17 March 2022
It’s a tough time to be a manufacturer. The pressure to reduce costs is relentless, the drive from consumers and supply chain to demonstrate sustainability is growing this is compounded by record-high energy prices that have provided an additional unbudgeted cost.
Against these challenges, manufacturers are always looking for ways to understand and control costs, optimise performance, reduce their environmental impact whilst remaining focused on their core business objectives. An effective energy management strategy can play a key part in meeting these objectives and offer up a route to effective procurement, greater data accuracy and insight, process improvements, greater energy efficiency, and improved sustainability credentials.
Our clients tell us that there are four key pillars to achieving an optimum energy strategy that maximises the contribution to delivering key corporate objectives.
1. Mitigating energy cost increases
At the moment energy prices have a regular presence in the news headlines and it is often a challenge to keep up with an increasingly complex energy market. Energy prices for some manufacturers will have already been a large cost but with the recent price increases, prices have become even more of a challenge – energy will now be on every manufacturer’s radar.
There is still an opportunity to mitigate against the rising costs and adopt a tailored procurement strategy that is clearly aligned to the organisation’s overall objectives and its appetite for risk. But effective procurement is only one part of the equation. Protecting margins against rising operational costs and increased competition also needs a holistic approach to energy optimisation through analysis and actionable insight across your manufacturing processes, peoples’ behaviours, and the impact of your technology. All of this will also play a large part in helping to understand and mitigate the impact of rising non-commodity costs.
2. Reducing energy intensity
A focused review of how best to achieve energy optimisation is key to reducing energy intensity and associated unit cost and emissions. But it’s important to embrace a holistic approach that improves energy intensity whilst still improving operational efficiency and ensuring production continuity. One further important factor is to focus your energy efficiency investments in those areas with the shortest pay-back period. Seeking out energy management best practices and innovation really can then play a big part in sustaining a competitive advantage.
3. Defining the right environmental sustainability strategy to protect your business and brand
Your marketing colleagues will always claim that brand is king. But as more and more brands look to embrace the ethical values of their target audience, manufacturers within their supply chains are also having to deal with the impact of a growing need to demonstrate their sustainability leadership.
This is never more evident than in the plastics and packaging industries where some of our customers are facing the full bow wave of pressure from consumers to radically reduce a brands reliance on what are at least perceived as non-sustainable consumables. Many plastics and packaging companies are making giant strides to respond to the growing pressure, but their best efforts can be undermined if their claims of environmental sustainability leadership are not also backed by clear data and evidence. The most hard-bitten Finance Director can be readily persuaded to invest in projects that set a path to embracing zero carbon if presented with a data-rich evidence-based business case or the alternative of losing a major customer.
The important thing is to elevate the discussion of the energy management strategy to the boardroom and to make clear to all stakeholders that it can play a vital role in underpinning the corporate environmental and CSR stated objectives. This can help deliver against the changing sustainability priorities of consumers, supply chain partners and shareholders alike.
4. Ensuring regulatory compliance and focus on core business objectives
Engaging with and improving sustainability further provides peace of mind that your organisation is well-positioned to meet growing regulatory requirements, such as ESOS (Energy Savings Opportunity Scheme) and SECR (Streamlined Energy & Carbon Reporting). However, compliance and regulatory schemes can often be seen as just a box-ticking exercise to avoid a big fine or reputational damage. But compliance can also often be the start of a process to reduce carbon and cost. Many manufacturers are facing a growing cost of energy compliance so why not take advantage of the resulting insight to drive improvement and turn the cost into a positive?
To find out more about how Inenco has already helped hundreds of manufacturing organisations turn energy management into a tool that drives greater operational efficiency and competitive advantage; please contact us on 08451 46 36 26.