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by Ryan Lang
April/May 2008
Many companies in the plastics distribution industry are facing the challenge of “going green” and researching opportunities to provide sustainable materials and products to their customers. However, to adopt a total sustainability structure, companies must also look internally at their energy efficiency. This forward thinking can result in major financial savings, is good for the environment and also improves their corporate image. The primary reasons for reducing energy usage are impossible to ignore. So why is the list of excuses for inaction seemingly endless?
Missed opportunities
Many companies believe the procurement of energy is the only viable option to control energy costs. Although an effective purchasing strategy is important, this is only part of the equation. Once the energy is purchased, if usage is not carefully monitored and controlled, the initial purchasing savings can disappear very quickly through preventable, wasteful consumption.
Frequently, the benefits of energy conservation with regard to the environment are not linked or used to promote an energy efficiency culture within or outside the company. If such a culture of conservation were created, it would certainly enhance corporate image, in addition to the measurable environmental benefits from minimizing usage.
Regardless, energy is still not a priority for many organizations. Despite shrinking profit margins and the fact that energy is a controllable variable cost, the bottom-line impact of reducing energy costs is often ignored, which is part of the issue. Historically, energy has been addressed within organizations as strictly a technical issue. Although technical insight is absolutely essential when making energy decisions, decision making has lacked a business acumen and focus through this exclusively technical approach.
There are several other consequences of a solely technical focus. In terms of accountability, energy responsibility under this system has typically been limited to one person or one department. Often, this one person or department is already so busy with other tasks that the mandate of complete energy responsibility can be overwhelming. As a result of this structure, energy becomes isolated from other critical planning activities and is not seen as a high priority for the organization.
A strictly technical approach will also lead to strictly technical solutions, usually requiring capital investment. However beneficial the proposed solutions might be, this capital hurdle can be insurmountable and can effectively stall progress. Even if capital projects are approved, the projected savings are not necessarily proven or continual.
Engineering may specify new equipment, for example, if it has been recommended by suppliers to save energy. Once installed, however, the equipment is often not monitored to verify the promised savings. These organizations never know if savings are actually achieved and energy efficiency is not promoted within the organization. In terms of the sustainability of savings, if there is a change in company operations, the installed equipment may no longer be appropriate. In these cases, the efficiency benefits of the new equipment diminish with the change in process and the cycle of missed savings opportunities continues.
A new multi-dimensional
perspective
This is not to say technical expertise is irrelevant when managing energy. Fortunately, most companies realize it is absolutely essential to have technical experts on board; viewing energy as strictly a business issue would be equally one-dimensional. A business-only approach would severely lack the imperative technical insight required and decision-making ability would be dramatically reduced. In fact, the list of business-only approach limitations would easily exceed the technical-only shortcomings described above.
The key to success is involving a variety of technical and business personnel in the energy management process, ensuring the organizational integration of energy and the achievement of sustained results.
The challenge for organizations in the plastics distribution industry lies in knowing where to begin. This is where the immortal advice from Julie Andrews in The Sound of Music, however simplistic, is worth recalling.
“When you read, you begin with A-B-C. When you sing, you begin with do-re-mi.” Similarly, when you manage energy effectively, you begin with an S-E-P: a Sustainable Energy Plan.
What exactly is a Sustainable Energy Plan (SEP)? A SEP is a company-wide strategy, with both a business and technical focus, for reducing costs. These cost savings are achieved through simple management practices, often requiring little to no investment. A successful plan typically incorporates customized strategies for procurement, conservation and demand management, and perhaps most importantly, making links with all organizational activities.
Achieving organizational integration
Traditionally, the decision-makers in an organization have not been the ones who are responsible for using energy. Through the development of a company-specific SEP, this gap is bridged by creating accountability and targets for usage at every level. Developing a SEP is a proven, proactive, measurable approach that provides a structure for managing volatile energy costs.
This is not to say that a SEP can be bought or that simply copying a competitor’s plan will be effective. For the plan to have any value, it must be created internally. Creating the plan in-house ensures that all team members take ownership of the plan and subsequently, energy awareness is raised throughout the organization. Ask your local utility about expert consultants who can provide training or coaching during the development of your plan.
Creating a plan and filing it away for future reference will be equally ineffective. By constantly revisiting and revising strategies, the SEP becomes a living, breathing document. Making a plan is an important step but failing to implement, monitor and follow-up is a guaranteed way to miss your targets. Making a plan and proceeding to successfully implement, monitor and follow-up is a guaranteed way to reduce your energy usage, in addition to the increased environmental benefits and the fulfilled corporate social responsibilities.
As a part of a company-wide energy plan, making the effort to monitor your energy usage, pricing and ensuring a variety of people are involved in the process can lead to substantial savings. The reality is, with the industry average profit margin of 3.2 percent, every dollar saved on energy is the equivalent of $31.25 of industrial product sold. When expanded to multiple sites and multiple energy activities, the savings and required sales equivalent values increase dramatically. Those types of bottom-line savings are substantial; the return on time and resources spent is measurable and worthwhile.
With a variety of people involved in energy initiatives, measurable savings are achieved, energy usage is minimized and organizational objectives are met. To put an end to the excuses for inaction and failure to implement energy initiatives, remember the optimal place to begin. The starting point for this team approach is the development of your SEP — a site-specific, internally-created, sustainable plan for managing energy.
Ryan Lang is a project manager for 360 Energy Inc. He can be contacted at ryan.lang@360energy.net. 360 Energy Inc. is an energy consulting firm based in Burlington, ON, Canada. They provide customized energy solutions for organizations across North America. For more information, visit www.360energy.net.
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