Ashe Menon sold his company to NOV (formerly National Oilwell Varco) in 2006 after his firm proved its mettle using mobile devices to help increase uptime on drilling rigs. He stayed on and took a new role in 2015 when NOV and others faced the largest oil and gas downturn in decades. Menon was asked to join Grant Prideco, a subsidiary of NOV, to rightsize the business to meet the new norm in the oil and gas industry.

“Things got hard,” Menon recalls. “We’d already right-sized the oilfield, and so when I joined the company, the question was, ‘how are we going to make money’? We had manufacturing in the US, China, Abu Dhabi, Singapore, and were very vertically integrated with steel coming from Austria.” Faced with downsizing a global business, Menon had no choice but to look at things differently. “We’d already done significant cost reductions in labor, so we asked, ‘let’s see if we can bring this work back to Texas?’ The hypothesis was that there was enough waste in the manufacturing process – we call it ‘invisible loss time’– that if we consolidated production in Texas, we could take the slack out of the system and start making money even in a challenging market. And so we did it.”

Looking back, the results have become a case study in downsizing – an outcome that wasn’t at all certain then. “When you’re doing this in 2015, when you’re faced with something that’s so dark and unclear going forward, you know, you hope you get it right,” Menon says.

“What happened was that the revenue side of the business went from over a billion down to $200-something million in three years. But the cost line was dropping faster than the revenue, so every single time we would beat the profitability goals by thirty and forty percent and sometimes double,” he recounts. “So when we did that three years in a row we felt like this was not a flash in the pan. You didn’t get lucky. You don’t do it three years in a row in the worst downturn in the history of the industry. We were at, ‘we think we know what we’re doing here and we have a process and a plan that we think we can scale and deploy across the company.'”

So what did Menon and this team do?

“The first thing we did was connect all the equipment. We have a trademark now for ‘IoROT’ (a play on IoT) – meaning ‘the Internet of Really Old Things’. If you look at manufacturing in the US, we have lots of old equipment. And to go spend CapEx money on buying a new machine or a new lathe or anything you wanted to buy, you have to make money first. So if you can’t figure out how to make money with old equipment, then just going out and saying new equipment is going to solve the problem is not really the answer,” he says, something that resonates with every manufacturer, large or small.

Menon continues. “So every person (in the plant) was tasked with one thing: how do we get better? How do we figure out how to make money? And we leaned in: We told our employees, ‘if you can come up with ideas to reduce cost, we’ll pay you up to $5,000.’ And the ideas started coming — because the best ideas come from the people doing the work every day —  many related to ‘making my really old equipment better,’” he says.

“We also focused on breaking down silos so that it wasn’t maintenances’ problem, or operations, or quality or engineering, when they weren’t in the room. We said, ‘let’s make it all of our problem’. This turned out to be a quick way for us to identify that ‘invisible lost time’. So much so that we now call it ‘invisible lost money’”, Menon laughs.

But back to making really old equipment better. “We instrumented all of these old assets with something very fundamental, right? Whenever we think about sensors, people start getting into vibration and acoustics and things like that. What we said was, ‘no, I just want to know if it’s running.’ So we bought something that you can buy at any hardware shop, we put it onto our assets and said, ‘let’s see if it can tell us if that equipment’s running.’ We put a little smarts into to the data to let us know if the machines were really running (under load) or just spinning. And when that equipment stopped running, it’s like any small machine shop guy knows when that machine is not running, I’m not making money. We did the same thing, except when it’s in a big plant, we connected all of this stuff,” he said. 

The platform the team developed to track and report factory-wide performance is now called Auredia. And NOV is not only using the Auredia software and technology platform to monitor its internal machines – over 1100 in total – it’s inviting any manufacturer to join the network, to begin monitoring uptime and other metrics, whether NOV sources from those companies or not.

“When we demonstrated that we could increase profitability, even as revenues suffered, and did it three years in a row in the worst downturn in decades, we knew it wasn’t a flash in the pan,” Menon reiterated. “When it was clear we could scale and deploy the system across any network, Clay Williams, our CEO at the time, asked how we could bottle this up and sell it.” Fast forward to today, and NOV’s Auredia is elbowing into traditional software-service markets like ERP — and more, competing with supplier-sourcing platforms that promise visibility, but lack meaningful operational value out of the gate.

“If you’re a manufacturer, one of the things you will struggle with is that either you’re priced out of certain ERP systems that provide a lot of value, or you’re left hanging with systems that just don’t give you a lot, right? It’s hard to get a perfect fit with an ERP system,” Menon said. It’s in fact a lousy trade-off that bedevils so many small companies. 

I asked Menon about the investment a company needs to make in basic IoT before joining?

“Zero,” he answered. “In our onboarding process we ask about make and model, and if we can’t connect out of the gate, we’ll come walk your shop and within the first two hours of determining your equipment set-up, we’ll have a good idea of what it’s going to take for is to connect those machines – including a wireless option we’ve just developed.” And recurring, SaaS-related costs? “If you sign up for three years, there’s no upfront costs, and we charge our customers $100 per month, per machine. If you find value in the platform, we don’t want cost to be the barrier.”

But let’s be real. Why trust NOV, or anyone for that matter, by connecting your machines to a network beyond the safety and security of your own firewall? Menon perked up when I asked. 

“First, when we started this, we wanted to be very cognizant of the community of machine shops in Houston, as in, can what we’re developing actually work to bring the community together to solve common problems as we make each of us better? I mean, I know we all worry about IP theft and loss – but every single piece of data we have on the system is stored in blockchain; there’s traceability of who owns what, at all times,” Menon explained.

“But if I’m sourcing a supplier, I’d rather be working with a trusted machine shop that lives in this ecosystem where I can say, ‘let me send you this work.’ And if I have a collection of machine shops, I’m part of the community we live in, that NOV lives in. Can you imagine the amount of time savings I would have if it’s an extension of my own manufacturing when a supplier is on the same network?” 

In addition to developing a separate brand, Menon’s team has trademarked the term ‘Let’s Make it Here’, to rally companies to a new, domestic community of manufacturers they envision.

I’ve seen the Auredia dashboard and the real-time monitoring of connected machines – as any machine shop that evaluates the system, would. The benefits are self-evident. Would joining the NOV network also increase your chances of landing NOV business, or other OEMs that begin to tap into this connected-community? It’s early, and hard to say.

But what’s also evident is that the promises made by any number of solution providers give way here to a platform that provides useful intelligence out of the gate, in ways that should resonate with shops hungry for a tech pathway.

Bart Taylor is executive director of the Greater Houston Manufacturing Assocation. Reach him at [email protected].