Energy Efficiency as Industrial Management Practice: The Ford Production System and Institutionalizing Energy Efficiency 2006-01-0829

Industrial motor-driven systems consume more than 70% of global manufacturing electricity annually and offer one of the largest opportunities for energy savings. System optimization techniques through the application of existing, commercially available technologies and accepted engineering practices typically achieve energy savings of 20% or more for these systems across all industrial sectors. The optimization opportunities for steam systems are at least equal or greater.

Despite the potential benefits, energy savings from these industrial systems have remained largely unrealized by US industry. This paper presents the argument that unless energy efficiency is institutionalized, it will be viewed by corporate managers as something different than the effective and efficient use of labor and material resources. If this institutionalization does not occur, the potential benefits will never be achieved or sustained.

The same factors that make it so challenging to achieve and sustain energy efficiency in industrial motor-driven and steam systems (complexity, frequent changes in production processes and staff) apply to the production processes that they support. Yet production processes typically operate within a narrow band of acceptable performance. These processes are frequently incorporated into quality and environmental management systems (ISO, Six Sigma, others), which require measurement, documentation, and continuous improvement.

This paper will present the experience of Ford Motor Company in integrating energy efficiency into the Strategic Business Plan via the Ford Production System and other operating practices. Starting with an internal champion at Ford who is also a Six Sigma Black Belt, we will describe how building on several existing management structures (Ford Strategic Business Plan, Ford Production System, including Ford Total Productive Maintenance), and implementing actions using common operating practices (Total Value Management, Ford Best Practice Systems, and Ford Six Sigma) creates an environment that encourages a more energy efficient operation. First, the paper will explore how energy efficiency has been incorporated into the business plan and operational procedures. Next, we will give examples of how sharing best practices, procedures, and successful projects via these systems are resulting in measurable improvements. Then finally, a specific model for integrating compressed air system into Six Sigma will be described.