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Energy Management: Driving Value in the Industrial Environments. Mehul Shah Research Analyst Matthew Littlefield Sr. Research Analyst. Why Now?. - PowerPoint PPT Presentation
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© AberdeenGroup 2009
Energy Management: Driving Value in the Industrial
Environments
Mehul Shah
Research Analyst
Matthew Littlefield
Sr. Research Analyst
© AberdeenGroup 2009 2
In the US, the industrial sector accounts for about one third of total energy consumption, which is more than any other sector, including: residential, commercial, and transportation¹
Globally, the industrial base now accounts for nearly half of all energy consumed².
In the top 10 most energy intensive industries, the cost of energy can ranges from 3.3% to 56% of the total dollar value add of production³.
Why Now?
¹ "Annual Energy Outlook 2009", Department of Energy, Energy Information Administration, March 2009
² "International Energy Outlook", Department of Energy, Energy Information Administration, May 2009
³ "Energy Trends in Selected Manufacturing Sectors", Environmental Protection Agency, May 2007
© AberdeenGroup 2009 3
Agenda
Research Frameworks Survey Demographics Making the Best-in-Class P.A.C.E. (Pressures, Actions, Capabilities,
Enablers) Recommended Actions
© AberdeenGroup 2009 4
Aberdeen’s Competitive Framework
In the research study, Aberdeen asked how companies performed with respect to Overall Equipment Effectiveness, Energy Efficiency and Operating Margin. Each respondent is subsequently categorized into:
Best-in-Class – Top 20% performers Industry Average – Middle 50% performers Laggards – Bottom 30% performers
© AberdeenGroup 2009 5
Aberdeen’s PACE Framework
Pressures – What market pressures are driving executives to focus on energy management?
Actions – What strategic actions are they taking in response to those pressures?
Capabilities – What process, organizational, knowledge management and performance management differences enable greater business performance?
Enablers – What technologies support the capabilities?
© AberdeenGroup 2009 6
Agenda
Research Goals Survey Demographics Making the Best-in-Class P.A.C.E. (Pressures, Actions, Capabilities,
Enablers) Recommended Actions
© AberdeenGroup 2009 7
Study Demographics
Revenue
44%
28%
28%
Small (<$50 million)
Midsize ($50 million- $1 billion)
Large (>$1 billion)
Between February and March 2009, Aberdeen examined the use, the experiences, and the intentions of more than 232 enterprises on energy management
Industries
10%10%
9%
9%
6%
15%
18%9%
Food/Beverage
Automotive
Pulp & Paper
Industrial Equipment
Chemicals
Industrial Products
Metals
Utilities
Geographies
67%
7%
14%
12%North America
Europe
Asia-Pacific
Other
© AberdeenGroup 2009 8
Mode of Manufacturing
Source: Aberdeen Group, April 2009
9%
9%
11%
9%
21%
22%
19%
Discrete Low VolumeLow Mix
Discrete Low VolumeHigh Mix
Discrete High VolumeLow Mix
Discrete High VolumeHigh Mix
Process Batch
Process Continuous
Mixed Mode Balance ofProcess and Discrete
© AberdeenGroup 2009 9
Agenda
Research Goals Survey Demographics Making the Best-in-Class P.A.C.E. (Pressures, Actions, Capabilities,
Enablers) Recommended Actions
© AberdeenGroup 2009 10
Best-in-Class DefinedDefinition of
Maturity ClassMean Class Performance
Best-in-Class: Top 20% of aggregate performance scorers
90% Overall Equipment Effectiveness-15.13 Energy Efficiency13.57 % Margin
Industry Average: Middle 50% of aggregate
performance scorers
80% Overall Equipment Effectiveness-7.15 Energy Efficiency1.84 % Margin
Laggard: Bottom 30% of aggregate
performance scorers
66% Overall Equipment Effectiveness6.13 Energy Efficiency-9% Margin
© AberdeenGroup 2009 11
Maturity with an Energy Management Program
Source: Aberdeen Group, April 2009
40%
20%
10%
22%
8%
0%
25%
50%
More than 3 years 1 to 3 Years Less than 1 year Currently inPlanning Stages
No Plans
Overall
© AberdeenGroup 2009 12
Agenda
Research Goals Survey Demographics Making the Best-in-Class P.A.C.E.
Pressures Recommended Actions
© AberdeenGroup 2009 13
17%
20%
46%
80%
0% 50% 100%
Elevated economic and consumeruncertainty
Want to be a thought leader insustainability
Maintain or achieve a competitiveadvantage
Need to reduce costs inmanufacturing operation
Overall
© AberdeenGroup 2009 14
Agenda
Research Goals Survey Demographics Making the Best-in-Class P.A.C.E.
Strategic Actions Recommended Actions
© AberdeenGroup 2009 15
Strategic Actions
Source: Aberdeen Group, April 2009
17%
32%
62%
67%
15%
41%
51%
69%
0% 40% 80%
Create or improve collaboration acrossfunctional groups
Include energy management in enterprise-wide Corporate Social Responsibility
Initiatives
Create / Improve visibility into energy acrossthe enterprise
Redesigning / optimizing processes to beenergy efficient
Overall
BIC
© AberdeenGroup 2009 16
Establishing a Energy Management Culture
Source: Aberdeen Group, April 2009
59% 58%
37%40%
24% 23%
0%
35%
70%
Energy Management is one of the top threefocus areas of company's strategic agenda
Energy Management is one of the central part ofthe organizations culture
BIC Industry Average Laggards
Cross-functional team across multiple plants to ensure best practices are shared and implemented. We track energy usage by asset. Our focus is to create a culture of energy and sustainability
~ Maintenance Manager, Food & Beverage
© AberdeenGroup 2009 17
Agenda
Research Goals Survey Demographics Making the Best-in-Class P.A.C.E.
Capabilities: Process Recommended Actions
© AberdeenGroup 2009 18
Process Capability
Source: Aberdeen Group, April 2009
82%
39%
58% 57%49%
39% 38%49%
31%19%
26% 30%
0%
50%
100%
Standardizedprocesses to monitor
energy across the enterprise
Standardizedprocesses to monitoremissions across the
enterprise
Established formalenergy management
programs endorsedby senior management
Established short termand long term goalsfor individual plants /
facilities
Best-in-Class Industry Average Laggards
Each production area is tracked for Power Usage and we have monthly targets identified and mangers report what activities contributed to over target condition, and identify countermeasures to correct
~ Maintenance Manager, Automotive
© AberdeenGroup 2009 19
Agenda
Hypothesis Survey Demographics Making the Best-in-Class P.A.C.E.
Capabilities: Organization Recommended Actions
© AberdeenGroup 2009 20
Organizational Structure
Source: Aberdeen Group, April 2009
61%68%
55%
34%
50% 54%
34% 31%37%
26%21%
15%
0%
40%
80%
Established corporateteam to ensure the
success of an energymanagement program
Roles and responsibilitiesestablished with in
departments tosuccessfully executeenergy management
programs
Active cross-functionalteams guiding thesuccess of energy
management programs
Internal as well asexternal recognition to the
department / plant thatmeets the energy as well
as the emission goals
Best-in-Class Industry Average Laggards
We have created an energy conservation work group that teleconferences monthly to identify savings opportunities, review energy usage and determine a path forward in energy usage reduction ~ Mid Size Chemical Company
© AberdeenGroup 2009 21
Agenda
Hypothesis Survey Demographics Making the Best-in-Class P.A.C.E.
Capabilities: Performance and Knowledge Management
Recommended Actions
© AberdeenGroup 2009 22
Knowledge Management
Source: Aberdeen Group, April 2009
67%62% 62%
55%50%
42%
34%41%
19% 21%16%
23%
0%
40%
80%
Energy data is collectedautomatically and stored
in a central location
Real-time and historicalenergy usage data easily
accessible to decisionmaker
Maintenance schedulesand alerts are based on
asset condition andenergy efficiency
Energy costs are takeninto consideration whilescheduling production
BIC Industry Average Laggards
We've trained employees on our goals and solicited their input on potential projects. We've also formed special committees to perform some of the initiatives, and posted our goals on plant bulletin board ~ Director of Manufacturing
© AberdeenGroup 2009 23
Performance Management
Source: Aberdeen Group, April 2009
64% 62%56%
36%40% 38%
45%
14%18% 18%
31%
11%
0%
40%
80%
Energy consumptionand costs used as KPIfor operational decision
making
Metrics established toquantify the benefits ofenergy management
programs
Operational metrics arelinked to financial
metrics
Control limitsestablished to monitorenergy and emissions
data in real-time
Best-in-Class Industry Average Laggards
© AberdeenGroup 2009 24
Agenda
Research Goals Survey Demographics Making the Best-in-Class P.A.C.E.
Capabilities: Enablers Recommended Actions
© AberdeenGroup 2009 25
Enablers for Energy Management
Source: Aberdeen Group, April 2009
69%62% 60%
56%50%
56%
40%33% 33% 29%
39%
27% 31%24% 22%
0%
50%
100%
Energy EfficientHardware
Employee Training& Certification
Updated EnergyDelivery Systems
Technology toautomate collectionand monitoring of
energy data
Consultants
Best-in-Class Industry Average Laggards
© AberdeenGroup 2009 26
Technology Tools
Source: Aberdeen Group, April 2009
46% 46%44%
42%
34% 33%30% 30%
15%
9%
18%
5%
26%
11%
26%
20%
42%
21%
37%
22% 21% 21%24%
18%
0%
25%
50%
EnergyManagement
Alert / EventManagement
Dashboards PredictiveMaintenance
Analytics SPC (StatisticalProcess Control)
EnvironmentManagement
Workflows
Best-in-Class Industry Average Laggards
© AberdeenGroup 2009 27
Interoperability with Energy Management Tools
Source: Aberdeen Group, April 2009
45%41%
17%
35%30%
9%
26%
17%
9%
0%
25%
50%
Asset Management Dashboards &Analytics
Advanced ProcessControl
BIC Industry Average Laggards
© AberdeenGroup 2009 28
Agenda
Research Goals Survey Demographics Making the Best-in-Class P.A.C.E. Recommended Actions
© AberdeenGroup 2009 29
Recommended Actions
1. Include energy management in corporate wide sustainability initiative
2. Establish executive level sponsorship for energy management programs with roles and responsibilities defined at an departmental level to drive the success of such programs
3. Include energy data (consumption, costs etc) as part of the optimization process to schedule maintenance and production activities
4. Provide real-time as well as historical energy data to appropriate employees as actionable intelligence
5. Invest in automating energy management to gain visibility into energy data and integrate it with existing technology investments
© AberdeenGroup 2009
Contact Aberdeen
Mehul ShahPhone: 617.854.5212
Matthew LittlefieldPhone: 617.854.5204