Cascading Energy Management through the supply chain. The Ford experience.

Transcription

1 Cascading Energy Management through the supply chain. The Ford experience. Jim Castles, Business Energy Planner Maryanne Walkley, Manager, Cascade Programs Energy Efficiency Victoria 215 Spring Street Melbourne

2 Abstract Energy Efficiency Victoria s Energy Smart Cascade program builds upon the Energy Smart Business program by cascading energy management concepts through business relationships such as a supply chain. This involves EEV working with a host organisation to bring together a group of companies with a relationship with the host, and providing training and discussion workshops, supported by engineering site visits. To pilot this approach, EEV undertook a Cascade project with the Ford Motor Company, a manufacturer with a steadily growing environmental and energy management program with a strong ISO flavour. In keeping with the ISO concept of influencing the value chain, the Cascade pilot aimed at passing through some of the energy management theory and experience at EEV and Ford to five of Ford s key component suppliers. The key outcomes for the participating supply companies were: A site champion with a better understanding of energy use patterns, issues and opportunities for saving energy. Improved awareness of energy and other environmental initiatives as key strategic planning and management issues at most senior site manager level. Improved energy use reporting against standard production indicators. Savings in energy costs of up to 22% in one case of which over half was in consumption reduction. Improved relationships between Ford and suppliers as well as improved interaction with government. This manifests itself as a motivated and competent cadre of energy management practitioners with an established network. A range of further Cascade exercises are currently being undertaken (for completion in October 1999), and further results will be presented as part of the paper. These include one program involving the Latrobe Valley electricity generators, and one involving a second group of Ford suppliers. Key words: Energy management, Supply chain, Automotive, Energy Efficiency Introduction. audit reports gather dust (1) This is a shame since there are invariably fine energy saving opportunities identified in energy audit reports. There are many possible reasons for this, but generally there is no context for receiving recommendations and no one responsible or resourced to deal with the recommendations. This paper describes the outcomes of the Ford Cascade Program ; a more comprehensive energy management program aimed at providing management context for energy saving activities. The first Cascade activity involved five suppliers to Ford Motor Company. Cascade programs are one of three actions identified in the Victorian Greenhouse Action Statement (VGAS), the Governments 1997 commitment to greenhouse mitigation, along with Replanting Victoria 2020 and Green Power. The second Ford Cascade involved nine supplier companies. See the EEV website for a list of participating companies and further information. ( and follow the links to Cascade ) There are many benefits for a government agency working in partnership with a host organisation such as Ford. These include: Access to a ready-made audience who comes to the program with a serious intent. Case study materials from the hosts own success. Support and complementary skills in the industry sector from the Host Company. Reinforcement of the drivers for managing energy which are common to all companies.

3 Ford has had a successful energy management program at their Broadmeadows Assembly Plant for some years and have reduced energy costs by 28% on a per car basis over the past few years. This provides a powerful impetus for supplier companies to want a piece of the action. The partnership between Ford and EEV has brought together a collection of experience and skills that benefit the program delivered to the supplier companies. EEV provided facilitation and technical (Energy Engineering) input, while Ford contributed from their Total Cost Management (TCM) Centre and their Environment Quality Office (EQO). TCM is part of the purchasing section of Ford, while EQO is a corporate function existing jointly out of the US and Australia. Key drivers for energy management for both Ford and the Victorian Government are energy cost management (savings) and carbon dioxide (CO 2 ) emission mitigation. The proposition that controlling waste at source is a good business decision with both cost control and environmental benefits was put to suppliers in the invitation to join the program. Other drivers for Ford and supplier companies are: Demonstration of community involvement and corporate citizenship. Taking a lead in green marketing. Building a more robust cost base as a hedge against future energy price fluctuations. Approach and structure. The key focus of Cascade Programs is building a management context for energy saving activities. This implies a basic requirement to engage senior management at supplier companies. To do this the program started with a briefing breakfast and ended with a report out meeting some four months later to summarise progress and reinforce the need for management support. Senior managers including General Managers, Operations Managers, Production Managers, Senior Logistics Managers, Quality Managers, and Senior Account Managers were present at these meetings along with the nominated Energy Managers. The body of the program included three workshops and three site visits. EEV worked on multiplying the effectiveness of our efforts by running awareness, information and training workshops as a key feature of the program. The three workshops featured: Understanding energy use patterns. Appropriate management systems for controlling energy use and cost. Developing and implementing an action plan. Each of these workshops had key features that distinguish the Cascade approach and made it successful. These will be highlighted in the Outcomes section. The site visits included a familiarisation visit to each site by the workshop facilitator, a visit to Ford Assembly Plant, and an energy appraisal of each site by an EEV Energy Engineer. Integrating energy management into the business. Throughout the Cascade Program the emphasis is on integrating energy management activities into the normal functioning of the business. Along with other automotive manufacturers, Ford is participating in a global trend to build and use Environmental Management Systems (EMS) in their operations. In Australia the most common EMS framework is the ISO system. Amongst other things, the ISO system of EMS encourages responsible sourcing and product stewardship. Hence Ford is encouraging suppliers to adopt EMS principles as well as their own certification. Energy use is obviously a significant environmental aspect of a business, but there are no regulations regarding amount of energy used. There are no regulatory restrictions on the amount of energy a

4 company may use in its operation. EEV has promoted energy management as an example of cutting waste to improve profit rather than as a defensive action in response to demonstrating compliance with regulations. Leading companies are moving to operate in a beyond compliance way. Outcomes of the Ford Cascade programs. The Cascade programs aim to enable companies to use energy more efficiently in their operations. There are secondary and complementary aims of creating a network of competent and knowledgable Energy Managers, improving supplier relationships with Ford and improving government/industry dialogue. The outcomes of the Cascade program with Ford supplier companies are working towards these ends. There are physical objects which represent progress to date, described below, but more importantly are the less tangible outcomes which will ensure the ongoing success of the energy management programs being built at the participating companies. The tangible outcomes of the program are reported in a summary document of the progress made. These are presented as a poster and a booklet. There was also an energy appraisal report for each site. There are many intangible benefits covered later in this section. The summary reports were put together by both the supplier companies and EEV with a view to informing both the report out meeting and as a useful tool for Energy Managers and Management Champions to take their message back to their workplaces. The summary report booklets were provided to all companies and give each company examples of what their peers are doing as a prompt and for inspiration. The summary reports contained: An overview of energy use patterns. Metrics (energy/widget) to be used in reporting. A diagram identifying a management champion, energy manager (coordinator), support personnel such as finance, maintenance, administrators and energy users such as production managers and supervisors. Identified key information to be included for regular reporting, identified whom reports should go to and how often. Program of works for the coming year. Review of annual action plan identified as actionable. The more intangible outcomes are a confident and informed energy manager (coordinator) at each site. This means that the energy manager understands the nature of their energy use and its relationship to production. The energy manager also understands the cost structure that relates to their physical energy use. The energy manager has also taken the time and made the effort to identify the key people in their organisation who will be required to cooperate in order to successfully improve energy performance. In all cases, the energy managers had discussed the program with most of these people during the four months of the program. The diagram below shows the relationship of the energy manager to other people in the organisation whose support is required for successful outcomes.

5 Communications, reporting and implementation. Management Champion (Senior management support integrates EM into core business and goals) Production teams. (ie: energy users) EG: Area Managers and supervisors Coordinator - Energy Manager Technical and admin officers. EG: finance, admin, HR, marketing, maintenance, product engineering. Metrics or benchmarks have been developed by each participating company so that everyone at the site can understand energy use in familiar terms. Suitable benchmarks are not always easy to generate and considerable discussion during the workshops centred around the purpose of these, the accuracy required and how to generate them. Factories turning out large sub-assemblies or similar products have the easiest task in setting metrics. Others use an indicator of production such as a common part, or work on a per sales dollar basis. The importance of suitable measures cannot be underestimated, as per production along with quality are the key drivers for these manufacturers. Energy saving activities. Savings opportunities have been identified from several sources including: Energy Appraisal by EEV Energy Engineer. Engineering staff at site. Shop floor operators via supervisors. Prior energy audits. Other environmental activities such as cleaner production projects. Commercial auditors recommendations. Production equipment suppliers. These range from highly technical, capital-intensive projects through management and training initiatives to simple housekeeping matters. The usual central systems such as lighting, compressed air, and steam were all identified as sources of efficiency gains. Several manufacturers identified items such as coolant systems on metal machining operations as opportunities for savings. Less usual was the recognition that plant upgrades should always include energy efficiency as a consideration in design and implementation. At least three of the nine companies in the second Cascade group had plans imminent for plant removal, replacement, moving, or upgrade. There was acknowledgment that the marginal costs of energy efficiency improvements were much more favourable when included in planned changes.

6 Production scheduling was identified as generally able to be improved with opportunities to retire under utilised equipment, switch off idling equipment, as well as change operating parameters to improve energy productivity. Housekeeping activities were recognised by the participating companies as excellent, low cost sources of energy savings. To this end four of the nine wish to use EEV domestic energy efficiency publications in their employee awareness efforts. The philosophy being that if people can save at home then they will bring the mindset with them to work. This will impact directly on housekeeping activities. The summary report produced for the end of program meeting was published in a high quality format with the intention that energy managers and management champions will be able to use these materials directly in activities such as management briefings, and supervisor training. These publications were generally very well received. Areas still requiring development. Further work, which would enhance the current Cascade programs, would include: Improved management briefing materials for use by the energy managers and management champions. Improved workshop tools for engaging energy managers in an interactive way. Standard packaged information for shop floor employees on energy efficiency in the home and at the factory. Further Cascade groups are now operating in the Electricity Generation sector and with the Australian Industry Group s Melbourne office. These have had outcomes at least as strong as with the Ford Cascades described in this paper. It is anticipated that further Cascade projects will run into the future. Ongoing contact will be maintained with past Cascade participants through EEV s Energy Smart Business program and via dedicated events aimed at both publicising the achievements of the companies and also at maintaining the knowledge base of the energy managers and the existing network. Conclusion. The Cascade program has been successful in generating energy saving actions at participating manufacturers. We anticipate that these will be sustained in the longer term because there are systems in place to maintain the energy saving effort. We believe that the Cascade work will not gather dust. The key components of the program which have helped achieve this are a focus on integrating energy management into the business by: Developing metrics or benchmarks for each business. Developing an understanding and ownership of energy management in an energy coordinator at each site. Identifying the key players at each site and engaging a management champion. Understanding energy use and developing an energy use reporting system. Identifying adequate actions and prioritising them into an action plan for the next year.

7 Acknowledgments: Thanks to all fourteen participating Energy Managers whose enthusiasm and drive yielded progress at each of their manufacturing sites. Thanks also to Mary Vella of the Ford TCM Centre and Joseph Nair of the Ford EQO for their contribution of energy, ideas and expertise to the successful outcome of the Cascade programs with Ford Suppliers. Reference: 1. Productivity Commission report 96/14 Energy Efficiency for SMEs page 12.