Energy Savings for Manufacturers

06.01.2005 | Engineering, FacultyAs manufacturers face increased energy costs, stiff international competition and the biggest fall in durable goods orders in almost a year, according to a recently released U.S. Department of Commerce report, many may wonder why their energy savings programs are not offsetting the bottom line as they had hoped.

Part of the answer may lie in a study by Kelly Kissock, a University of Dayton associate professor of mechanical engineering, who showed that "lean" manufacturing programs have little effect when extra inventory from increased productivity cannot be sold.

"Profits from productivity improvements typically are much greater if additional products can be sold than if productivity improvements result solely in cost reduction," said Kissock, who also directs UD's industrial assessment center, ranked No. 1 in the nation in 2003 by the U.S. Department of Energy.

In Kissock's example, the company that sold more products while implementing lean manufacturing saw profits jump around 250 percent, compared to only 60 percent if sales did not increase.

His study also emphasized quantifying the profits from an energy-savings program rather than just the savings.

"Lean manufacturing benefits typically are measured by production time, number of employees to produce an item or how much scrap material is left over," Kissock said. "It also is important to quantify these benefits in terms of profit so potential investments in productivity improvements can be measured against potential bottom-line returns."

Related to selling the increased inventory, Kissock also found that management should focus on the energy cost per item rather than the overall energy cost. Making 200,000 pencils at 30 cents each costs more than making 100,000 pencils at 50 cents each, but reaps increased benefits provided they can be sold.

Kissock's findings were presented earlier this year at the Ohio Energy Management and Restructuring Conference.

Kissock offers other tips for reducing energy costs:

* Identify "bottleneck" processes that limit overall production.

* Investigate opportunities to reduce raw material inventory by improving delivery schedules or ordering material that requires less processing.

* When possible, configure workspace in U or L shapes so workers can operate multiple machines from one location.

* Identify people doing repetitive tasks, then talk to the operators and management about ideas for improving these operations. Investigate whether a machine could supplement or perform the operation. Sometimes, manual labor is the best way to get a job done. In these cases, pay attention to ergonomics to make sure workers are in the most productive and safest positions.

* Ask operators for ideas about how setup and changeover time could be reduced.

* Determine frequency, duration, cause and cost of unscheduled down time. Consider whether preventative maintenance could reduce cost.

"Today's manufacturers are in survival mode," Kissock said. "People are trying desperately to cut production costs. We are trying to do what we can to help."

For media interviews, contact Kelly Kissock at (937) 229-2852 or via e-mail at kelly.kissock@notes.udayton.edu.