This paper describes the current economic and regulatory drivers that are compelling manufacturers to improve management of their water, air, gas, electric and steam (WAGES) resources from within the plant. It also details a four-stage methodology that can:
a) Help manufacturers shift their persectives from treating WAGES resources as undiff erentiated overhead costs to managing them as “raw material” resources.
b) Create a strategic competitive advantage.
The Complexity of Energy Management
Manufacturers around the world have put forth commendable eff orts to reduce WAGES consumption. However, despite individual reduction eff orts, WAGES resources have become one of the most elusive and hard-to-manage costs in manufacturing, with high levels of cost variability and supply volatility. Manufacturers face the very real possibility that water, gas, fuel oil or electricity may not be available when they need them.
For example, less than one percent of the world’s water is available for human use; yet consumption is estimated to increase by 40 percent over the next 20 years. Meanwhile, world manufacturing energy consumption is projected to increase by 44 percent from 2006 to 2030, according to the U.S. Energy Information Administration. Yet, growth in electrical power generation will average just 1.1 percent per year from 2007 to 2035. These risks and uncertainties can wreak havoc on a company’s operations, ability to deliver and their bottom line. By better understanding and managing WAGES resource consumption across the company, manufacturers can better defend themselves against these threats.