Tuesday, March 12, 2013

Manufacturers need to focus on energy efficiency

There are two tables from a research did by Australian Industry Group in 2012. In the first table, it shows the proportion of turnover in 2008 and 2011 Australian business spend on energy.

This table clearly indicates that the business energy costs of manufacturing company have risen since 2008 to 2011. The reason of the increasing is mainly because the price of energy keeps going up. Thus, as the article Manufacturing Resource Productivity says, this trend will cause the manufacturers face more challenge in the industry because it will significantly reduce the profit as shows in the table.[1]

Although Manufacturing Resource Productivity mainly talked about how to redesign the products so that the manufacturers can reduce the cost of manufacturing, it did mention that the cost of energy occupies an important proportion of the total cost. In this blog, I will talk about how to manage energy cost to establish a greater operational stability.

From the view of manufacturers, energy efficiency is to reduce the amount of energy a manufacturer uses to produce a unit of product. Here is a table about the improvement of some methods to improve energy efficiency.

From it we can see that there are some measures popular among the manufacturers. They are: identify major uses of energy in the business, change staff practices to encourage energy efficiency, conduct a formal energy audit on assessment and so on. In the research, Australian Industry Group mentioned that most of the company saved the cost of energy less than 5% of the total energy cost. Although the percentage seemed negligible, the real number will be huge. Thus, these methods can be considered useful.[2]

There are three major reasons of reducing energy cost. Reducing cost is an obvious and direct reason for manufacturers to reduce energy cost. The other two reasons are reducing carbon emissions and reducing risks of the fluctuating energy price. Reducing carbon emissions is not from the view of environment protection. It is because some countries are charging fees for the carbon a manufacturer emits. Also, the more energy a manufacturer consumes, the greater the risk of increasing energy price and the risk of energy shortage. [3]

After reading all these research reports, a problem came into my mind. Although reducing energy cost seems to have so many benefits for manufacturers, actually the manufacturers do not pay too much attention on it. I think it is mainly because reducing energy cost needs a long time to see the effect and sometimes the improvement of energy efficiency is negligible to the manufacturers. Thus, little manufacturers can persist. Another problem I concerned is that the manufacturers take action only after they found that the cost of energy is huge. I think they should first do some assessment about the consequence and cost of the plan of their use of energy. Then if there are problems, they can change the plan and evaluate again. Do not remedy the situation after it happens.

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