAT In-Process Control MM Materials Management QM Quality Management PP-PI Production Planning Process Industries PM Plant Maintenance Performance Monitoring Process Optimization Advanced Process Control APO Advanced Planner and Optimizer Raw Materials Logistics Sales Products Logistics Training Simulator

Kuschnerus page9 ; ARC Conference Orlando January Examples of Advanced Automation Today Real life in a chemical and pharmaceutical enterprise Process optimization Example: Advanced process control Performance monitoring in a chemical production unit Use of training simulators in a chemical production unit Supply chain optimization for worldwide production in the process industries Manufacturing execution in a crop protection multi- purpose unit

Kuschnerus page10 ; ARC Conference Orlando January Plant Optimization Example: Advanced Process Control Production Preparation Production Execution (Batch) Production Data Analysis Asset Management SAP: Enterprise Resource Planning (ERP) WM Warehouse Management Manufacturing Execution System Information Exchange Technical Logistics (MIMS) Plant - Unit - Process - Laboratory Laboratory Automation (LIMS) Control Systems Electrical & InstrumentationOn-Line PAT In-Process Control MM Materials Management QM Quality Management PP-PI Production Planning Process Industries PM Plant Maintenance Performance Monitoring Process Optimization Advanced Process Control APO Advanced Planner and Optimizer Raw Material Logistics Sales Products Logistics Training Simulator

Kuschnerus page11 ; ARC Conference Orlando January Improvement of Process Operation F C Da m  feed 2 AB 48 % 4 AB 50% 6 AB 99% 6 AB 1% 4 AB Q On-Line NIR Analyzer Example: Isomer Separation Savings: > 1 Million € annually After: Product specification is observed on-line through modern analyzer technology (NIR) Completely automated process for in-spec production Reduced number of manual analyses (personnel) Reduced energy consumption Increased availability through faster load changes Less off-spec production Reduced raw materials consumption ROI of plant optimization: < 6 months Before: Isomer separation: Analysis in a traditional, off-line laboratory (4-hour delay) Quality assurance by excessive compliance with product specifications PCS Improvement of Process Operation Basis for OpX Consists of Improved instrumentation On-line analysis Process modelling Integration in DCS

Kuschnerus page12 ; ARC Conference Orlando January Process Performance Monitoring Production Preparation Production Execution (Batch) Production Data Analysis Asset Management SAP: Enterprise Resource Planning (ERP) WM Warehouse Management Manufacturing Execution System Information Exchange Technical Logistics (MIMS) Plant - Unit - Process - Laboratory Laboratory Automation (LIMS) Control Systems In-Process Control MM Materials Management QM Quality Management PP - PI Production Planning Process Industries PM Plant Maintenance Performance Monitoring Process Optimization Advanced Process Control APO Advanced Planner and Optimizer Raw Material Logistics Sales Products Logistics Training Simulator Electrical & InstrumentationOn-Line PAT

Kuschnerus page13 ; ARC Conference Orlando January Process Performance Monitoring Costs / Benefits (three-year experience from 40 projects) Project Costs: 100,000 to 1 Million € Project time requirement: months Energy reduction: Up to 10 % Yield increase: Up to 10 % Forecast of equipment problems: Up to 14 days within a few hours margin of accuracy ROI of plant optimization: < 6 months Process Performance Indicators: Operating Conditions, such as Energy Consumption Raw Materials Consumption Yield Asset Conditions, such as Plugging and Fowling Forecast Corrosion Forecast Sensor Signal Reliability Column Efficiency Visualization, e.g. via Internet or Intranet Process Performance Monitoring Basis for OpX Consists of Instrumentation Improvement On-Line Analysis Process Data Acquisition and Evaluation Process Model Visualization Process performance monitoring is applied, when we cannot close the loop for process operation improvement

Kuschnerus page14 ; ARC Conference Orlando January Training Simulator - Chemical Plants Production Preparation Production Execution (Batch) Production Data Analysis Asset Management SAP: Enterprise Resource Planning (ERP) WM Warehouse Management Manufacturing Execution System Information exchange Technical Logistics (MIMS) Plant - Unit - Process - Laboratory Laboratory Automation (LIMS) Control Systems Electrical & InstrumentationOn-Line PAT In-Process Control MM Materials Management QM Quality Management PP-PI Production Planning Process Industries PM Plant Maintenance Performance Monitoring Process Optimization Advanced Process Control APO Advanced Planner and Optimizer Raw Materials Logistics Sales Products Logistics Training Simulator

Kuschnerus page15 ; ARC Conference Orlando January Unit operator training Plant scenario training: load changes and typical malfunctions Automation software tests Development of a dynamic model of the entire unit Plant model link-up to an emulated DCS More highly skilled unit operators before startup Improved automation software Reduced commissioning time Cost: 300,000 € - 700,000 € per unit Savings. 50 % of startup costs Avoidance of operational errors – savings in one case: – days of lost production –100, million € maintenance costs New Unit Dynamic Unit Model Emulated Process Control System Operator Work Station Visualization of Real Unit Training Simulator Training Simulator - Chemical Plants Objective Action Results

Kuschnerus page16 ; ARC Conference Orlando January Supply Chain Optimization in Process Industries Production Preparation Production Execution (Batch) Production Data Analysis Asset Management SAP: Enterprise Resource Planning (ERP) WM Warehouse Management Manufacturing Execution System Information exchange Technical Logistics (MIMS) Plant - Unit - Process - Laboratory Laboratory Automation (LIMS) Control Systems Electrical & InstrumentationOn-Line PAT In-Process Control MM Materials Management QM Quality Management PP-PI Production Planning Process Industries PM Plant Maintenance Performance Monitoring Process Optimization Advanced Process Control APO Advanced Planner and Optimizer Raw Material Logistics Sales Products Logistics Training Simulator

Kuschnerus page17 ; ARC Conference Orlando January Supply Chain Optimization in Pharmaceutical Production Units Active Ingredient Production Active Ingredient Production Shipping Formulation Capsules Tabletting Packaging Solida Shipping Leverkusen: Formulierung & Verpackung Formulation Parenteralia Formulation Tabletting. Pacckaging Parenteralia Shipping USA / Japan Shipping USA / Japan Micronization Milling Formulation Packaging Analysis of the interrelationships between demand, service level, production capacities (units and personnel), and inventory Evaluation of lot sizes and emergency inventories as to feasibility and plausibility Optimization and reduction of inventories along the supply chain Visualization, risk assessment, and debottlenecking, particularly in cases of multi- layered production processes Normally: Project costs: 100,000 to 3 million € Return on investment: about 1 year Leverkusen: Formulation and Packaging

Kuschnerus page18 ; ARC Conference Orlando January Integrated System: Crop Protection Products – Multi-Purpose Plant Production Preparation Production Execution (Batch) Production Data Analysis Asset Management SAP: Enterprise Resource Planning (ERP) WM Warehouse Management Manufacturing Execution System Information Exchange Technical Logistics (MIMS) Plant - Unit - Process - Laboratory Laboratory Automation (LIMS) Control Systems Electrical & InstrumentationOn-Line PAT In-Process Control MM Materials Management QM Quality Management PP-PI Production Planning Process Industries PM Plant Maintenance Performance Monitoring Process Optimization Advanced Process Control APO Advanced Planner and Optimizer Raw Materials Logistics Sales Products Logistics Training Simulator

Kuschnerus page19 ; ARC Conference Orlando January Crop Protection Products – Multi-Purpose Plant Pilot plant and production unit for crop protection products Total investment : 10 million € Cost of MES, logistic systems and SCO: 5 million € Highly complex production structure Possibility of linking more than 200 unit modules Possibility of combining up to 40 unit modules for production campaigns of months duration Personnel Reduction Increase of Asset Utilization Inventory Reduction Process Improvement Through Electronic Batch Analysis Avoidance of Raw Materials Mix - Ups Savings: Unknown, but not operable without the improvements Transfering 50,000 data/month Planning (Pilot) Batch Generating Basic Recipe Completing Basic Recipe Disposing Materials Ordering Raw Materiasl Determining Supplies Approving Batch / Trail Forecasting Supplies Documenting Pilot) Batch Approval; Generating Control Recipe Archiving Documents Accounting Production Order Process Order, Material Bin Data Production Data Planning Recipe Executing Control Recipe, identifying Materials BatchFlexible / PCS7 SAP R/3 SAP APO Materials Master Data

Kuschnerus page20 ; ARC Conference Orlando January Trends We See DCS is becoming a basic commodity in the process industries, –but its operation is still overloaded with information. –Much work still remains to be done to make HMI more production-friendly. Enterprise Resource Planning is becoming a standard, –but a lean and integrated information flow requires a lot of manual procedures or excellent and sophisticated engineering. Advanced manufacturing solutions and supply chain optimization are the keys to success in coming years –Manufacturing Execution Systems –Logistic Systems –Advanced Process Control –Process Driven On-Line Analysis –Performance Monitoring –Operator Training Simulators –Supply Chain Optimization are the real benefit of production process optimization with cost savings increasing up to 10% of the total revenue -However, they need the solid basis of I&E; DCS and ERP

Kuschnerus page21 ; ARC Conference Orlando January What is Required from the Vendor?  Open Systems  Each component must be able to communicate with any other component.  “We want to have a full competition in price and technology” (Jim Caie, GM, ARC - Orlando February 2003).  We don’t think, that one single automation manufacturer can supply all required components and the best technologies for complete solutions at the best price world– wide.  Easy to Use Systems  to save engineering costs and ease operation  Modular HW and SW components  Innovation cycles adjusted to the lifetime of the production units  Technology must concentrate more on operational needs  Most sensors offer solutions for what is easy to measure and not what is needed.  Traditional HMI overloads the operator with unnecessary information,  but does not immediately show what the operator really needs.  Who is really taking care of asset management? Where is the entire information he needs?  Alarms must lead to the real cause  Alarm cascades confuse the operator and are most dangerous.

Kuschnerus page22 ; ARC Conference Orlando January Total Automation Production- preparation Production- execution (Batch) Production- data- analysis Asset- management SAP: Enterprise Ressource Planning (ERP) WM Warehouse- Management Manufacturing Execution System Information exchange Technical logistics (MIMS) Plant - Unit - Process - Laboratory Laboratory- automation (LIMS) Control Systems Electrical & InstrumentationPAT-online Inprocess-control MM Material- Management QM Quality- Management PP-PI Production Planning Process Industry PM Plant Maintenance Performance Monitoring Process optimization Advanced Process Control APO Advanced Planner and Optimizer Raw material logistics Sales material logistics Total automation requires a few additional high-tech hardware components a lot of additional, highly sophisticated engineering a wealth of experience a small additional investment Total automation brings the benefits of production at lower operating costs lower energy and raw materials consumption optimized asset utilization and material flow optimized product quality high return on investment This is operational excellence.

Kuschnerus page23 ; ARC Conference Orlando January Thank you