Carbon Emissions Legislation Adds Another Reason to Reduce Malfunctions, Material Waste & Defects
As we’ve mentioned in previous posts, a carbon tax is coming (if not already here). Countries scattered throughout the world are imposing carbon emissions taxes, or implementing cap-and-trade programs to tackle greenhouse gas emissions.
Manufacturing will undoubtedly be the largest industrial sectors to feel the impact from carbon constraint. Perhaps more than any other sector, the cost of inputs directly impact the output – specifically the product produced, its price and quality. As states like California and elsewhere roll-out carbon emissions taxes or cap and trade programs, manufacturers will increasingly experience higher energy costs. For example, in California, the costs generated through cap and trade will increase electricity and gas costs; increase transportation costs; and prices for high energy inputs (such as metal and cement).
Yet even before the 1997 Kyoto Protocol, the landmark international agreement that provides the impetus to reduce greenhouse gas emissions, savvy manufacturers continually strived to develop efficient and reliable production systems that increased throughputs without increasing costs, thus improving the bottom line.
Interruptions or delays in any manufacturing process can directly impact the bottom line. Customer orders that are delayed or unfulfilled can lead to cancellations or compensation. Maintenance related errors and supply chain issues are the main reasons for these delays.
However, as carbon taxes are introduced, maintenance related production issues will add further costs. Unintended mistakes such as the miscalibration of equipment, or installing the wrong spare parts, can lead to scrap and rework. Rework requires reprocessing, which uses additional energy and can create further emissions.
Using CMMS for Optimized Profit and Reduced Carbon Emissions for Manufacturers
Manufacturers have always had incentives to reduce production malfunctions, material waste, and defects. Now carbon emissions legislation adds another. When companies inadvertently produce defects or waste, they throw away carbon emission costs that they’ve already paid for. Manufacturers lose their ability to offset price increases from a greenhouse gas tax and essentially double their carbon emissions.
A CMMS can help counter many of these new challenges by reducing the maintenance related errors and emergency repairs that impact production. Strict maintenance and inspection schedules ensure equipment issues are spotted and repaired before they occur. Regular servicing like lubrications or calibrations also ensure equipment is running in spec. Organizations are increasingly moving from the old reactive way of thinking to this more proactive approach. CMMS software is the perfect tool to help make that move. Moreover, by limiting the number of emergency breakdowns, you can reduce the amount of scrap and rework produced, thus limiting the costs associated with carbon taxes. Adhering to maintenance schedules also ensures equipment is operating as efficiently as possible. Consider the difference a service on your car can make to its fuel efficiency!
As a company builds its database and records more asset related information in the CMMS, the CMMS becomes an increasingly advantageous resource over time. The opportunities are enormous. It can also be used to help quantify the repair vs. replace decision so older, less energy efficient equipment is replaced on time.
Manufacturers have always faced multi-faceted processes related to manufacturing, sales, and distribution. Factoring in greenhouse gas emissions adds another dimension. A CMMS provides a valuable tool to not only track past maintenance and repairs on assets, but also expand to meet future challenges like carbon impact.
For information about Cap and Trade and Carbon Emissions:
Wikipedia does a good job at summarizing the components and provides a worldwide overview. The Institute for Local Government also describes the current framework within the USA.