Increasing energy prices have motivated many companies in the U.S. to make efforts to reduce energy consumption and improve energy efficiency. The wood products industry has been affected by this trend, which adds to an already challenging business climate.
Figure 1 shows the percent change in the ratio between fuel and electricity expenses and the value of shipments for selected wood products sub-sectors, for years 2002 and 2007. Most of these industries saw significant increases in their energy expenditures compared to the value of shipments, with furniture, wood and window, and sawmills being the hardest hit.
The increased energy costs clearly threaten profitability and indicate the need to reduce energy consumption and improve energy efficiency. Improving energy efficiency not only reduces production costs, but it also improves environmental performance (i.e., the impact of an industrial operation on the environment), reduces exposure to increasing energy prices, and allows the company to reach customers who consider the environment in purchasing decisions.
Companies that want to control their energy expenditures and improve energy efficiency can adopt one of the following strategies: (1) shop for lowest fuel prices; (2) implement energy efficiency projects occasionally, for example tuning up existing equipment or upgrading insulation of drying chambers; (3) implement capital projects, investing in some energy-saving technology like heat recovery for dry-kilns or co-generation technology; or (4) implement a sustained energy management effort. The latter entails the highest degree of management commitment and is the only strategy that allows maximizing savings and obtaining sustained improvements in energy efficiency; and is therefore the focus of this article.
Energy Management System
The effective control of energy costs requires a systematic approach, instead of many one-dimensional efforts. A system is needed to identify the areas that need improvement, select and implement those projects that will have the biggest impact, and to insure that any gains are sustained. Such a system is known as an Energy Management System (EMS). An EMS can be defined as a system to make sure all users in the organization get their energy needs fulfilled, timely and in the amounts required, at the lowest cost for the company. The objective of an EMS is the continuous improvement of energy performance, to reduce costs and minimize waste. The steps to plan and implement an EMS are outlined below.
Planning
In the planning stage, top management commits to improving energy performance, formulates energy policy and goals, and creates awareness of the need to improve energy efficiency. In most successful energy management programs, a dedicated energy manager is named, and supervisors are made responsible for the energy management efforts in their own areas.
Organizations most likely to obtain major improvements in energy efficiency have the following characteristics: a strong top-down commitment for energy performance improvement, an integration of energy management to all business processes, a system to measure and monitor energy performance, goal-setting for energy performance, and personnel who specifically dedicate their time to find energy savings opportunities.
Establish Current Performance
In this step of the energy management process, the company’s current status is established by conducting an energy audit. An energy audit is conducted to determine the current energy performance and to identify energy conservation opportunities, and can be carried out in-house or with external support (e.g., private consultants, utilities, Department of Energy). Depending on the time and resources committed, an energy audit can go from a simple walkthrough, to visually-inspect the facilities and find the most obvious opportunities for improvement, or “low hanging fruit”, to an in-depth study of energy balances for all processes and facilities. The latter type requires establishing an accounting system for energy and economic/financial analysis of improvement, and allows for the highest return on investment. Figure 2 summarizes the steps of an energy audit.
Implementation and Operation
In the implementation step, the plans established in the previous phases are put into practice. Energy management activities have to be made part of the company’s everyday activities. Responsibilities for energy management are assigned, a measurement system for energy performance is established, and personnel are trained in aspects of energy policy and plan implementation. This training must ensure that employees can carry out monitoring and improvement activities.
Establishing an energy performance measurement system (EPMS) is probably the most important part of this phase. An EPMS provides a common language to measure performance and progress towards goals. Metrics should be selected in three areas: energy consumption, material productivity, and quality, since they all contribute to energy efficiency. Some challenges when designing a performance measurement system are: to align metrics with strategic goals, avoid metrics that drive the wrong behaviors, and to ensure that information to calculate measures is readily available when needed.
For the successful operation of the EMS, a method is needed to sustain and improve energy savings. One method to achieve this is through the use of Six-Sigma, which principles and tools are suggested as a specific methodology to achieve continuous energy performance improvements.
Six-Sigma for Energy Performance Improvement
Six-Sigma is a problem-solving methodology for improving business performance; it relies on extensive data collection and statistical tools to eliminate defects and minimize costs, and provides a specific process for problem solving. The numerical target for Six-Sigma is to have a process that produces only 3.4 defects per million opportunities. Six-Sigma improvement projects are directed by trained leaders and follow a standardized five-step method (Figure 3), including Define, Measure, Analyze, Improve, and Control (DMAIC). Typical DMAIC projects involve cross-functional teams and take several months to complete. This proven problem-solving method can be used to improve energy efficiency at your plant. Each step of the DMAIC process is explained here.
Define
In the Define phase, the project team is formed, the problem is identified, the objective of the improvement project is stated, and a schedule and specific
tasks are assigned. The team has to be very specific when defining the problem and the improvement goals. A DMAIC project in a wood processing plant could, for example, have as objective the reduction in air leaks, power factor correction, reduce energy consumption in plant illumination, or improve lumber drying energy-efficiency. A business case should be made about how solving the problem will benefit the company. This can be expressed in terms of payback period1, impact on earnings or costs, return on investment2, or increased performance (e.g., decrease in specific energy consumption).
1 Payback period = Annual Cost Savings / Total Investment
2 ROI = Gains – Investment Costs / Investment Cost
In sawmills, for example, the most common improvement opportunities are, in order of decreasing impact on costs, increasing the frequency of boiler tune-ups, insulation upgrades, installing variable speed motor drives, solving air leaks, and upgrading lighting, and power factor correction. Typical payback periods go from less than a year for air leaks to two years for installing variable speed drives.
Measure
In this stage, the process is understood and the primary metric of performance is determined and computed. For example, energy consumption could be measured in terms of energy consumed per unit of product produced, known and specific energy consumption. The mathematical expression is:
Specific Energy Consumption = Energy Consumed / Product Units
In the case of a lumber manufacturer, for example, energy consumption could be measured in kilowatts-hour (kWh), and product units in thousand of board feet (MBF) of green lumber produced. A mill could, for example, determine that its specific consumption of electric energy is 150 kWh/MBF of green lumber. Similarly, a solid hardwood flooring producer could determine that its electric energy consumption is 32 kWh/MBF.
Analyze/Improve
In this phase, the current energy performance determined in the “measure” step is compared against a standard. This standard could be an industry benchmark (from comparable operations or companies), a company standard (if the company operates more than one facility, and the best performing facility is set as the standard), or a historical standard (based on past performance data for the same process/facility).
After the benchmarking process, the potential causes for variation between goals and actual performance are identified. Six-Sigma provides a powerful tool for this purpose. In a cause-and-effect diagram, or fishbone diagram, Figure 4, causes are classified and cause-and-effect relationships are shown with arrows. Categories commonly used are materials, machinery and equipment, methods, and operators. All personnel involved participate, providing their ideas and opinions. After the causes are brainstormed and categorized, a few causes are selected based on how strongly they affect the problem.
After the analysis, specific processes are selected for improvement. Several approaches exist for this selection, like choosing those with the biggest impact on energy savings, or the greatest ROI.
Control
In the last step of the DMAIC project, a method to monitor process performance is established to make the improvements sustainable. It is also important to document and report the savings achieved and communicating the results to all personnel involved. Ongoing process monitoring could be carried out using Statistical Process Control (SPC), which is the use of statistical tools for measuring and analyzing variation in a process. SPC makes extensive use of statistical control charts, a graphic comparison between process performance data and statistical control limits.
The main purpose of a control chart is to detect special causes of variation, usually due to changes in the process, defective tools or quality problems. A process control chart could be implemented, for example, to monitor the moisture content of incoming lumber, to reduce drying time.
Summary
As energy prices raise and environmental regulation becomes stricter, pressure will grow on companies to reduce their energy consumption and improve energy efficiency. The only way to achieve sustained improvements in this field is the implementation of an Energy Management System (EMS). As with any improvement initiative, an EMS requires top management commitment and needs careful planning. Personnel should be assigned specific responsibilities for its implementation, and a control mechanism needs to be in place to sustain its results.
Six-Sigma provides demonstrated problem-solving techniques that could be used in energy-saving projects. Successfully implemented, an energy management system can not only help reduce total production costs, but also be a driver for overall company performance.
Omar Espinoza is a research associate and Dr. Brian Bond is an Associate Professor in the Department of Wood Sciences and Forest Products at Virginia Tech.
