Energy Management: What’s Next for Manufacturing?

There have been dramatic changes to the way US companies have improved their processes through Lean, Six Sigma and TOC.  The shift now is focusing on applying those techniques to WAGES, water, air, gas, electricity and steam.  Energy consumption is set to expand by 50% which 63% of manufacturers citing energy as there largest expense growth of about 10% of total costs[i].  Furthermore as reported in the McKinsey Quarterly in “Manufacturing resource productivity,” the rapid growth in emerging markets is causing a huge increase in demand for resources.  McKinsey notes that first companies can apply lean-value-add identification to map energy consumption  second companies can use lean to optimize energy integration, third lean can improve process and equipment design with a focus on energy savings, and finally lean can reduce energy waste[ii].

Mary Burgoon proposes several ideas related to the supply of energy and understanding the value of the upstream manufacturer of energy.  Energy companies have cyclical energy demand of all their consumers: manufacturing, household, etc.  Burgoon proposes four ideas that could help manufacturers take advantage of its energy suppliers demand environment.   First and simplest is to avoid high energy demand periods, this may involve ramping up demand slowly during peak energy demand hours.  Second utilize the appropriate load, the power needed should be precisely attuned to the equipment requirements.  Third understand how your manufacturing equipment can be used to regenerate energy either in the power down phase, between production cycles or during a production cycle.  This energy can then be sold back to the suppliers or the grid during peak hours.  Finally optimize performance by using intelligent motor controls to network equipment and provide diagnostics.  This allows for constant revision and improvement to reduce energy costs[iii].

In this system Burgoon proposes analyzing energy from a supply chain perspective.  Energy companies are in fact suppliers of a critical resource: electricity.  Thus manufacturers should work with their resource suppliers to optimize demand and delivery of this critical resource.  Using lean, low demand time, appropriate demand and integrated networks can help the manufacturer optimize its energy demand requirements with the supplier.

Questions: Are companies already implementing such an energy policy?  What technologies exist to capture wasted energy or to regenerated energy to sell back to utilities?  How can the supplier advise manufacturers on the benefits of energy saving and is it in their best interest?

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[i] Mary Burgoon. Energy Management: What’s Next for Manufacturing. Plant Engineering. September 19^th 2012. http://www.plantengineering.com/single-article/energy-management-whats-next-for-manufacturing/fe34d4bb07e3eec419cb8a2a1aa6fdbf.html

[ii] Stepahn Mohr et. All. Manufacturing resource productivity. McKinsey Quarterly. June 2012

[iii] Mary Burgoon. Energy Management: What’s Next for Manufacturing. Plant Engineering. September 19^th 2012. http://www.plantengineering.com/single-article/energy-management-whats-next-for-manufacturing/fe34d4bb07e3eec419cb8a2a1aa6fdbf.html