Low-cost manufacturers are not the ones with the lowest staff complements, but those who manage their variable costs effectively. The efficient use of raw materials, energy and water and the minimisation of waste are the hallmarks of cost leaders in the manufacturing sector. The issues are very complex and unless you attack this challenge in a structured manner, chances are your operation will harbour significant untapped savings potential. So how should you go about it?
1. Establish your Compass
First, you need to establish a set of measures that will indicate your resource efficiency performance. Use of statistically developed baselines that link resource consumption to drivers such as throughput, environmental factors and other variables that impact on performance is the most robust way to measure performance. Trend performance for each measure at least monthly, and establish targets, with timelines for achievement. You now have a simple dashboard that measures the effectiveness of your resource efficiency efforts.
2. Identify the levers of performance
The next step is to identify significant resource users in your operations. An SRU is a unit or process that either consumes a large quantity of resources or readily offers opportunities to significantly reduce resource consumption. The identification process should be quantitative, and hence will require historical data and/or measurement. By definition, improvements in resource efficiency for individual SRU’s will improve the resource efficiency performance of the entire organisation. You want to leverage your resource efficiency efforts by focusing in the right areas, and this is what SRU’s allow you to do.
3. Control the levers of performance
Each SRU should now be monitored and managed through a carefully designed set of operational controls. These controls should include the measurement of local performance as well as the drivers of that performance. The principle here is that the outputs you require in terms of resource efficiency can be achieved through careful control of the inputs to each process. For example, raw material losses in an electroplating process are influenced by drip time, and hence the drip time should be measured and controlled. Failure to monitor this key driver makes it extremely difficult to control losses of plating chemicals. It is important to analyse all SRU’s in a structured way to identify key drivers, establish how each driver will be measured and then establish a monitoring and control system. The key consideration when designing operational controls is that they should be capable of measuring performance at short intervals. In some cases, this control can be done continuously using instrumentation and electronic control systems. Many factories I work with are migrating to web-based monitoring systems, which are capable of alerting operators to out-of-control situations, and which make data readily accessible to a wide, yet controlled audience.
4. Identify and develop systemic improvement opportunities
Once robust operational controls are in place, the next step would be to establish a live portfolio of resource efficiency projects that support improved performance as measured by your dashboard. The focus will remain on your SRU’s.
These projects should include:
Process optimisation projects that improve performance without investment e.g. operating a process at a lower temperature while still achieving product quality goals
Process modification projects that achieve the same end result but through a different and more efficient process route e.g. blending of bulk product to achieve a final specification instead of processing individual batches to achieve it
Work practice changes that involve procedural changes at shop floor and management level to improve performance e.g. tagging of air, steam and water leaks for action
Minor plant modifications to monitor and improve performance e.g. installation of a water meter to monitor a water-intensive process or insulation of a steam pipeline
Technology changes e.g. installation of a VSD refrigerant compressor in a chiller system
In compiling the project portfolio, remember to take a systems view of individual opportunities, and always consider how individual opportunities may impact on each other. Detail each opportunity, the rationale for its inclusion, expected benefits and costs. Review each opportunity, determine whether implementation is viable, and then rank opportunities for implementation.
5. Implement and assess impacts
Now implement identified opportunities based on your priority ranking. Measure impacts locally (e.g. has the boiler’s efficiency improved?), but also link implementation back to your dashboard to assess if the desired system-level impacts are being realised (e.g. is the trend of fuel usage reducing relative to baseline?). Take further steps based upon your results – this is PDCA in action!
The quality of the process used to identify opportunities will be an important driver of your overall success. My approach is to list all possible options qualitatively first before developing individual opportunities through quantitative approaches, which include measurement and modelling. As a general rule, the larger the potential cost, the higher the level of due diligence required. The initial brainstorming exercise is best done in a multi-functional team environment to maximise the number of opportunities identified, with more detailed tasks then delegated to specialists. All levels of the organisation should be engaged, and hence vehicles such as suggestion schemes can be an important input. This is a live process and the project list should be amended on an ongoing basis as more and more opportunities are identified over time or as circumstances change.
By measuring performance, identifying relevant actions, implementing projects, reviewing impact and then taking further appropriate action, you will have embarked upon a process of continuous improvement that is sure to reduce resource consumption, cut costs and minimise environmental impacts.
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