Monday, November 26, 2007

Ten Energy Management Case Studies

Energy management is practiced to varying degrees by manufacturers throughout industry. No one company or industry dominates the practice. While it is easier to identify energy management leaders among Fortune 500 companies, there are also small, privately held companies that excel at stewardship of energy and other resources. Here is an overview of ten companies’ accomplishments (Full text of these case studies is included in The Industrial Energy Harvest):

3M. This diversified manufacturer seeks to reduce energy consumed (Btus) per pound of product by 20 percent over the 2000 – 2005 time frame. This goal will require 3M’s tier-1 plants (52 facilities worldwide) to achieve 3M’s own “World Class” energy management label. 3M has already surpassed that target and uses its energy performance in its product marketing. Superior energy cost control at 3M reduces the embedded energy cost that 3M’s customers would normally absorb. Notable feature: 3M’s executive management believes that resource stewardship makes good business sense. Energy management goals and results are routinely communicated to Wall Street analysts. 3M, and the manufacturers that purchase inputs from 3M, are responding to markets that increasingly demand products with low environmental impacts.

C&A Floorcoverings. Based in Georgia, this privately held, five-plant company demonstrates successful energy management by a mid-sized manufacturer. C&A has implemented a management system for matching energy-efficiency initiatives with business goals. After two years, C&A achieved 10 percent savings on an annual natural gas expenditure of $824,500. Notable feature: C&A adopted MSE 2005, an ANSI-certified standard for energy management developed by Georgia Tech, as a template for an in-house energy management program. By the end of 2004, C&A was close to becoming the first organization to become fully certified per the MSE 2005 standard.

Continental Tire North America. Continental began shutting down certain North American facilities due to energy waste and other cost inefficiencies. One Illinois-based facility became proactive at energy management and was rewarded by getting a larger share of overall production quotas. The Illinois plant used a combination of energy consultants and in-house management structures to achieve a 31 percent reduction in energy consumption per tire. Notable feature: Continental successfully partnered with an energy services company (ESCo) to design and implement energy management procedures that were self-sustaining after the ESCo’s tenure concluded.

DuPont. With over 100 plants in 70 countries, energy management practices at DuPont are supported by two top-level strategies. The first is designating energy efficiency as a high priority corporate issue. The other is the application of “Six Sigma” methodology to the energy management process. Notable feature: Through 2002, DuPont applied Six Sigma to behavioral tasks, including plant utility management. Over 75 energy improvement projects, many requiring no capital, were implemented across the company’s global operations. The average project netted over $250,000 in annual savings.

This leading snack food manufacturer’s energy management features aggressive energy reduction goals with a focus on results. This demands a high degree of monitoring, measurement, and communications. Frito-Lay organized the required engineering talent as its Resource Conservation Group. While surpassing intermediate targets on the way to even larger savings, Frito-Lay’s efficiency initiatives have returned over 30 percent on investment. Notable feature: Large and challenging energy reduction goals were used to rally and motivate staff to generate results.

Kimberly-Clark Corporation.
This personal care products manufacturer has a broad mandate for environmental stewardship. KCC’s more than 165 plants worldwide practice energy efficiency, air emissions abatement, wastewater treatment upgrades, process water use reduction, packaging reduction, landfill elimination, toxic chemical elimination and environmental management system implementation. Five-year plans help coordinate benchmarking efforts across a global facility network. KCC’s energy conservation efforts are currently in the middle of a second five-year plan, which seeks to expand on the success of the first plan (1995-2000). The first plan led to a corporate-wide, 11.7 percent reduction in energy use per ton of product. Notable feature: A large, global population of mills allowed KCC to generate its own proprietary energy benchmarking discipline. Sharing best practices across plants prevents “reinventing the wheel.”

Merck & Co. Inc. This pharmaceutical products and services corporation seeks to improve the productivity of existing assets while reducing energy expenses. A corporate energy program is mobilized by goals that hold site managers accountable for annual performance targets. Energy costs at manufacturing sites are on a growth-adjusted pace to be cut 22 percent between 2001-2005. This equates to at least 250,000 tons of avoided carbon emissions and 11.5 percent energy expenditure savings. Notable feature: Energy efficiency was employed to boost the production capacity of existing assets, thus avoiding the need to finance new capital assets.

Mercury Marine. This manufacturer of marine propulsion systems consolidated energy decisions under the authority of a central facilities manager (CFM) and implemented a power monitoring system that permits electricity costs to be tracked and billed to individual cost centers. Valuable energy flow data gives the CFM leverage in gaining corporate approval of energy technology upgrades. The centerpiece of these efforts in 2004 was the installation of a new, centralized compressed air system that carved roughly half a million dollars from an annual $7 million electricity bill. Notable feature: Simple and effective energy management (1) placed the authority to make energy improvements in a single manager, (2) assigned cost control responsibility to production units, and (2) used information technologies to monitor energy flows and to directly bill production units for their actual energy use.

Shaw Industries. Concerted efforts to manage energy at Shaw Industries got underway in mid-2004. By primarily using the U.S. Department of Energy’s plant audit methods and BestPractices reference materials, a newly-hired demand-side engineer documented potential energy savings at a rate of $1 million per month for the first six months of his tenure. Notable feature: U.S. DOE resources were effectively adopted by in-house personnel to drive their energy auditing and remediation activities.

Unilever HPC. Unilever’s Health and Personal Care Division’s energy management program coordinates 12 facilities by combining energy-use targets with an energy service outsourcing strategy. A simple budget-to-actual spreadsheet compares energy performance at 14 facilities. Notable feature: Because its use resulted in a saving $4 million on energy and another $4 million in avoided costs, the spreadsheet has captured the attention of individual facility managers as well as Unilever’s Board of Directors.

A comparison of the 10 case studies presented here suggests that industrial energy management is not prescriptive in nature. It is tempting to argue that some companies’ approaches are stronger than others’. Upon further thought, it is useless to suggest that Company A is somehow “better” at energy management because it achieved greater relative energy reductions than Company B. After all, one company may have already been somewhat more efficient to begin with. The structure of authorities within companies is a major factor. So too are market conditions and asset management strategies. Is energy management helped or hindered by corporate policies regarding investment, human resource development, and outsourcing? The answers are unique for every company.

A few forward-thinking companies have allowed their energy management experience to be documented for industry’s wider benefit. It is clear that each corporation approaches energy management with a strategy that reflects the company’s organizational characteristics. Among the leading determinants are the degree of corporate authority and involvement, depth of in-company technical support, leadership, and the capability to express energy performance’s contribution to business goals.



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