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CHAPTER 1
Using Energy Price Shock as an Opportunity
The manufacturing industry is in a tight spot: Drastically higher energy prices are driving up costs. But with the right measures, industrial manufacturing companies can cut their energy consumption in half and drastically reduce costs. How can these potential energy savings be identified? The answer: With the modern tools of digitalization. Your company probably already collects all the necessary data but needs to analyze it to maximize future energy savings in manufacturing in every work step.
One thing is sure: Regardless of further political developments, the days of low energy prices are a thing of the past. This places pressure on the industry. It must rethink and switch its production to an energy-saving mode for economic necessity and sustainability. So, it is time to make lemonade out of lemons.
However, more than conventional efficiency measures or superficial energy audits are needed to exploit the enormous potential energy savings on the factory floor. A deep insight into the entire value chain is required, including upstream and downstream processes in the supply chain. In the end, we must answer the following questions: How much energy does the production of one machine cost? Which processes, components, or preliminary products are the biggest energy guzzlers? And what energy-saving alternatives are there? This white paper discusses how your company can find the right answers to these questions.
Energy prices are exploding
Compared to the rest of Europe, electricity and gas prices in Germany are very high. According to the Statista statistics portal, for instance, the average industrial electricity price, including electricity tax, rose from 21.38 cents per kilowatt hour (2021) to 26.64 cents per kilowatt hour (2022). By comparison, in 2000, one kilowatt hour of industrial electricity cost an average of 6.05 cents. The development of gas prices was even more extreme: In 2022, the average price for industrial customers was 6.76 cents per kilowatt hour, compared to 2.95 cents per kilowatt hour just a year earlier.
CHAPTER 2
Identifying and Eliminating Cost Drivers
In the wake of the recent energy price explosion, many businesses have already implemented cost-cutting measures, which have led to initial successes. In the end, however, this only solved obvious problems that could have been addressed years earlier. These include installing LED lighting, insulating factory buildings, and/or replacing outdated machinery and heating systems.
The implemented measures are sensible and correct but are limited in scope. The disadvantage of this reactive approach is the current state is evaluated using existing measurement methods and with a static solution implemented. For example, energy consumption drops if a company installs a new conveyor belt with a more efficient drive. However, minor changes in the value chain might have resulted in more significant energy savings. Installing particularly heavy or fragile components can strongly affect energy consumption, depending on which point in the production process they are installed. Companies must take an integrated and proactive approach to identify total savings potential.
A sense of crisis in Europe’s boardrooms
91% of businesses believe that “the challenges facing our company have never been as complex as they are today.” In particular, exploding energy costs are seen as the greatest challenge. Eight out of ten businesses believe their economic prospects suffer due to the high price level.Source: Aras Survey 2023: Europe’s Industry in Transition
The basis for a significant energy audit, which can provide a baseline for optimization measures, is only given when all energy consumers in the entire process chain are known and possible interdependencies are identified. This transparency exposes energy-hungry loops in the process chain and hidden cost drivers—right down to seemingly minor details such as the plastic packaging of the end product.
Because gas and electricity were relatively cheap in the past, energy costs were often neglected and only roughly allocated to production. Businesses instead mainly focused on material costs. However, this approach is no longer economically viable in times of high energy prices. All future relevant costs, processes, materials, and work steps must be analyzed and optimized.
Industry on the back burner
According to the German Federal Network Agency, the German industry reduced its gas consumption by 15% in 2022 compared to the annual average of the previous four years. Households and commercial enterprises saved 12%. Notable: From October to December, year-on-year consumption in the industry was down 23% and in households and commerce 21%. Overall, electricity consumption in 2022 fell by 4% to 484.2 TWh (2021: 504.5 TWh).
CHAPTER 3
Advantage PLM: Real-Time Configuration Instead of Spreadsheets
Classic spreadsheet programs are not suitable for analyzing product data. Given the sheer volume of information collected, ideally automatically and in real-time, companies need a tool that brings clarity and order to this data chaos. This is where product lifecycle management (PLM) comes into its own. PLM provides links to the individual components, the associated supply chains, the machines involved, and the end product configuration along the entire value and lifecycle chain.
The product is no longer viewed as a closed unit at the end of a process chain but is broken down into individual components along the various phases of its creation and use. In addition, PLM also permits the analysis of related topics such as sustainability or social responsibility. Unlike other tools, PLM links production and operations data with upstream and downstream processes. This aspect is becoming increasingly important, as companies depend on low-cost energy suppliers but are also under pressure from business partners and legislators to use green energy sources and consider their actions’ social impact.
The great advantage of modern PLM solutions is that they offer all the functionalities for creating and visualizing a digital twin configuration. This digital representation of a real system links the individual components, associated services, equipment, and process chains. The data relating to the product is kept up to date via a digital thread throughout the entire lifecycle, from production to recycling. Changes in the course of repairs can be entered the same way as energy consumption during use.
Digital models permit a look at all combinations at the push of a button
The planning options of digital models are particularly interesting in terms of rising energy prices. PLM can be used to optimize product design specifically with regard to efficiency. For example, if the components supplied for a product must be stored or installed within a specific temperature range. A manual evaluation of possible combinations of products with dozens or even hundreds of individual parts is too time-consuming. Digital models can look at many possible combinations and examine mutual dependencies. For instance, ball bearings from supplier A, despite a higher price, are more suitable because they are easier to handle in the manufacturing process than ball bearings from supplier B. Since the digital model builds on existing engineering tools and includes all data sources, the simulation functions permit a realistic view.
Digital models are ideally suited for optimizing existing and future products and process chains in terms of energy use. Virtual product development with different materials, processes, or even used machines reduces costs and time-to-market. It can spark a surge of creativity in the R&D department, as previously complex test procedures are easier to implement, encouraging experimentation.
In contrast to a static table tool, which supports a backward-looking view, PLM also looks ahead: Huge mountains of data are meaningfully structured and analyzed in dynamically adaptable modeling. In the case of complex products with many different components, enormous efficiency potential can be tapped that cannot be uncovered using traditional methods.
Energy crisis stands in the way of sustainability
70% of European businesses state that they are under tremendous pressure to operate sustainably. Four out of ten feel that the energy crisis slows this process down, and three out of ten say that this is due to a lack of human resources or insufficiently prepared data.Source: Aras Survey 2023: Europe’s Industry in Transition
The potential is enormous: businesses can cut their current energy consumption in half if they take a structured and proactive approach.
CHAPTER 4
Aras Innovator: Your Solution for Tomorrow’s Energy World
Yesterday’s tools are no longer suitable for identifying energy savings in manufacturing and the efficiency potential required for a green transformation. Modern PLM systems like Aras Innovator are different. They support businesses in several respects: they derive strategically important information from the mountains of data that have already been collected but usually go unused. They also offer the possibility of tapping into previously unused data. Thanks to the diverse simulation and projection methods, PLM becomes a vital tool for countering the risks of further energy price increases and the requirements of stricter legal regulations.
This is because increased efficiency also minimizes environmental impact. This impact is largely already determined in the design phase. However, including the life cycle assessment in the early design phases can significantly impact a design’s sustainability. PLM is, therefore, a vital tool on the road to becoming a carbon-free company—including tracking sustainability throughout the supply chain.
PLM paves the way for sustainable business practices
90% of businesses using a PLM software are already prepared for the new ESG requirements (environment, social, governance).Source: Aras Survey 2023: Europe’s Industry in Transition