Audits Are a First Step to Cutting Energy Costs

Chances are if you’re involved in the cold chain, you’re looking for ways to better manage energy costs. In the March/April 2014 issue of COLD FACTS, published by the Global Cold Chain Alliance, the cover story “Best Practices Spark Industry Growth” addresses the importance of conducting audits as a way to cut energy costs. Following is an excerpt from the article:

Even if a company has a culture of continuous improvement, there are times an objective third party can help find cost-savings opportunities, says Anthony M. Leo, CEO and President of Warehousing Group for RLS Logistics.

“Energy is our second highest operating expense category, second only to labor, so after talking with a representative of Cascade Energy, I hired them to perform an audit for one of our warehouses,” he says. Although informal audits had been conducted by different vendors previously, this was the first formal energy audit Leo’s company undertook and he was surprised at the thoroughness of the process.

“They spent a week at the facility and looked at every nut and bolt,” he says. “Everything from battery chargers to lighting was examined.”

The audit resulted in a list of about 60 action items to reduce energy costs. “This list seemed overwhelming at first, but we were able to sort and prioritize by implementation cost and energy impact,” explains Leo. He adds that key contractors and employees were involved as the energy consultant presented the report to make sure everyone understood why some processes were changing.

“We did change our preventive maintenance schedules for equipment to find and repair potential energy losses before they become major and made adjustments to pressure settings, but the most significant change came with the increased awareness of energy costs throughout the company,” says Leo. An audit at a second facility also created a lengthy list of savings opportunities and supported the addition of energy to the list of key areas on which employee incentives are based.

The company’s “gainshare” program is based on meeting targets in the areas of safety, housekeeping, accuracy, productivity and energy. Employees are paid quarterly gainshares equal to one percent of their gross pay for each goal met for the quarter.

Because the company has incorporated energy awareness into the corporate culture, behaviors that contribute to energy savings are second nature, says Leo. “Everyone has always known a freezer door should be kept closed, but now keeping the door closed is automatic because people understand the savings will benefit them as well as the company and the customer.”

Even though energy use improvement is an ongoing effort, the time and expense of the program is worth it, says Leo. The Newfield, N.J., facility that was the site of the first audit saw an energy savings of five percent in the first year.

“The real savings for the New Jersey facility was in maintenance costs due to revised maintenance schedules,” he points out. “The first year, our refrigeration repair costs went up between 10 and 15 percent, then dropped to 40 or 50 percent below average the next year.” Savings at the Pittstown, Pa., facility were dramatic where “we experienced a 23 percent savings in energy costs the first year.”

The return on investment for the audits was realized in nine months for the New Jersey facility and four months for the Pennsylvania warehouse.

Even if a company doesn’t undertake a full energy audit, there are savings to be found with simple changes, as C. Gary Jones, Managing Director of Iowa Cold Storage learned in 2013.

“We changed all of our lighting to light-emitting diode (LED) lamps,” he says. “The savings in energy costs for lighting was about 14 percent.”

 

Convert existing space for more flexibility

Space in a warehouse is a constant challenge, points out Jones. “We’ve been operating at 95 percent capacity for several years and have just added 45,000 square feet to our facility,” he says. In addition to adding space, Jones’ company created five convertible rooms when the need for multiple rooms that can be converted from cooler to freezer environments was recognized when a customer expanded from 2,000 pallets in a cooler to 5,000 pallets in a combination of cooler and freezer.

“Convertible rooms can go from 10 degrees below zero to 35 degrees within one to two weeks,” says Michael Smith, Director of Project Development at Stellar. More owners are opting for convertible rooms because it provides the flexibility to meet changing customer needs easily, he adds.

Convertible rooms are not the only change cold facility storage owners are making with new construction or renovation of existing structures, says Jason Duff, Vice President of Design Engineering at Stellar. New facilities rely on more vertical space as warehouses are built on smaller footprints. Higher pile storage comes with new challenges, such as the need for specialized equipment to reach the higher levels and cameras to assist forklift operators with accurate put-away at the higher levels, he says. The cost of this equipment, however, can be offset by the savings in real estate.

Meanwhile, fire safety systems are also changing to reflect changes in cold storage facilities, says Duff. Dry, deluge fire protection systems that are ceiling-only installations eliminate in-rack sprinkler systems and enable more flexible storage array design. “The system can protect racks of up to 50 feet in height in a 55-foot high building.”

In an effort to improve productivity, facility owners are moving away from centralized battery charing rooms and utilizing fast charging technology, says Duff.

“Retrofitting an existing building with multiple charging stations stations is not difficult and it frees up the space that the centralized charging system occupied for other functions.

For more information on the Global Cold Chain Alliance, visit www.GCCA.org.

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