Manage energy consumption, improve profitability and productivity
The majority of the energy coming into the plant is used to power machinery, to convert raw materials into intermediate products, to generate steam, or to facilitate production. If it’s used inefficiently, you can make behavioral and programming changes to use energy more productively.
As an operations manager, control engineer or machine operator, you have always been measured by your ability to cut costs. As a result, you have made just about every money-saving effort possible. You have maximized throughput and minimized waste. You have incorporated Lean-Six Sigma techniques throughout your plant. But your employer is still asking for more bucks to the bottom line. In an industry where everything is already squeezed about as tight as it can be, where else can you turn to help improve profitability?
Indeed, this is a time of unprecedented complexity for manufacturing: Managing production operations while balancing regulations, supply, pricing, retailer requirements, consumer demands, operational efficiencies, and other demands is extremely challenging. While energy usage has the potential to be a new frontier in cost savings, it has become one of the most elusive and hard-to-manage costs in manufacturing, with high levels of variability and volatility.
Crude oil prices, for example, skyrocket to a record $140 per barrel one day and down to $63 just a month later, and there is the potential that water, gas, fuel oil, or electricity may simply not be available when you need them. For example, water consumption is estimated to increase by about 40 percent over the next 20 years. These risks and uncertainties can wreak havoc on your operations and ability to deliver goods, and subsequently your company’s bottom line.
Energy in the Third Dimension
Traditionally, industrial energy consumption was seen one-dimensionally as an unavoidable, unmanageable cost of doing business. But the fact is, managing energy is actually a three-dimensional challenge: less, cheaper, and optimal. Some energy is used for facility operations such as heating, cooling and lighting the building.
Typically, however, the majority of the energy coming into the plant is used to power machinery, to convert raw materials into intermediate products, to generate steam, or to facilitate production. If it’s used inefficiently, you can make behavioral and programming changes to use energy more productively.
You can actually use less energy – for example, through taking advantage of more efficient equipment, or designing improvements such as reuse of waste heat into your processes, or scheduling production intelligently to minimize energy-intensive changeover procedures. You also can use cheaper energy – by managing where, how, and when energy is used in order to harness it when it is least expensive, such as during off-peak times.
However, the third, most sophisticated dimension - and the one that will ultimately have the most impact on financial performance – is in optimizing energy use so as to achieve production goals in the least expensive, most profitable way while balancing the many variables inherent to manufacturing. In other words, you can actively manage your energy as one of many inputs to the overall production equation. Such an approach is impossible if energy is viewed simply as plant overhead.
Using the methodology outlined in this article, you can leverage technologies in new and innovative ways to strategically invest energy into your production processes. As a result, you can gain higher returns on energy expenses by actively managing energy as an input to production, thereby offering exceptional value to your organization.
By taking an “inside-out” approach, the seven pillars of energy management outlined below can be leveraged independently or simultaneously to transform your energy management strategy into a holistic and strategic program. It is essentially a blueprint – or as we call it, a “greenprint” – for using your existing automation and power control assets to begin saving energy more effectively, and investing it more intelligently.
Before you can begin to manage your energy consumption, you have to gain visibility into what your energy usage and quality patterns are in the first place. After all, you can’t manage what you can’t see. Chances are you’re already measuring your energy consumption at some level. However, some manufacturers know only what their utility tells them regarding total energy usage in the building. To expand that knowledge, an assessment of your manufacturing facility can help establish the scope of an energy savings effort, define key metrics and help you get the necessary resources in place in order to take a holistic view of energy usage throughout the facility.
You also can monitor the facility’s metering infrastructure to collect data about all energy resources – water, air, gas, electricity, steam, or other sources – in relation to equipment usage and environmental conditions. This data can then be logged and time-stamped in an energy historian software program to establish obvious trends or discrepancies in energy quality and consumption, and establish benchmarks for future improvement.
With this big picture view of a facility’s overall energy use, you can identify and make operational changes to help reduce energy consumption and costs. This might include shedding loads or lowering power levels for a few minutes when the facility is approaching peak use. The information gathered at the facility monitoring level also can help you understand and manage power quality. With a log of historical data, you can identify power quality issues such as voltage sags or harmonics that can cause damage to equipment inside the plant and cause power factor problems on the energy grid. As a result, you can better protect your equipment and also avoid incurring penalty fees from the utility companies that might charge for efforts to correct power factor issues on the grid.
Auditing and monitoring usage should be an ongoing effort in order to identify variables such as how seasons might affect production variables and whether previously implemented improvements are continuing to perform as planned.
In order to understand energy consumption of the plant floor or production unit level, work with your automation solutions provider to identify useful data collection points across machines and lines, and program your information systems to store and analyze that data. Once a system is in place that extracts energy information from the plant floor, you are able to separate plant floor consumption data from facility consumption data.
In this pillar, you gain a clearer view of exactly how much of the company’s overall energy use is consumed by the manufacturing process versus how much is consumed by operational functions such as data centers. This more detailed level of monitoring allows you to track and project energy expenditures according to actual use rather than by square-footage allocations.
You can then view this information in a reporting dashboard that can help pinpoint variable energy costs on the plant floor, and begin to consider ways to improve profitability. For example, it is common today for software systems to preclude operators from turning on equipment that they are not qualified to use.
With visibility into peak demand systems, a manager can similarly preclude an operator from turning on an energy intensive machine – or at least warn them of the risk of doing so – when the facility is close to reaching peak demand.
This knowledge could also add a new dimension to commonly-used OEE equations which currently only take into account product quality, equipment uptime, and production output rates. By gaining a clearer understanding of energy consumption at the plant-floor level, you could modify your OEE calculations to include energy efficiency. For example, a North American packaging company used plant floor energy consumption data to determine that a piece of equipment was using an excessive amount of energy during first shift. The company rescheduled production on that piece of equipment to the second shift and saved $66,000 in one year due to reductions in peak demand charges.
Capturing energy on the production BOM
Once manufacturing energy consumption data is stored and analyzed in the information system, you can begin to see clear trends in how energy has been used among various historical events such as a specific product cycle or batch.
Capturing that knowledge provides immediate benefit and also promotes future improvement: You no longer have to guess what energy consumption will be for similar production runs in the future. You actually can begin to project in advance how much energy will be required for similar loads or batches. In doing so, you move to a new pillar of the energy management architecture in which energy requirements are included in resource planning and scheduling decisions in the same way that raw materials are considered an element on the bill of materials.
Empirically tying energy consumption requirements to the production bill of materials helps you make proactive production decisions and better manage energy investments in a way that will generate a greater return. For example, by knowing that certain batches require more energy, you can move those batches outside peak windows. In addition, the unit-level energy consumption information becomes valuable input to your company’s sustainability scorecards and other reporting mechanisms.
Once you have insight into how much energy is required to run a specific production cycle, you can leverage production simulation software tools to input variables such as peak and off-peak energy costs, raw material costs, labor and projected emissions, and pre-test “what-if” scenarios to see how production outputs and costs will change as a result of modifications.
Within this pillar, you can optimize all production assets and forecast the most economical way to manufacture your products, using energy as one of the variables. Looking beyond individual production cycles, you also can forecast the full sequence of production scheduling to optimize overall production.
With all the manufacturing applications and automation solutions on the plant floor generating data, the next pillar in the energy management architecture is to drive all data sets into a common automated solution that can identify, model, visualize and present control options, or automatically control, production changes.
While this might be beyond the scope of your day-to-day tasks, within this pillar, the modeling capability would automatically implement decisions without unnecessary intervention on your part. Furthermore, these decisions can extend past simple plant floor production variables to include additional variables that you are not directly measuring, such as last-minute staffing changes or urgent orders placed by key customers on short notice.
Responding and scorecarding
Thanks to the foundation you have put in place, your company can make external market and regulatory influences part of their overarching energy management strategy. In these pillars, firmly confident in the management activities within the plant, it is possible to shift the perspective back to the outside of the facility and begin to focus on how to make intelligent economic decisions based on altering energy consumption in response to market fluctuation and regulatory demands.
In addition, many manufacturers envision an imminent future where governments, power retailers, and even consumers may demand “sustainability scorecards” on products, such as carbon or energy footprint labels. They are concerned about their readiness to comply and how they might optimize their scores, not only to support their brand reputation and sales, but also to support their own corporate responsibility initiatives.
Such possibilities may seem distant to many. Fortunately, thanks to the real-time access to vital energy consumption data you have provided, your company can rest easy, confident that the pillars of energy management that you have helped put in place over time will establish a firm foundation for meeting such challenges.
Phil Kaufman is the business manager for industrial energy management and Marcia Walker is the global market development manager for sustainable production for Rockwell Automation.
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Annual Salary Survey
In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.
Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.