Cost of living crisis: energy efficiency tips for manufacturing businesses

With surging inflation now an unshakeable truth, manufacturers could benefit from these cost-saving ideas to further instil mindful energy use into their business models.

The price of liquid fuels, transport and other goods and services are seeing substantial hikes. With these increasing costs, cash flows are being stretched and pricing strategies adjusted as a result. We’ve partnered with Russ Hall, Principal Engineer- Circular Economy and Sustainable Manufacturing at WMG to provide some tips and actions to help your business weather the inflation storm. These focus primarily on the price of materials, and the cost of energy and fuel, and could be simpler than businesses realise.

“WMG appreciates that businesses are facing significant financial headwinds at the moment, efficiency improvements can help to alleviate those head winds, realising those improvements needn’t be complicated or expensive – simple actions can realise significant cost reductions without affecting performance” says Russ Hall, WMG,

“As well as physical and tangible changes, embedding a culture and habits of efficiency in a workforce can have a huge impact.”

Below are a number of measures manufacturers can explore to mitigate the effect of rising costs.

Reducing costs – efficiency as a culture

Laura Capper, our Head of Manufacturing and Construction, says: “During the pandemic, manufacturing businesses demonstrated extreme resiliency. While the current inflationary environment creates even more pressures, we feel there are ways to pivot and adapt to rising input and output costs. 

“In particular, energy and fuel price rises are a catalyst to consider energy efficient and sustainable alternatives to help manage business costs whilst also reducing emissions and carbon footprint.”

Being more efficient in relation to energy, materials and time reduces costs and is kinder to the environment. Recently, energy and material prices have soared, placing more focus on efficiency in terms of cost reduction, along with reducing emissions. 

These kinds of improvements are everyone’s responsibility; company culture has a key part to play in the journey. 

Here are a few pointers to help drive the changes:

  • Ensure team members understand why there is a need to be more efficient
  • Encourage team members to suggest ideas that will save energy, materials and time
  • Show the benefits of changes that are made: visual management and live tracking of improvements can be powerful ways of encouraging team involvement
  • Set priority areas for energy abatement, target each one to ensure delivery
  • Reinforce and communicate efficiency messages regularly, by as many mediums as possible
  • Recognise and celebrate successes; improvements are there for everyone in the team

Energy efficiency actions

1. Overall energy efficiency

a. Measurement – audit energy usage to understand major energy-using processes/applications.

b. Estimate savings – estimate energy savings before making investments, invest in areas with highest returns first.

c. Commercial measurement services are available from most energy providers, they require investment but can be very powerful, allowing immediate understanding of energy-hungry processes and systems.

d. Generating energy – self-generation of energy can reduce overall energy bills; although capital intensive initially, it often gives good payback in the longer term. Methods of self-generation include wind and solar.

2. Lighting: make sure lighting is efficient

a. Lights activated by motion sensors, time switches and daylight sensors.

b. Install LED/low-cost lighting. Light emitting diodes (LEDs) are more efficient than traditional incandescent bulbs, and the Department for Business, Energy & Industrial Strategy suggests that upgrading to LED technology throughout your business could deliver “cost savings of up to 80%”.

c. Optimise use of natural light wherever possible.

d. Label switches to make sure the right lights are used in the right places.

3. Heat: identify and address wastage

a. Building maintenance – well-maintained buildings will be more energy efficient than those that are poorly maintained

b. Insulating factory spaces – keep heat where it is needed, lessen the need for space heating, insulate factory walls and roofs. Studies by the Energy Saving Trust have shown that buildings with improperly insulated roofs can lose about 25% of heat through their roof, and insulating wall spaces can increase energy efficiency by up to 45% (depending on building size). Commercial surveys can help to identify where heat is being lost and where insulation would help reduce costly energy losses.

c. Factory/office doors – keep them closed wherever possible to maintain heat where it’s needed; consider upgrading to thermally insulated factory doors with automated opening and closing for warehouses.

d. Hot processes (furnaces, ovens, kilns) need to be as efficient as possible – keep furnace doors closed, look at the most efficient ways of using energy (recuperative burners, furnace firing sequences), reuse waste heat from one process to assist with another, identify areas where heat can be recirculated. 

4. Time: reduce operating costs to make sure operations happen efficiently

a. Efficient use of equipment – upgrade hardware and software for machines, review the need for underused equipment (which can also incur unwanted insurance costs).

b. Storage – raw material/parts storage locations, material/part identification, storage conditions – reviewing inventory requirements and locations can save energy costs; heating larger spaces costs more.

c. Factory layout – poor factory layout can increase the time taken to do even basic tasks, adding cost to actions.

5. Equipment operation efficiency

a. Change machine motors – install variable speed drives in pumps and fans, as well as high-efficiency motors.

b. Lubrication – ensure regular machine drive lubrication for smoother operation and maintenance.

c. Compressed air systems – reduce operating pressure of compressed air systems (1 bar reduction can save 7% of the energy consumed). Switch compressors off when not used (a compressor that’s left on still uses 70% of its full load power), according to the British Compressed Air Society trade association.

d. Refrigeration – keep refrigeration units well serviced – check door seals (a faulty seal can increase energy use by 11%), ensure condensers are running effectively (dirty condensers can increase energy costs by 26%).

e. New equipment – are grants available for newer, more efficient equipment that will save costs in the longer term?

f. Voltage optimisation – buildings are often supplied with a higher voltage than is necessary from the national grid; have equipment surveyed to make sure that supply voltage is optimised to provide only the energy necessary, preventing waste and saving energy costs.

Material efficiency actions

Material efficiency covers material inputs (those purchased for manufacturing) and outputs (products and waste materials), and is an important consideration for manufacturers. 

1. Material supply costs 

a. Negotiate for cheaper material prices wherever possible.

b. Substitute materials – can a material be replaced with a cheaper alternative that has the same performance? Or is it possible to substitute a higher performance material for a lower performance one so that less material is needed?

c. Keep material and inventory levels as low as possible, only buffer materials where supply is high risk.

2. Material management

a. Stock management – poor stock management can cause loss of materials and time. Make sure that stores are well labelled, effectively organised and tracked to save time and prevent over-ordering of materials. Various lean management tools exist to ensure good stock control such as labelling, barcoding, scanning etc.

b. Process efficiency – ensure any process that consumes materials (cutting, welding etc) is tailored to requirements, using fewer tools and consumables, to help reduce operational costs.

c. Prevent overproduction – overproduction occurs when more parts or components are produced than are needed. Overproduction consumes materials that could be used for other purposes, increasing storage costs and potentially waste.

d. Minimise product inventory – the sooner a finished product is delivered, the sooner a sale can be made. Minimising the time that finished products are kept in storage will speed up income.

3. Material-efficient designs

a. Eliminate unnecessary product features – make sure that products have fewer non-essential features to prevent material waste. Question customer motivations for features that waste materials and increase manufacturing costs.

b. Are the right materials in the right place? Assess whether the right materials are being used for a product or component’s main purpose, always question whether material quantities can be reduced, work with experts for advice on a lean, efficient model.

4. Reduce waste

a. Minimise waste from manufacturing processes – ensure that product designs use as little raw material as possible, maximising material available from all manufacturing processes (cutting, machining, joining, etc) and that productivity is maximised from raw material stocks.

b. Reduce waste from packaging and transportation – overpackaging products, improperly packaged products and receiving goods/materials that have been overpackaged can all add to the waste burden and increase waste removal costs.

c. Reuse and repurpose waste – is it possible to make waste streams into saleable products or to repurpose waste for another use? 

Support for your business as costs rise

Increases in the cost of living and trading have meant many businesses have felt a squeeze in the last 12 months. On our support hub you'll find resources that could help to mitigate increasing costs. 

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of NatWest Group, as of this date and are subject to change without notice. Copyright © NatWest Group. All rights reserved.

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