Energy Management for Increased Profitability
“The cost of purchasing the energy needed for production by an industrial facility is viewed as managed input and typically receives significant attention, while the use of that energy once it is inside the factory is often viewed as simply the cost of doing business. While this is not true in all industrial facilities, experience has shown that unless the facility actively manages energy use and has a documented plan for doing so, these facilities are significantly less energy efficient than they could be. Without performance indicators that relate energy consumption to production output, it is difficult to measure or document improvements in energy intensity.”
– Paul Scheihing, Technology Manager, Industrial Technologies Program, U.S. Department of Energy
The modernization of BRIC (Brazil, Russia, India and China) and other third world countries has led to a surge in demand for energy. As energy markets have opened up to competition in recent years, fixed pricing policies are becoming less prevalent as governments let market forces dictate prices. In addition to this, legislation to address climate change by reducing greenhouse gas emissions and establishing a price on carbon could create further increases in energy costs and price volatility.
Since many manufacturers have traditionally treated energy as a fixed cost of production, many are slow to take action to offset the effects of higher energy costs through price increases, productivity improvements and cost reduction programs. Obviously, when a manufacturer is not able to manage or offset the effects of higher energy costs, profitability will suffer.
Progressive manufacturers no longer view energy simply as an expense to be controlled or a bill to be paid and are leading the industry in managing energy as a raw material in their manufacturing process. These manufacturers understand the need to track energy as a component of the bill of materials (BOM) or ingredient in their recipes/process so they can manage it carefully in order to sustain a profitable business.
One of the primary tools used to monitor and track a company’s energy consumption, is an Energy Management Information System (EMIS). An EMIS enables continuous, real-time monitoring, and targeting of energy usage. Access to this real-time data provides management with the necessary tools to make more informed production planning decisions to control these direct costs with actionable intelligence.
To be effective, an EMIS must be fully integrated into the Business System, connecting to Plant Maintenance, Quality Management, Enterprise Asset Management, Materials Management, Finance and Carbon Impact. With continuous analysis and collection of data all levels of management, supervisors, maintenance personnel and operators can optimize their operations to manage where, how, and when energy is used in order to harness it when it is least expensive, as well as actively manage their energy as one of many inputs to the overall production equation. If companies view energy simply as plant overhead, they are ignoring the multidimensional aspect of effective energy management: Lower cost, Reduce Consumption and Optimization.