To Measure Efficiency, Tailor Metrics to their Users
The key to measuring corporate energy efficiency is to quickly identify the business units where a simple energy index will be reliable, and then develop local action plans accordingly, according to a former Owens Corning executive.
It’s easy to get overwhelmed by the amount of energy data your plants produce, Peter Garforth writes in Sustainable Plant. But managers and executives need to make compromises between precision and utility, he says.
Garforth is principal of consulting group Garforth International, former vice-president of strategy at Owens Corning, and before that an executive at Honeywell and Landis & Gyr.
One of Garforth’s large manufacturing clients defines energy productivity in several ways. For the CEO, it is defined both as total energy costs per cost of goods sold, and energy costs as a percentage of revenues. The major business units use similar definitions.
“This index is easy to communicate, easy to understand and probably appropriate – at this level,” Garforth says. “Energy is just one more cost item alongside materials, labor and other business expenses.”
At the next level down, the definition gets more granular, with an index for each of the major product lines. This is defined as energy costs and energy use, in megawatt-hours equivalent, for each unit of saleable product.
“In my experience, the parts of the business that need a somewhat more complex energy index to track productivity become a reason to slow down the entire energy management program,” Garforth says.
“My recommendation is to keep the high-level indices focused firmly on dollar productivity, and at product-line levels, keep indices to an absolute minimum of complexity needed to track energy performance in a statistically reliable way, recognizing some may need a higher degree of complexity than others.”
The complexity issue can reach a head when it comes to tracking the energy embedded in individual product lines, Garforth says.
“Even a product line with small variations might mix in-sourcing and outsourcing for the same products. This immediately throws any index purely based on delivered product and direct energy use all over the map,” Garforth notes.
The wrong way to deal with this would be to eliminate outsourced products from the count, Garforth says. Such an approach would ignore the role that energy plays in the price of third-party production.
More frequently, he says, companies are finding ways to capture suppliers’ energy content, either by standard estimates or by requiring the supplier to identify the amount of energy embedded in their products.
Picture credit: artnoose
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