Mehul Shah Research Analyst Matthew Littlefield Sr. Research Analyst

© AberdeenGroup 2009

Energy Management: Driving Value in the Industrial

Environments

Mehul ShahResearch Analyst

Matthew LittlefieldSr. Research Analyst

© AberdeenGroup 2009 2

In the US, the industrial sector accounts for about one third of total energy consumption, which is more than any other sector, including: residential, commercial, and transportation¹

Globally, the industrial base now accounts for nearly half of all energy consumed².

In the top 10 most energy intensive industries, the cost of energy can ranges from 3.3% to 56% of the total dollar value add of production³.

Why Now?

¹ "Annual Energy Outlook 2009", Department of Energy, Energy Information Administration, March 2009

² "International Energy Outlook", Department of Energy, Energy Information Administration, May 2009

³ "Energy Trends in Selected Manufacturing Sectors", Environmental Protection Agency, May 2007


Agenda

Research Frameworks Survey Demographics Making the Best-in-Class P.A.C.E. (Pressures, Actions, Capabilities,

Enablers) Recommended Actions


Aberdeen’s Competitive Framework

In the research study, Aberdeen asked how companies performed with respect to Overall Equipment Effectiveness, Energy Efficiency and Operating Margin. Each respondent is subsequently categorized into:

Best-in-Class – Top 20% performers Industry Average – Middle 50% performers Laggards – Bottom 30% performers


Aberdeen’s PACE Framework

Pressures – What market pressures are driving executives to focus on energy management?

Actions – What strategic actions are they taking in response to those pressures?

Capabilities – What process, organizational, knowledge management and performance management differences enable greater business performance?

Enablers – What technologies support the capabilities?


Agenda

Research Goals Survey Demographics Making the Best-in-Class P.A.C.E. (Pressures, Actions, Capabilities,



Study Demographics

Revenue

44%

28%

28%

Small (<$50 million)

Midsize ($50 million- $1 billion)

Large (>$1 billion)

Between February and March 2009, Aberdeen examined the use, the experiences, and the intentions of more than 232 enterprises on energy management

Industries

10%10%

9%

9%

6%

15%

18%9%

Food/Beverage

Automotive

Pulp & Paper

Industrial Equipment

Chemicals

Industrial Products

Metals

Utilities

Geographies

67%

7%

14%

12%North America

Europe

Asia-Pacific

Other


Mode of Manufacturing

Source: Aberdeen Group, April 2009

9%

9%

11%

9%

21%

22%

19%

Discrete Low VolumeLow Mix

Discrete Low VolumeHigh Mix

Discrete High VolumeLow Mix

Discrete High VolumeHigh Mix

Process Batch

Process Continuous

Mixed Mode Balance ofProcess and Discrete


Agenda

Research Goals Survey Demographics Making the Best-in-Class P.A.C.E. (Pressures, Actions, Capabilities,



Best-in-Class DefinedDefinition of

Maturity Class Mean Class Performance

Best-in-Class: Top 20% of aggregate performance scorers

90% Overall Equipment Effectiveness-15.13 Energy Efficiency13.57 % Margin

Industry Average: Middle 50% of aggregate

performance scorers

80% Overall Equipment Effectiveness-7.15 Energy Efficiency1.84 % Margin

Laggard: Bottom 30% of aggregate

performance scorers

66% Overall Equipment Effectiveness6.13 Energy Efficiency-9% Margin


Maturity with an Energy Management Program


40%

20%

10%

22%

8%

0%

25%

50%

More than 3 years 1 to 3 Years Less than 1 year Currently inPlanning Stages

No Plans

Overall


Agenda

Research Goals Survey Demographics Making the Best-in-Class P.A.C.E.

Pressures Recommended Actions


17%

20%

46%

80%

0% 50% 100%

Elevated economic and consumeruncertainty

Want to be a thought leader insustainability

Maintain or achieve a competitiveadvantage

Need to reduce costs inmanufacturing operation

Overall


Agenda


Strategic Actions Recommended Actions


Strategic Actions


17%

32%

62%

67%

15%

41%

51%

69%

0% 40% 80%

Create or improve collaboration acrossfunctional groups

Include energy management in enterprise-wide Corporate Social Responsibility

Initiatives

Create / Improve visibility into energy acrossthe enterprise

Redesigning / optimizing processes to beenergy efficient

OverallBIC


Establishing a Energy Management Culture


59% 58%

37% 40%

24% 23%

0%

35%

70%

Energy Management is one of the top threefocus areas of company's strategic agenda

Energy Management is one of the central part ofthe organizations culture

BIC Industry Average Laggards

Cross-functional team across multiple plants to ensure best practices are shared and implemented. We track energy usage by asset. Our focus is to create a culture of energy and sustainability

~ Maintenance Manager, Food & Beverage


Agenda


Capabilities: Process Recommended Actions


Process Capability


82%

39%

58% 57%49%

39% 38%49%

31%19%

26% 30%

0%

50%

100%

Standardizedprocesses to monitor

energy across the enterprise

Standardizedprocesses to monitoremissions across the

enterprise

Established formalenergy management

programs endorsedby senior management

Established short termand long term goalsfor individual plants /

facilities

Best-in-Class Industry Average Laggards

Each production area is tracked for Power Usage and we have monthly targets identified and mangers report what activities contributed to over target condition, and identify countermeasures to correct

~ Maintenance Manager, Automotive


Agenda

Hypothesis Survey Demographics Making the Best-in-Class P.A.C.E.

Capabilities: Organization Recommended Actions


Organizational Structure


61%68%

55%

34%

50% 54%

34% 31%37%

26% 21%15%

0%

40%

80%

Established corporateteam to ensure the

success of an energymanagement program

Roles and responsibilitiesestablished with in

departments tosuccessfully executeenergy management

programs

Active cross-functionalteams guiding thesuccess of energy

management programs

Internal as well asexternal recognition to the

department / plant thatmeets the energy as well

as the emission goals


We have created an energy conservation work group that teleconferences monthly to identify savings opportunities, review energy usage and determine a path forward in energy usage reduction ~ Mid Size Chemical Company


Agenda

Hypothesis Survey Demographics Making the Best-in-Class P.A.C.E.

Capabilities: Performance and Knowledge Management

Recommended Actions


Knowledge Management


67%62% 62%

55%50%

42%34%

41%

19% 21%16%

23%

0%

40%

80%

Energy data is collectedautomatically and stored

in a central location

Real-time and historicalenergy usage data easily

accessible to decisionmaker

Maintenance schedulesand alerts are based on

asset condition andenergy efficiency

Energy costs are takeninto consideration whilescheduling production


We've trained employees on our goals and solicited their input on potential projects. We've also formed special committees to perform some of the initiatives, and posted our goals on plant bulletin board ~ Director of Manufacturing


Performance Management


64% 62%56%

36%40% 38%45%

14%18% 18%

31%

11%

0%

40%

80%

Energy consumptionand costs used as KPIfor operational decision

making

Metrics established toquantify the benefits ofenergy management

programs

Operational metrics arelinked to financial

metrics

Control limitsestablished to monitorenergy and emissions

data in real-time



Agenda


Capabilities: Enablers Recommended Actions


Enablers for Energy Management


69%62% 60% 56%

50%56%

40%33% 33% 29%

39%

27% 31%24% 22%

0%

50%

100%

Energy EfficientHardware

Employee Training& Certification

Updated EnergyDelivery Systems

Technology toautomate collectionand monitoring of

energy data

Consultants



Technology Tools


46% 46%44%

42%

34% 33%30% 30%

15%

9%

18%

5%

26%

11%

26%

20%

42%

21%

37%

22% 21% 21%24%

18%

0%

25%

50%

EnergyManagement

Alert / EventManagement

Dashboards PredictiveMaintenance

Analytics SPC (StatisticalProcess Control)

EnvironmentManagement

Workflows



Interoperability with Energy Management Tools


45%41%

17%

35%30%

9%

26%

17%

9%

0%

25%

50%

Asset Management Dashboards &Analytics

Advanced ProcessControl



Agenda

Research Goals Survey Demographics Making the Best-in-Class P.A.C.E. Recommended Actions


Recommended Actions

1. Include energy management in corporate wide sustainability initiative

2. Establish executive level sponsorship for energy management programs with roles and responsibilities defined at an departmental level to drive the success of such programs

3. Include energy data (consumption, costs etc) as part of the optimization process to schedule maintenance and production activities

4. Provide real-time as well as historical energy data to appropriate employees as actionable intelligence

5. Invest in automating energy management to gain visibility into energy data and integrate it with existing technology investments

© AberdeenGroup 2009

Contact Aberdeen Mehul Shah

Phone: [email protected]

Matthew LittlefieldPhone: 617.854.5204

[email protected]

mailto:[email protected]

mailto:[email protected]

Documents

Mehul Shah Research Analyst Matthew Littlefield Sr. Research Analyst