QiSOFT Blog - Reducing Energy Costs

18 November, 2022

Why Improving your Manufacturing Quality Can Reduce Your Energy Costs

Introduction

We all know that sustainability and net zero are strategic goals for most businesses nowadays. Taking steps to reduce your carbon footprint and conserve energy is essential for the environment. Plus, with energy costs rising globally, it’s more important than ever to become more energy-efficient.

You may not have thought that improving quality in your manufacturing company can help you with those same goals. In fact, quality and sustainability often go hand-in-hand. Many people think of energy costs as a necessary overhead expense for their manufacturing company. But did you know there are ways to reduce your energy costs just by improving the quality of your products? 

In this article, we’ll explore how improving product quality can lead to lower energy costs for your manufacturing company.

The Four Types of Quality Costs

There are four main types of quality costs: prevention, appraisal, internal failure, and external failure. 

Prevention costs are those associated with proactive measures taken to prevent defects from occurring in the first place. These can include things like process improvement and design reviews, as well as training and auditing.

By contrast, appraisal costs are incurred when activities are undertaken to identify defects after they have already occurred. The goal of these activities is to assess the extent of the damage and take corrective action to address the problem. Typically, this manifests in inspection and recording activities.

Internal failure costs arise when defective parts are discovered before delivery to a customer. To remedy the situation, the manufacturer must take steps to correct the defects. This may involve reworking the part, replacing it with a new one, or scrapping it entirely.

External failure costs occur when the customer receives defective parts. This can include processing customer complaints, handling customer returns, and processing warranty claims or product recalls. In many cases, these costs can be significant and harm a company’s bottom line.

Usually, each of those costs is calculated in terms of the materials and labor time involved. But manufacturing companies rarely consider the energy costs involved in those activities. Poor quality leads to increased energy consumption due to rework, scrap, and downtime. As a result, incorporating energy costs into quality cost calculations can give a more accurate picture of the true costs of poor quality.

So, it’s clear that manufacturing companies can lower their energy costs by improving quality. But what else can they do?

5 Ways for Manufacturing Companies to Reduce their Energy Costs

Implement a Continuous Improvement Program

A continuous improvement program constantly looks for ways to improve efficiency and quality, usually within manufacturing or business processes. As a result, many companies adopt CI to reduce costs and increase profits. However, one of the less apparent benefits of CI is that it can also help to reduce energy costs. By streamlining processes and eliminating waste, CI can help companies to use energy more efficiently. In addition, CI often involves engaging employees in finding ways to improve energy efficiency, which can lead to behavioral changes that further reduce energy consumption. 

Conduct Energy Audits

If you’re serious about reducing energy consumption in your manufacturing company, consider appointing an energy auditor. By hiring an energy auditor, a company can get an unbiased, professional assessment of its energy use. The auditor will evaluate everything from the lighting and HVAC systems to the production process and recommend improvements. In many cases, the auditor will also identify sources of wasted energy that the company was unaware of. As a result, conducting an energy audit is one of the most effective ways to reduce energy costs. Not only will it identify areas where improvements can be made, but it will also provide valuable insights into the company’s overall energy use.

Improve Your Company’s Overall Quality Performance

As we mentioned above, improving quality performance can have a direct impact on reducing energy consumption. When manufacturing products, companies use a lot of energy to heat, cool, and operate the equipment. But when products are made with lower quality, more power is needed to fix the mistakes, which requires even more heating, cooling, and operating of equipment. So, by improving quality performance, companies can actually reduce their energy consumption. In other words, it pays to make products right the first time. Not only will it save on energy costs, but it will also save on material costs and improve customer satisfaction.

Establish process ownership 

Any manufacturing company looking to reduce energy consumption should consider establishing process ownership by creating energy teams for each department. This approach can directly and immediately impact reducing energy consumption, as each team will be responsible for monitoring and managing their department’s energy use. The energy teams can track energy consumption trends, identify opportunities for improvement, and implement strategies to reduce energy consumption. In addition, the teams can raise awareness of energy conservation among employees and provide training on best practices. By taking a proactive approach to managing energy consumption, manufacturing companies can significantly reduce their energy use.

Educate Your Employees on Energy Efficiency

By raising awareness of simple things like turning off lights and appliances when they’re not in use, employees can make a big difference in reducing energy consumption. In addition, employees can be given tips on how to conserve energy while performing their tasks. For example, they might be advised to limit the use of heat-generating equipment during peak demand periods. As a result, businesses can lower their energy consumption and save money. Additionally, employees can be encouraged to adopt energy-saving practices in their own homes, which can have a positive ripple effect on the company’s overall energy consumption. In short, educating employees on energy efficiency is a smart business move that can help to reduce energy consumption and costs.

Summary

So, there you have it—improving quality can help you save energy (and money). Not to mention, it’s better for the environment too. So, what are you waiting for? Start making quality a priority in your manufacturing company today and see how much your energy consumption drops.

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QiS Metrics

Measurable and sustainable improvements resulting in tangible financial and operational benefits

25%
25%
Reduction in waste, downgrade and rework
30%
30%
Labour savings across quality, production and administration teams
15%
15%
Reduction in the cost of internal and external failure

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