Monitoring and reducing energy use in the supply chain

  • 17-Jun-2013 02:19 EDT

Schneider Electric's John Boville (left), Market Segment Manager for installed base and automotive solutions, is based in Michigan and can be reached at Robb Dussault, the Offer Manager for Industrial Energy Management Solutions, is based in North Carolina and can be reached at

During the past few years, auto manufacturers have been building cars that use less fuel and emit fewer greenhouse gases when customers drive them. However, the global demand for energy is expected to double in the next 40 years, energy prices will continue to rise, regulatory and reporting demands are expected to become more stringent, and fossil fuel resources will continue to become increasingly scarce.

These constraints are driving the auto industry to find ways to improve the energy efficiency of the complete life cycle of each vehicle during all three of its main phases: manufacturing, driving, and recycling.

So it is not just about improving vehicle fuel economy but also optimizing energy use during the manufacturing and recycling phases. Auto manufacturers must work to increase vehicle life cycle energy efficiency to remain competitive, avoid pricing themselves out of the market, and meet ever-increasing consumer and regulatory demands for product and enterprise sustainability.

Calculating energy used for vehicle assembly

A 2010 research report by the U.S. Department of Energy's Argonne National Laboratory outlines research toward developing a model to calculate the energy used and carbon emissions of the part manufacturing and vehicle assembly (VMA) stage of the vehicle life cycle. According to this report, the objective of life cycle assessment (LCA) is to develop an environmental “picture” of product systems, one where life cycle burdens (LCBs)—such as energy, CO2 emissions, and raw materials—are quantified and evaluated over all stages. Hence, trade-offs between life cycle stages can be accounted for, resulting in more holistic assessments of product systems and often illuminating improvement opportunities.

For example, vehicles made lighter by substituting materials such as aluminum and composites for steel do indeed have higher fuel economy (operational stage), but at the same time, a part of that benefit is offset by the generally higher production energies of alternative materials (material production stage). While electric-drive vehicles use less energy during operation than their spark-ignited counterparts, the energy required to make constituent materials and assemble them into batteries may offset a major portion of the benefit.

This report provides two very important findings as the industry strives to improve the energy efficiency and sustainability of the VMA phase of the automotive life cycle:

1) The cumulative energy consumption and CO2 emissions to build a 1.7-ton vehicle total approximately 34,000 MJ and 2000 kg, respectively. The energy portion of this translates to 9444 kW·h of energy. If this energy were all electricity at, say, 5 cents per kW·h, it would cost $472 to build a vehicle. So a 10% energy savings per vehicle could save an average auto manufacturer $47 per vehicle; at the average production rate of 5 million cars per year, that's $236 million annually.

2) The report goes on to break this energy use down to the constituent major process parts of the vehicle manufacturing and assembly process (machining, painting, heating, welding compressed air, etc). This information will potentially help prioritize energy efficiency improvement activities to target the most energy-intensive process operations, thereby achieving the best ROI for a company’s energy improvement project capital.

While the above two points help underline the importance of automotive manufacturing energy efficiency and where to go first in the build processes to improve it, there is one key challenge. Gone are the days when all the process operations associated with building a vehicle are located in one facility or even, for that matter, within one company.

The data in the report show which processes need to be attacked to make the biggest differences in energy efficiency and sustainability. However, those processes are distributed across a supply chain spanning multiple plants, companies, and even countries.

Increased emphasis on sustainability

In addition to the monetary savings that will result from reducing the energy it takes to build a vehicle, manufacturers are also facing the need to measure, report, and ultimately reduce the carbon impact of their manufacturing operations.

In January 2012, the U.S. EPA released greenhouse gas (GHG) data collected under its GHG Reporting Program for the first time. The program collects data on individual facilities that directly emit 25,000 metric ton of carbon dioxide equivalent or more per year. The 2010 data included U.S. GHG emissions from large industrial facilities in nine industry groups and from suppliers of certain fossil fuels and industrial gases.

While most auto manufacturers realize the importance of calculating a vehicle’s life cycle cost and carbon footprint, the systems to do this today are still in their infancy.

In June 2011, the Automotive Industry Action Group (AIAG), a nonprofit association made up of professionals from a diverse group of automotive stakeholders, began rolling out its greenhouse gas emissions reporting tool, OHS-11. AIAG created a working group of Tier 1 suppliers and auto manufacturers to develop the standardized reporting tool and held a training session last year to assist in understanding how to properly complete the form. OHS-11, while still a manual approach, is a major step forward. It allows the major automotive manufacturers to "roll up" their energy use across their supply chain and to understand fully the carbon impact of their operations.

Anatomy of a sustainable, energy-efficient operation

In the face of these challenges and potential benefits, there is some good news. Today ISO 50001 provides an organizational standard to ensure energy efficiency is core to the DNA of any manufacturing organization. Energy dashboards can be implemented to provide enterprises with near real-time views of their energy use and carbon emissions. Supply-side energy-management techniques help organizations optimize the cost and carbon impact of the fuel they buy. Energy monitoring and management systems can be implemented to help organizations understand energy usage at the following levels: enterprise, plant, and process.

Best of all, these systems are networkable, both within a plant, an enterprise, and/or on a far wider basis via the Internet. A well thought-out and implemented enterprise and supply chain energy-management strategy is one that ensures by specification that all supply-chain partners use compatible approaches and systems. This will guarantee that energy use and carbon impact by enterprise, plant, and even by finished vehicle can be measured and optimized.

For example, if Company A manufactures wiper blades, Company B manufactures brake calipers, and Company C builds the finished vehicles—and they all have compatible systems to measure and understand energy use and carbon impact per product—then Company C can access the data of its major component suppliers and combine with their data to get an accurate picture of the energy use and carbon impact of manufacturing their vehicles. This data can then be used to drive and measure significant improvements in per-vehicle-manufacturing energy cost and sustainability across the supply chain.

Coming next time...

Solutions: we will take a look at how to execute an enterprise-wide energy management strategy including the role of supply-side and demand-side energy management, dashboards, and ISO50001.

The first article in this three-part series on supply chain energy management can be found at

John Boville and Robb Dussault of Schneider Electric wrote this article for AEI.

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