Infor’s vice president for global asset sustainability, Rod Ellsworth, looks at how spiralling energy bills can be stemmed to cut manufacturers’ costs and carbon footprints. Legislative measures are enforcing a reduction in energy consumption for the largest users across Europe. In the UK the CRC Energy Efficiency Scheme is tasked with cutting consumption by 1.2 million tonnes per year by 2020.
However, what about the millions of organisations which are currently too small to be impacted by these initiatives? For these the need to reduce energy is being driven primarily by the need to stem spiralling energy bills.
The costs of energy and fuel have soared by 40% in the last five years and, according to experts, will increase still further in the next five years. Of course, companies can do little about the long term market price of fuel. And, as a result, they often view their energy bills as a fixed cost – a necessary evil which they have little control over.
However, in reality this is not the case. When one considers that on average, energy accounts for 70% of an organisation’s operations and maintenance (O&M) budget, and that up to 80% of energy consumed is actually wasted, the cost benefit of cutting out energy waste within an organisation to reduce bills comes into sharp focus.
While some organisations are starting to take measures to reduce their energy consumption, attempts are often limited in what they can achieve. Typically, companies tend to start by looking at a utility bill and set objectives to reduce the total figure at the bottom. Some might even combine this figure with supply chain costs such as warehousing and transportation to get a more comprehensive figure to work from.
However, while this might sound like a logical place to start, this figure represents only a crude measure from which to instigate the process.
This approach does not include the detailed energy consumption patterns of individual plant assets which can identify when and where most wastage occurs. Without this detail, there is no way of knowing how much of the energy consumed is being wasted, and therefore, what can be eliminated without impacting the running of day to day operations.
Getting energy intelligent
As with any business change, a shift in both culture and processes are central to making improvements, as a company that does not know which assets are inefficient, simply cannot act to improve the consumption of energy.
Having committed to the concept, it is technology which presents the real opportunity to deliver cost savings. Unfortunately no spreadsheet, no matter how sophisticated, is capable of capturing and processing the millions of pieces of data necessary to effectively monitor, measure and analyse the energy consumption and performance of the broad range of machinery, air conditioning and transportation involved in running a manufacturing plant.
Organisations tend to assume that once an asset is installed the biggest cost has been expended – when in fact it is the ongoing running costs which far outweigh the initial outlay. Moreover, there is a belief that plant equipment will continue to operate as efficiently as it did on day one. In fact, machinery which utilises compressed air represents one of the largest culprits of waste as the pressure involved in the operation of the machine means that leaks are more likely. However, these leaks are often left to continue without question. The problems inevitably get worse as the equipment ages, but again, the extent to which consumption deteriorates is impossible to track in most cases.
Advanced asset management systems harness data from a number of sources to assess how efficiently a machine is operating on a continuous 24/7 basis. They show the actual energy being consumed in the course of production, and the units, parts or processes which are consuming disproportionately more energy than they should. Such systems also provide warnings when consumption gets too high and present red flags when maintenance, routine or otherwise, is required.
Sub-meters are also crucial, as they measure energy consumption at the asset level in order to feed asset management software. However, many pieces of equipment are now being fitted with built-in smart metering at the point of manufacture. Microprocessor chips fitted onto assets can provide information on consumption levels, uploading information to asset management software directly.
The level of information provided by asset management systems can facilitate the action required to remove inefficient processes, parts and machines which are disproportionately energy hungry, and the lifecycle of an asset can often be extended through evaluation of its running costs against efficiency levels.
Green and lean
As the escalating number of pressures facing manufacturers continues, any potential to strip out costs must be exploited – particularly where expensive energy wastage is occurring.
An increase in energy bills seems inevitable, and while part of the cost is fixed, a large part of it is not. Asset management software, in conjunction with sub- or smart metering, can reduce energy consumption by an average of 30%, which for a typical plant running a large number of machines, air conditioning units and transport involved in supply chain operations, equates to big figure savings year on year.
Of course, long term targets and legislative measures are integral to reducing carbon footprints. However, in an economy which remains tough for the majority of manufacturers, the cost savings associated with substantial reductions in energy consumption and wastage are increasingly compelling in the quest to be both green and lean.