WHITEPAPER | Production Effectiveness and Energy Efficiency

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Idhammar Whitepaper – Production Effectiveness Why energy efficiency is a critical element in the compound measure of profitability

ABSTRACTREDUCING WASTE in all its forms (inventory, downtime, leaks, paperwork etc) through lean manufacturing, coupled with energy saving campaigns such as ‘load shedding’, ‘switch off’, ‘insulate better’, and ‘heat efficiently’, has until now, helped to considerably lower manufacturing costs and increase profitability. However, escalating energy costs consume an increasingly large percentage (a reported 30-90%) of operating and maintenance budgets.

In the last decade, the industrial price of gas and electricity has shot up 122% and 94% respectively, so whilst Operational Effectiveness is key to meeting business objectives, it is now vital to adapt lean manufacturing approaches towards Production Effectiveness by rigorously managing energy usage.

Underlining this trend, the manufacturers’ advisory organisation EEF, published survey results in 2014 which highlighted that ‘energy management’ is a Board Level concern, with 96% of UK manufacturers going beyond the basics and increasing investment:

“What’s clear is that the vast majority of manufacturers that pursue energy efficiency report that it helps them manage their costs and competitiveness”Susanne Baker, Senior Climate and Environment Policy Adviser at EEF

Making every second of production count is no longer enough to stay ahead of the competition. Understanding energy usage across the manufacturing process is key to identifying innovative equipment, processes, and product strategy that will improve energy efficiency.

This whitepaper examines why energy efficiency is an intrinsic element in the calculation of Production Effectiveness: the compound measure of profitability.

CONTENTSLean Manufacturing Imperatives - the volatile energy market 2

Tariffs, Taxes, Incentives Security of Supply

Energy Management Beyond the Basics 3Total Productive MaintenanceOverall Equipment Effectiveness

Monitoring Energy Intensity - Average vs Actual 4Energy CT Meter Monitoring

Measuring Production Effectiveness 5Global Asset Sustainability (GAS) CalculationsHybrid Solutions - CMMS, OEE & Energy Monitoring

Conclusion: PE = ECO 6

Tariffs, Taxes, Incentives

MANUFACTURING ACCOUNTS FOR NEARLY A THIRD of the world’s total energy consumption, with industry producing 125Mt Carbon Dioxide (CO2) per year in the UK alone. The Government’s commitment to reducing the UK’s greenhouse gas emissions by 80% by 2050 is therefore heavily reliant on manufacturers radically improving energy efficiency.

Intended to support these efforts and offset the Carbon tax that affects UK manufacturers, the Energy Bill introduced in 2013 has delivered payments to manufacturers for every kilo-watt hour they save through energy reducing measures.

In line with Article 8 of the EU Energy Efficiency Directive, the Government is also introducing the Energy Savings Opportunity Scheme (ESOS) which involves the regular, independent energy auditing of large enterprises. The aim is to improve profitability by helping companies identify energy-saving opportunities. As the audits will be based on up-to-date, measured, traceable data on energy consumption, compliance will be easier to achieve if energy-monitoring measures are already in place.

Security of Supply

Quite apart from taxes and incentives, security of supply is a real concern for UK manufacturers. Britain’s primary energy production is falling with a reported 10.7% decline in 2012 on the previous year*. With fossil fuel stores depleting faster than sustainable energy is being harvested, and viable large-scale generation in the form of controversial shale and nuclear energy still 10-15 years away – demand is outweighing supply. Imported energy is on the up, and so is the price. The impact of energy inefficiencies is therefore, significant to both the environment and the economy.

Source: “BP Energy Outlook 2030: demand forecasts in graphs”

The fundamental truth derived from the interplay between complex political and market forces is that ‘energy’ is not a fixed cost. Energy is variable, in purchase price, and the intensity in which it is required to manufacture products.

Therefore, it is critical that manufacturers understand their energy needs and usage patterns in order to negotiate best prices by forward purchasing, accessing more affordable rates, securing long term supplies, and ultimately in using energy as efficiently as possible throughout the manufacturing process.

WHITEPAPER | Production Effectiveness 2

Lean Manufacturing Imperatives - the volatile Energy Market

*Source: The Manufacturer’s 2013 Energy Supplement

WHITEPAPER | Production Effectiveness 3

Energy Management Beyond the Basics

MOST MANUFACTURERS HAVE ALREADY IMPLEMENTED a wide-range of energy related programmes including: switch-off campaigns; intelligent production scheduling at a lower time-tariff; installing new energy-efficient equipment or enhancing maintenance to reduce energy leakages.

A recent report checklist by The Manufacturer*, highlighted these relatively low cost energy saving opportunities:

Inefficiency Issue Energy RecoveryA compressor installation that is switched on when there is no demand will consume 20-70% of its full load power.

Automating the switch off process will help reduce energy consumption.

Compressed air leaking through a single 3mm hole could cost you nearly £700 per year in energy costs.

Fixing the hole to result in a 1-bar reduction could save about 7% of the energy required for compression.

Running old motors at full speed could be as effective as reducing the motor’s speed by 20%.

Fitting a variable speed drive could reduce a motors’ energy consumption by as much as 50%.

A faulty door seal could increase a refrigera-tion unit’s power consumption by as much as 11%.

Replace the seal and implement inspection checks (dirty refrigeration condensers can increase costs by around 26%).

A sound Total Productive Maintenance (TPM) strategy supported by a CMMS solution will address many of these issues. However, the Carbon Trust states that whilst energy efficiency best practice measures are widely applied to facilities management and ‘non-process related areas, such as space heating and lighting… very few [manufacturers] have the internal systems to identify and deploy genuine innovations in processes.’

As most industries consume the majority of energy during the production process, grasping a detailed understanding of energy flows and measuring energy intensity throughout processes is key to identifying the next level of reduction opportunities. Even at a basic level, running the plant more efficiently can result in significant sav-ings - as shown with this 1% improvement in Overall Equipment Effectiveness (OEE):

Table Summary: 1% OEE improvement in a week achieved 750 more good products with 50%

less rejects in 3 hours less production time; resulting in £114,920 annual benefits.

*Source: The Manufacturer’s 2013 Energy Supplement

OEE Score 43% 44% 1% OEE improvement

Good Products 75,000 75,750 750 extra good products

Rejects 1,500 750 50% less rejects

Total Units 76,500 76,500 Same total units in less time with less rejects

Hours to Produce 118 115 3 hours less production hours

Labour Costs £11,769 £11,477 £292 / week saved by less production hours

Materials Cost £1,500 £750 £750 / week saved by less rejects

Energy costs £47,077 £45,909 £1,168 / week energy saved due to less production hours

Benefits per week £2,210

Benefits per year £114,909

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Monitoring Energy Intensity - Average vs Actual

ALLOCATING RETROSPECTIVE ENERGY COSTS TO PRODUCTS based on estimates of plant running time and average consumption is common practice; however, calculating the ACTUAL energy intensity required to manufacture a unit of product enables companies to accurately determine the cost per unit.

The amount of energy needed to manufacture a unit of product needs to be considered as any other item needed for production: a variable that can go up as well as down. Monitoring energy usage will thus help manufacturers manage Energy Intensity (energy required per unit of output) and look at ways to improve efficiency.

Linking discrete energy current transformer (CT) meter feeds to a designated Energy Monitoring system will determine energy intensity levels for lines or equipment.

Combining this ‘energy intensity’ data with other production and operations data then provides a granular level of detail – product mix, production sched-ule, line, asset, running speed, maintenance schedule, production team, energy consumption – that enables a true evaluation of energy efficiency that can drive the organisation’s Production Effectiveness strategy.

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Measuring Production Effectiveness

A RANGE OF SOLUTIONS HAVE BEEN DEVELOPED to automatically capture, calculate, and analyse Overall Equipment Effectiveness data – providing a measure of asset and line performance where each factor is a percentage of the theoretical best possible:

OEE = Availability x Performance x Quality

Leading manufacturers that are investing in energy management strategies are now using the compound calculation - Global Asset Sustainability (GAS) - as a measure of Production Effectiveness:

GAS = Availability x Performance x Quality x Energy Consumption

In order to measure and support improvements in Production Effectiveness, a hybrid solution is required that combines best of breed Energy Monitoring, CMMS or EAM, and OEE technology in order to reduce the ACTUAL cost per unit of product by:

• Boosting equipment uptime and scheduling standbys, changeovers and process configurations to minimise energy wastage

• Maximising maintenance effectiveness by incorporating energy into the maintenance decision process to eliminate inefficiency

• Replacing rogue, inefficient equipment with higher efficiency models

These Production Effectiveness solutions will also help Continuous Improvement teams with root cause analysis and allow them to capitalise on opportunities to:

• Optimise production schedules in line with lower tariff zones

• Increase plant speed for the same energy usage

• Identify product mixes and raw materials that reduce energy consumption

With a hybrid Production Effectiveness solution in place, energy efficiency can be managed effectively across equipment, process, product and facilities (non-process).

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Conclusion: PE = ECO

Like any other raw material, energy needs to be handled with care and the appropriate tools. The evolution of asset, production, and energy management technology means that manufacturers have all the data needed to identify opportunities to improve Production Effectiveness, significantly reduce energy bills, and improve profitability.

As Energy Reduction is now a Board Level concern, leading lean manufacturing solution providers like Idhammar Systems, now provide the hybrid combination of Energy Monitoring (E), CMMS (C) and OEE (O) technology required to accurately measure, report on, and manage Production Effectiveness (PE).

PE = ECO

Idhammar Systems’ ECO solutions are designed with powerful, integrated reporting capabilities intended to keep all business levels and team functions fully informed and focused on improving and sustaining Production Effectiveness, including cross functional:

• Root Cause and What If Analysis

• KPI Dashboards

• Andon/End of line Displays

• Improvement Agendas

• SMS, MMS and Email Alerts

• Profitability Reports

To find out more about how Idhammar’s Systems can help you improve Production Effectiveness and improve your profitability:

Call: +44 (0)117 9209400Email: info@idhammarsystems.com orVisit: www.idhammarsystems.com

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l OEE, the Great Energy Saver - reducing consumption with OEE SystemsCopyright © 2014 Idhammar Systems Ltd.

All rights reserved. August 2014