We recently sat down with our sustainability and energy management service line and PTC to discuss ways companies can optimize their operations for greater efficiency and sustainability
Sustainability is a word that is thrown around a lot these days. It means different things for different people and organizations. For some, it is just a buzzword - a promise to do things better which sounds good on paper and in press releases but is rarely seen in practice.
For others, particularly those who are keeping an eye on emerging sustainability regulations around the world, it is a potential new cost pressure. Others still see sustainability as an ethical – if not always realistic – goal.
Lastly, for those corporate leaders who have watched investors of companies like Chevron and Shell hold their boards accountable by threatening to fire and/or sue members for inadequate sustainability responses, it serves as a warning of changing investor priorities.
We would argue that sustainability can mean something else. If handled properly, it can mean an opportunity for companies to explore more efficient operations and improve customer/investor relations, while positively impacting their bottom line.
To explore this, subject matter experts from Kalypso’s sustainability and energy management service line met to discuss how they have leveraged their client experiences and long-term partnerships to develop a holistic understanding of how sustainability will impact a range of industries.
“What we’re seeing now is that the goal is shifting,” says Maria Lowry, a Manager at Kalypso and one of the sustainability teams’ driving forces. “The goal is: let’s make the best products, let’s get them out the door, AND let’s do all that in a way that optimizes the consumption of natural resources like water, gas, and electricity across your production facilities.”
To Improve Something You have to Measure it First
As requirements for data standards and reporting cadences become more stringent, data management and effective metrics are becoming a vital part of developing more sustainable practices.
“You can’t improve what you can’t measure, and you can’t measure what you haven’t collected data for,” says Lowry, “The first line of defense is just seeing where companies are at today with managing their energy consumption, and what we are finding with clients is that even collecting the right data is a struggle.”
Rein Singfield, a senior manager and one of the service line leads, suggests that even when companies have the necessary data, accessing it and using it is often problematic.
“Data is everywhere. The individual contributors really have the information required for sustainability already,” says Singfield. “Do we want to centralize that information away from the SMEs? No, let’s keep it with the SMEs, but use IT/OT systems to look across the digital thread for what you need.” Much of the data necessary to make informed decisions and improve sustainable outcomes is pulled directly from existing meters, submeters, and sensors that many manufacturers already use today – the trick is to ensure that data is organized, displayed, and communicated effectively.
Singfield goes on to explain that, although many companies have the means to collect raw data, they are just now starting to invest in visualization and contextualization tools that enable enterprises to gain actionable insights into their operations.
“Data is often trapped in silos across many teams and many different locations,” says May Ann Madlansacay, director of solution program management at PTC. A solution like ThingWorx can provide powerful visualization on dashboards.
A key to making decisions that drive sustainability is the ability of an organization to have access to data points, through these dashboards, that track production in real time and give you deep insights into resource management, overall equipment effectiveness and enterprise optimization.
Low-Hanging Fruit in Sustainability – More Efficient Energy Usage
Despite the fact that over 54% of the world’s energy sources are consumed by production sectors, energy management is an often under-explored component of resource optimization. Madlansacay suggests that digital technology will play a fundamental role in reducing energy consumption during production runs.
“WAGES (Water, Air, Gas, Electricity, and Steam) is going to be a key part of creating a standard energy model in the context of production, energy intensity, and the ability to measure key performance metrics,” says Madlansacay. “One automotive company found out they were using 40% of their energy from equipment when they were not producing anything. Having energy insights enables leaders to make impactful decisions that help their bottom line and the planet.”
Lowry elaborates on one project in which they found that steam power used in one plant was losing over 80% of its potential energy in transit through the facility. “WAGES does not encompass all energy, but it is an important way to parse out the ways that energy gets distributed.”
Energy Quality can Equal Product Quality and Energy Savings
What is energy quality? Singfield explains this through a baking metaphor.
“I want you to imagine you’re making soufflés, but the energy provided to your oven is erratic – your soufflé goes flat. You’ll have to bake it again. This wastes the flour, eggs, sugar, and other resources as well as the oven’s energy that could have been used more efficiently by contributing to a usable product. This concept applies directly to scaled production of tires, paints, potato chips, and engines: products saved from scrap directly contribute to more sustainable operations. This is called OEEE or Overall Equipment Energy Effectiveness.”
Even outside of energy management, quality has a profound impact on typical sustainability goals, as outlined by the ESG Framework and UN Sustainable Development Goals, by reducing material waste. Proof of this is seen in a recent case study. A tire company client wanted to improve their tire building machines’ production capabilities. After mapping the business problem through a series of machine learning algorithms and iterative models, the most sensitive variable in the production process was identified. By making minor changes in this single variable, each machine was able to turn 30 abnormal tires into 42 normal tires, which translates into energy and material savings of 65,000 tires per plant, per year. When calculating this improvement’s financial value, they saved $1.3 million per plant, per year.
The Benefits of Early Adoption – Why Your Company Should be Focusing on this Now
“Your greenhouse gas emissions and energy information is no longer a nice to have, it is soon going to be required by the SEC. Soon it’s going to be a compliance issue,” warns Singfield. “Even if the SEC takes a while, the C-Suite will pay a heavy price for dragging their feet on sustainability initiatives. It is a market expectation now.”
Even though compliance may require investments, the cost savings from waste reduction or energy efficiency can be significant.
“For a long time, there was a prevailing myth around sustainability being a sunk cost,” says Lowry, “but it’s even graduated beyond an investment. It’s good business. We’ve seen that throughout the market.”
In the end, leaders will need to ask themselves whether they should rush to meet the minimum requirements – and in doing so waste countless labor hours on sifting through outdated and imperfect metrics – or whether they should view this as an opportunity to explore digital solutions that will meet compliance standards in an automated and efficient way, and improve visibility, efficiency and resiliency of operations. The answer seems self-evident, and those companies who realize it first will gain a competitive advantage in the years to come.