AGA: Taking digitisation as an important opportunity

The company has celebrated many successful milestones in recent years, including inaugurating the world’s largest fully automated filling station for industrial gases in 2016, and this year AGA is gearing up to open a new top modern site in Sweden with its level of automation a first-of-its-kind in Europe.

At the helm of this is CEO Dr. Andreas Opfermann, who has been with Linde for nearly 15 years and is well known within the industrial gases industry.

In the final instalment of this exclusive three-part series, Opfermann discusses other significant milestones AGA has achieved related to digitisation, AGA’s ambitions going forward and what the digitised gases industry of the future might look like.

Digitisation at the core

AGA is a company with automation and digitisation at its core. This year the company fulfils a 15-year journey to complete automation when it automates its last plant.

“What we call digitisation today has long standing roots in our industry as automation. Digitisation is seen as a new and hot topic in our industry, but in some of its aspects it’s just the next level of automation of our operational chain,” Opfermann says.

“It is new, digital solutions for our customers where I see even bigger potential in the long run.”

E-commerce, propane vending machines and 24/7 gas points are just three examples of initiatives AGA has been implementing for its customers over the last few years.

The company has launched state-of-the-art web shops where its customers can shop like they would with Amazon, for example.

“For our industry this is certainly a big step and we see the benefits. Our cylinders might be heavier than many consumer products, but the same convenience counts in ordering and attracting new customers.”

AGA has a significant business in propane, which is used in the Nordics for heating in the winter and barbequing in the summer. The company has built a network of so-called ‘propane vending machines’ where customers can exchange their cylinders 24/7 in a way that’s convenient to them.

AGA: From industrial innovator to industrial gas leader

“The customer feedback is very positive on this new experience. We are rolling out these vending machines at busy locations, like in front of retail stores, and customers can exchange their cylinders empty for full 24 hours a day, 7 days a week. We recently celebrated the erection of the 100^th propane vending machine in Norway,” Opfermann highlights.

This got AGA thinking – why should the buying experience be limited to just propane customers, why doesn’t the company do it with industrial gas cylinders also?

“We have developed in-house a containerised solution concept we call ‘24/7 gas point’. Customers are able to gain access into the container via an app and exchange their empty cylinders for full or just buy a new cylinder.”

“This is the first in the world I know of and we are currently testing this within our strong sales agent network.”

“What all three solutions have in common is that they are able to offer convenience and proximity in a new way, which is particularly relevant in the Scandinavian countries, characterised in many areas by low population density,” Opfermann explains.

Good examples of data-driven digital solutions at AGA are Avantos and advanced pricing analytics. Cloud-based welding management solution Avantos covers the workflow from end-to-end.

“With Avantos, an innovative tool developed in Linde, our welding customers can capture, monitor and analyse every step of every welding operation. Here, AGA being a part of Linde plc is particularly well positioned to develop data driven business models on a new scale of customers,” Opfermann notes.

“When digitisation meets the other big topic, pricing, it hits the nerves of our industry. We have seen a lot of cost headwinds globally and in Scandinavia particular, from a dramatic increase of power cost to an increase volatile oil price. We will always work against these headwinds through efficiency and growth, with the tailwind of new digital solutions. However, in the next years it is pricing, pricing, pricing. The industry can’t sit on these cost increases without sharing and passing them on.”

“Digitisation can bring a new level of understanding and transparency for customer profitability, from unit pricing to profitability modelling based on advanced analytics. Big data is a topic where many industries are more advanced, and where we are open to learn and copy with pride.”

Game-changer

Besides automation, new self-service and data driven customer solutions, Opfermann says digitisation is a game-changer for entire industries and we will see new business models emerging. Something he believes will be an even bigger driver in the next few years is making “dumb” steel cylinders intelligent.

“With new technologies the cost of tracking and tracing our cylinders will reduce further and we will see a moment when entire cylinder fleets become an intelligent asset.”

“We have a good example of this already today in our LIV IQ valves for our hospital customers, where the added value of digitising our ‘dumb’ cylinders already generates good benefits for the nurses and patients.”

“I think everyone agrees there is a transformation, but I currently lean more towards an adaption scenario rather than a revolution.”

“Linde also developed DIVA, a groundbreaking valve, that measures and sends content, flow and location information. Give it a few years and we will see these solutions scale.”

“The gas industry should adopt the same approach for digitising our process chains, here we are no different to any other industry. For example, AGA is developing bots, automating manual repetitive process steps and will increasingly use big data and analytics capability into our process landscape overall, in logistics, HR, finance, everywhere.”

AGA: Game-changer in automation

So, with all these new digitised technologies and solutions being implemented, what will the digitised gases industry of the future look like? Is there an impending digital revolution or should we prepare for continual development?

“I think everyone agrees there is a transformation, but I currently lean more towards an adaption scenario rather than a revolution. I don’t see the music industry picture where the value chain changes dramatically in just a few years.”

“Something else to think about is how much is digitisation a challenge and how much is it an opportunity? AGA is certainly looking at it as an opportunity.”

“What I see we need is openness and the will to adapt maybe with a higher rate than what we are all used to.”

“I started the digitisation initiative for Linde overall. On the strategic level for digitisation, the most important thing is to make the right choices for what to focus on and not to be driven by love of technology, but by business or customer value.”

People – an enduring significance

Looking to the future and any challenges that lie ahead for digitisation in the gases industry, Opfermann says one thing to keep in mind is people and talent base.

“We have to bring our people along on this journey, we have to invest in them and offer them new forms of training. As an example, we recently launched the first digital boot camp in AGA and it is great to see so many young people full of enthusiasm bring new ideas for digitisation forward.”

“We have to embrace more trial and error, quicker decision making, and we have to become better known and more attractive to new talent who might naturally not think of the gas industry as a first choice for their career.”

Concluding, Opfermann says, “I am convinced it is the best time ever to be in our industry and we have to share this enthusiasm with people as much as we can.”