Published 4 years ago.
About a 5 minute read.
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How can companies implement longer-term efficiency projects that deliver meaningful energy cost savings, alongside material impact on their productivity, reliability and resiliency of their operations?
For a large part of our industrial history, businesses have treated energy
as a fixed cost center and conservation measures as an expensive investment.
This dynamic has encouraged the prioritization of short-term projects that often
fall short of improving operational resilience, cost competitiveness and carbon
footprint. But is there a way to implement longer-term efficiency projects that
deliver meaningful energy cost savings, alongside other tangible outcomes such
and brand value?
The answer is yes. However, to strategically use energy as a lever for
profitability and growth, companies must reflect on their current business
processes and identify the improvements that can be made to drive
enterprise-wide transformation. Put another way, organizations must think
globally and act locally to ensure the growing investments in energy and
sustainability translate to long-term growth for the business.
Identifying necessary changes is entirely different from successfully
implementing those changes. To fully capitalize on opportunities, corporate
leadership must take a collaborative
Feedback and data gathered from those working at the site level can identify
activities that will drive performance. Establishing a strategic plan based on a
more holistic view will help companies to move beyond site-specific energy
savings and allow them to leverage best practices across their entire enterprise
— freeing up capital to reinvest in future-proofing overall
But the approval process can be tricky. Global executives face an evolving
energy and sustainability marketplace, complex and changing organizational
structures, limited access to funding and a lack of experienced staff, which can
delay or even defer any decision-making.
To overcome these common roadblocks to enterprise-wide efficiency, executives
Resolve disparities between local site plans and global corporate plans,
Overcome implementation paralysis resulting from traditional funding models,
Implement a mindset of continuous improvement to obtain sustained results.
This article examines ways for businesses to overcome these implementation
challenges and achieve material impact on their productivity, reliability and
resiliency of their operations.
Plant facilities are largely focused on meeting production targets. This myopia
can discourage sites from implementing enterprise-level initiatives such as
efficiency and sustainability. To align global and local ambitions,
organizations must combine a centralized approach to planning with a localized
implementation strategy. But how can businesses get from planning to action
To address misalignments between corporate and local sites, companies should
establish a governance system that identifies key stakeholders from all levels
of the business. These stakeholders can then build and validate an
organization-wide implementation plan. Stakeholders should determine objectives,
capital planning and key performance metrics that balance corporate goals with
Stakeholders can also work collectively with individual site teams to execute
and refine the implementation methodology during the initial stages of
transformation. One common outcome from such an approach is the centralization
of portfolio data on an enterprise-wide platform to better direct and prioritize
Another obstacle facing many organizations is lack of financial resources using
traditional CapEx budgets. Our recent research
report found that 57 percent of responding
companies blame failed business cases for efficiency on a lack of capital. This
situation becomes more pronounced when budgets are allocated at facility levels.
When organizations evaluate each of their projects individually, it is difficult
to see the ROI clearly. The process can waste resources and limit returns,
making it difficult for companies to achieve and accelerate results for global
It can also be challenging to persuade executive decision makers to change their
funding models. To combat this status quo, many leaders implement smaller OpEx
projects and use them to demonstrate results quickly, building credibility for
funding approval on future capital-intensive projects. However, even when
capital does become available, it can be difficult to gain support internally
for energy efficiency projects over other competing business priorities. As a
result, businesses end up with an endless cycle of smaller projects that fall
substantially short of corporate cost savings and carbon-reduction goals.
With energy cost volatility — and increasing internal and external mandates to
improve both efficiency and sustainability performance — companies need new
business models to fund improvements over the long term. It is imperative to
build a business case for a portfolio of options, combining long- and
short-payback projects into an acceptable financial package that identifies
opportunities for reinvestment. Businesses can also overcome funding constraints
using alternative third-party funding models such as Energy Service Agreements
and Power Purchase
and employ a suitable funding model to boost performance and assure results.
Despite individual efficiency projects showing initial progress, it is easy to
lose momentum over time. This can make it difficult to scale an efficiency
program across the enterprise portfolio, especially if there is no evidence of
sustained performance. Collaboration with local teams is key in these cases, to
ensure that efficiency gains are maintained over time via active monitoring and
Evidence suggests that many companies have a “once and done” attitude towards
efficiency initiatives that can cause local sites to generate inconsistent
savings. Without oversight, it’s difficult to drive optimal performance and take
advantage of the opportunities created through the energy program. This approach
can even make the efficiency process costlier if incorrectly maintained.
Many programs also struggle with follow through on identified energy savings,
which can result in loss of valuable time, resources and future credibility.
It’s important to align stakeholders from the top floor to the shop floor,
jointly defining the criteria for success and empowering everyone with the
tools, skills and best practices needed to recurrently identify savings
opportunities. This knowledge will allow sites to drive continuous optimization
on their own and maintain operational and equipment efficiencies over the long
Taking a more holistic and enterprise-level approach to planning, implementing
and funding efficiency will ensure that transformation continues over time,
providing a valuable lever to support low-carbon growth for future business
Learn more in our eBook, Capitalizing on Change: How Executives Can Use
Efficiency to Future-proof
Published Jul 2, 2019 8am EDT / 5am PDT / 1pm BST / 2pm CEST