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Thinking about energy as part of your bill of materials

Thinking about energy as part of your bill of materials Most manufacturers have a firm handle on the cost of materials and labour, but without mastering critical energy consumption data you'll never have a true picture of the cost of producing each individual product. We talk to Rockwell Automation Business Leader Jonathan Smith about 'energy intelligence'.

With rising energy costs and an emphasis on reducing carbon emissions, sustainability has become a key topic for manufacturing companies in the UK across the spread of industry sectors. The price of carbon-based energy - coal, oil and gas - has gone up substantially in recent years and, for better or worse when comes to energy supply, the UK still very much a carbon based economy.

Of course, there are renewable energy alternatives that you can switch to, but they are more expensive options. It is still unclear what role nuclear power will play as part of the UK's energy mix, but it will definitely be many years before nuclear power is making a significant contribution to the national grid. And although there has been much talk about shale gas as the solution to our future energy requirements, it could be ten years or more before we even begin to exploit its potential.

In the meantime, the UK is likely to remain a carbon-based energy economy. Prices are already high, and that is at a time when global demand is reasonably flat because of the economic slump. As economies across the world begin to drive out of recession, demand will increase and prices will rise accordingly.

Another issue that could raise its head is availability. There was a time when we were more or less self-sufficient when it came to gas supplies. Now, the UK is a net importer, but with very little reserve in storage should there be problems in the supply chain. Further, because the UK is not investing in clean coal technology, the shut down of traditional coal fired power stations is gathering pace. All of this impacts on energy security.

We tend to think about energy security in rather woolly national terms, but it is not hard to foresee a time when individual manufacturing businesses could be directly hit by energy security problems, as discussed in Ofgem's Electricity Capacity Assessment report to Government. The 12-15% over capacity on the national grid that we used to take for granted is now trending towards 4-5%, and with it a sharply increased risk of brownouts or even blackouts. Is your production flexible enough to be able to ramp up and down accordingly? Could you cope if your supplier told you that you needed to back off for a few hours on any given day? If not, then you could be facing a significant price premium to assure your energy supply.

It certainly makes sense then to look at reducing energy usage as part of any sustainability debate. It reduces cost, it helps to assure supplies, and it dovetails with initiatives to cut emissions as part of any carbon reduction commitment. But reducing energy costs can only come with a true understanding of energy usage, and that requires a level of visibility that many companies simply don't have in place.

"Quite often we begin talking about energy metrics, it's weighted very much towards monitoring energy at the factory wall," comments Jonathan Smith, Business Leader at Rockwell Automation. "That might only show you how much your energy is costing on a weekly basis. Best case it might show you half hour metrics so you can begin to see fluctuations, but it gives you very little visibility into the true energy usage in your plant."

Viewing energy as a raw material
Smith argues that a sea change must come; one where we begin to view energy in the same way you'd consider any other raw material. If we don't then we can't manage its use. "Once you begin to treat energy as another element on our bill of materials, then you can look at tracking it right through your production process, optimising its use and minimising waste," he says.

This begins with some more sophisticated monitoring at the factory wall, and then extending this to monitor key areas of the plant floor, such as individual production lines. Monitoring can then be further extended to individual machines within those production lines, and then you can get a further level of visibility by looking at individual machine components - motors, heaters, contactors, inverters, etc.

All of that is going to give you a lot of logged data that you have to be able to make sense of, but there are plenty of options out there to help you take that data and create trends and reports, to highlight exceptions, and to being to build a picture of how you're using your energy. It's all useful information, but still not really at a level that enables you to really see how energy is being used in relation to production.

"When we look at production costs, it's useful to be able to monitor the cost per product," says Smith. "And with most raw materials we can do this quite easily. But when it comes to energy, we tend to have just a statistical picture: we know we used so many kWh to manufacture, say, 5000 products, so we can average out the cost per product. But this is not a true picture. How much did it cost to produce a specific product on a given day, and how did this compare to the same product on a different day? If the cost is different, then why was it different? The statistical analysis tells us nothing about this."

The solution from Rockwell Automation is an integrated suite of "intelligence enabling" software products - the FactoryTalk suite. And key within these products are EnergyMetrix and VantagePoint Energy. These packages enable users to gain true value from their energy data, giving it real context within organisation or production models, and making it more relevant to the decisions that manufacturers need to make.

Using a web-based system for on-site or remote monitoring, users can capture, archive, report and analyse the flow of data, correlate it with disparate sources within the plant, and enable the monitoring and optimising of energy usage. And the linkage to emissions monitoring allows you to leverage rebates, energy incentives, off-peak purchasing plans, and other cost saving measures.

"Once you have the tools to treat energy as a raw material, then you can start to look at it in relation to other items on your bill of materials and see how it impacts on cost per product," explains Smith. "For example, you could tie it in with procurement to see how different raw materials from different suppliers affect production costs. A raw material from one supplier might be 5% cheaper than from a competing supplier, but that cost advantage might be wiped out by higher processing costs. Or perhaps you might find that some materials are supplied with higher moisture content in some batches than others, again resulting in a higher processing cost. Because you can see that, you can go back to the supplier and see where the problem can be addressed."

It is clear that energy costs will continue to rise, energy security will become an increasing concern, and emissions reduction will remain as an added pressure on manufacturing operations across all industry sectors. Energy intelligence, then, has to become a key performance metric within the wider scope of performance indicators, because only with true visibility of energy usage within the plant, can it be optimised to drive down costs.

Find out more by visiting Rockwell Automation's sustainability page.
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