How to Save Money on Your Company's Energy Bill

As a business leader, what would you be willing to do in order to shave 10% off your company's annual energy bills? Would you ask a team of employees and operational experts to examine your facility from top to bottom? Would you allow them to devote a few days to studying energy-efficient enhancements?

You can empower employees to seek ways to conserve resources -- ideas that can be simple and nearly cost-free, or complex with long-term payback schedules. Called a Treasure Hunt at GE, it's a cost-effective way to analyze energy usage and identify opportunities for improvement, called energy kaizens. GE has found 650 million tons of carbon dioxide reduction opportunities company-wide by conducting over 300 internal Treasure Hunts across a wide variety of GE businesses, saving $150 million.

Based on a model originally developed by Toyota Motor Engineering & Manufacturing North America and later adapted for our own purposes, the following checklist outlines GE's Treasure Hunt process.

Step 1: Identify the Resource Streams

The Treasure Hunt process begins by selecting a project leader. Accompanied by someone who has a deep understanding of site operations, the project leader will walk through the facility to identify all resource streams in use, ranging from water and steam to compressed air and electricity.

The leader will then map each resource stream. How does natural gas, for example, come into the facility? How is it metered? How is it consumed?

With that information in hand, the leader calculates spending on each resource type to create a baseline of the facility's annual resource usage and expenses. A generally accepted goal might be reducing resource consumption and spending by 10 percent annually, with a target payback of three-and-a-half years or less. For companies that have old facilities or those that haven't made resource consumption a priority, it's possible that annual savings could be higher.

Step 2: Assemble a Team

Based on the resource streams used in the facility, the project leader can determine the number of people who need to be involved in the Treasure Hunt.

Participants should include at least one expert on each resource in use: Motors; water and/or steam; electricity; lighting; and heating, ventilation and air conditioning (HVAC), to name a few. If the company doesn't have in-house experts, it should consider bringing in third parties. In addition, it's important to invite representatives of local energy providers, such as public utilities and other vendors. Not only do they understand resource conservation, but they may be able to provide information on government incentives for making specific investments in, for example, new lighting.

It may be helpful to have a Lean Six Sigma expert who can look critically at processes and suggest ways to enhance efficiencies, too.

Finally, senior management should participate in the Treasure Hunt. If that's not possible, a company leader such as the CFO should kick off the event in order to demonstrate its importance to all employees.

Step 3: Event Planning

When should the event take place? The project team observes the facility at three phases over two-and-a-half days: Fully at rest, at start up, and in full production or full usage. A typical Treasure Hunt will kick off on a Sunday afternoon when the plant is shut down. The process will continue the next day as activity ramps up into full production mode.

Even in facilities that operate 24 hours a day, there may be discrete operations at certain periods. For example, times when some production lines are shut down for maintenance could be the equivalent of "sleep mode."

Step 4: Identify Kaizens

Each team is assigned to study one of the resources used in the facility from beginning to end. Over the course of the Treasure Hunt, it's empowered to track down waste and suggest improvements. Ideally, teams will collaborate to examine the use of resources and brainstorm about possible process or technological improvements.

Some commonly identified energy kaizens include the following:

Compressed air: Patch leaks; implement dust collector optimization
Lighting: Upgrade obsolete products to more efficient fixtures and bulbs; remove excess fixtures; install photocells and motion sensors.
HVAC: Automate systems using an energy management system.
Motors: Pre-plan shut down times to avoid continuous operation when unnecessary.
Water: Stop leaks; use on-site sources of water or implement rainwater collection system to reduce reliance on municipal water supplies, where practical.

Step 5: Analyze the Results and Present Final Report to Management

After aggregating all of the suggestions, each team should identify the top three to five projects that will result in the greatest return on investment. To help prioritize projects, teams should determine in advance the amount of funding available for improvements and the expected "hurdle" for these investments.

Teams will probably choose a combination of projects that are easy and nearly cost-free to implement, and those that require significant investments of time and money but are likely to offer a large payback in a reasonable period of time. There are some cases where a new motor or more efficient lighting will be the best solution. In other situations, a simple change to an entrenched process might yield major savings.

On the final day of the Treasure Hunt, team leaders present a final report, complete with project recommendations, to senior management. After that, it will likely be necessary to conduct a formal cost/benefit analysis of potential savings opportunities. Inevitably, some projects will be completed immediately, some will require future budget allocations, some will require a deeper assessment of the costs involved, and some will drop off the list entirely for various reasons.

Karen Dougherty is Access GE Customer Growth & Access GE Leader, and Howard Mikytuck is Access GE Lean Six Sigma Team Leader, GE Capital, Americas.