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Procedia CIRP 57 (2016) 758 763

49th CIRP Conference on Manufacturing Systems (CIRP-CMS 2016)

Implementing Key Performance Indicators for Energy Efficiency in

Manufacturing
Christopher Schmidtab*, Wen Liac, Sebastian Thiedeab, Bernard Kornfeldac, Sami Karaac, Christoph
Herrmannab
a
Joint German-Australian Research Group Sustainable Manufacturing and Life Cycle Engineering,www.sustainable-manufacturing.com
b
Technische Universitt Braunschweig, Institute of Machine Tools and Production Technology, Chair of Sustainable Manufacturing and Life Cycle Engineering,
Langer Kamp 19b, 38106 Braunschweig, Germany
c
Sustainable Manufacturing and Life Cycle Engineering Research Group, School of Mechanical and Manufacturing Engineering, The University of New South
Wales, Sydney, Australia

* Corresponding author. Tel.: +49 531/391-7169; fax: +49 531/391-5842. E-mail address: christopher.schmidt@tu-braunschweig.de

Abstract

Energy is an important input factor in todays manufacturing and measuring the efficiency of energy employment is essential for companies to
meet ecological and economical goals. Despite the recent development in both academia and industry, there are multiple definitions and key
performance indicators (KPIs) proposed which are confusing to use and thus lack of broad application. This paper proposes a generalized
calculation methodology with a set of templates for measuring the energy efficiency of manufacturing activities from factory level to process
and product level. Owing to the recent trend of implementing energy efficiency measures as well as on-site energy generation from renewable
resources, new KPIs have been developed to quantify the benefits of those applications. The proposed KPIs and their development process are
demonstrated with a case study of a pharmaceutical manufacturer in Australia.
2016
2015TheTheAuthors.
Authors. Published
Published by Elsevier
by Elsevier B.V.is an open access article under the CC BY-NC-ND license
B.V. This
Peer-review under responsibility of Scientific committee of the 49th CIRP Conference on Manufacturing Systems (CIRP-CMS 2016).
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the scientific committee of the 49th CIRP Conference on Manufacturing Systems
Keywords: Key Performance Indicators; Energy Efficiency in Manufacturing; Renewable Energy

1. Introduction the benefits of such energy efficiency measures. Moreover,

they lay the foundation for a continuous improvement process
The United Nations Framework Convention on Climate as part of energy management and are, consequently, an
Change has recently set ambitious targets for slowing down enabler for further energy efficiency measures.
global warming [1]. Being responsible for a significant share Hence, a methodology for the development of energy
of CO2eq emissions [2], the manufacturing sector needs to efficiency related KPIs with high significance has been
foster a sustainable development. In this regard not only the developed. Specific attention is given to the exploration of
direct emissions from production are of interest but especially energy efficiency KPIs for on-site energy generation [5].
the indirect emissions which are related to the companies Beforehand, selected background information about on-site
energy demand. energy generation facilities and KPIs for sustainability
Against this background, companies pursue various energy assessment is provided.
efficiency measures such as retrofitting variable speed drives The application of the methodology is exemplarily
and energy efficient components, installing energy recovery employed in a case study at a manufacturing company of
systems and auto-switch-off devices etc. [3]. On-site energy pharmaceutical goods, which features several on-site energy
generation facilities are another important option to reduce the generation facilities. A selection of company-specific KPIs is
environmental impact of a manufacturing company [4]. Key presented to demonstrate the potentials for KPI application in
performance indicators (KPI) are required to assess and track plant management.

2212-8271 2016 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the scientific committee of the 49th CIRP Conference on Manufacturing Systems
doi:10.1016/j.procir.2016.11.131
 Christopher Schmidt et al. / Procedia CIRP 57 (2016) 758 763 759

2. Background 2.2. KPIs for Sustainability Assessment

2.1. On-site Energy Generation Traditional KPIs in manufacturing generally emphasize

criteria related to cost, time, and quality. Further supplements
A growing number of manufacturing firms installs added dimensions like delivery time, safety, and risk
facilities to generate their own energy from renewable assessment [e.g. 12-14]. With increasing awareness for
resources on-site. Goals are to become independent from energy-related costs as well as environmental impacts,
energy prices and suppliers, to increase supply safety in companies focus more and more on indicators measuring their
emerging countries, and to reduce environmental impacts energy efficiency in particular. Goals are the reduction of
from production. Various systems for on-site energy product or factory carbon footprints and the identification of
generation can be distinguished which differ in availability companywide improvement potentials to reduce energy losses
and the provided form of energy (see Fig. 1). and costs [15].
KPIs for the assessment of energy efficiency have at first
been reviewed and discussed by Patterson. The focus is on
(physical-) thermodynamic and economic indicators with
respect to their applicability at the policy level [16]. Tanaka
also addresses energy efficiency performance measures for
policy but directly addresses the industry sector. KPIs such as
absolute energy consumption, energy intensity, diffusion of
specific energy-saving technology, and thermal efficiency are
evaluated in regards of their reliability, feasibility, and
verifiability [17]. Bunse et al. focus on energy efficiency in
manufacturing and specifically on the integration of efficiency
metrics in production management. It is stated that a low
status of energy management and, consequently, lacking data
for efficiency measure payback calculations are a barrier to
energy efficiency. Energy efficiency KPIs and benchmarking
systems are identified as industry needs for future research
[18]. The importance of benchmarking KPIs for monitoring
the performance and deriving improvement potentials is
emphasized by Lindberg et al. who recommend to identify
process signals that are strongest correlated with the KPI for
process improvements. In addition to energy KPIs, further
indicators as for raw material, operations, equipment etc. are
considered [19]. May et al. have the objective to support
companies in the development of energy-based performance
Fig. 1: On-site energy generation equipment; compiled based on [6-10] indicators to overcome identified gaps such as difficulties in
benchmarking or the lack of guidelines and well-developed
Notably, locally generated power provides the opportunity energy management tools. The proposed 7-step method [20] is
to meet overriding goals from different areas. As an example, on the one hand comprehensive but on the other hand very
generating electricity by means of photovoltaic panels does complex. This might be a barrier to implementation especially
not only reduce the companys CO2 emissions, but also the in smaller companies.
energy intake from the grid. In return, this can result in cost- It is obvious that the implementation of suitable KPIs for
savings from a financial perspective. measuring energy efficiency is indispensable. However, KPIs
The amount of energy produced on-site needs to be need to be adjusted to company structures and manufacturing
recorded and examined in order to carefully balance it with conditions to be most effective. The successful application of
the power acquired from the grid. Influencing factors on this a KPI depends on its continuous measurability. Furthermore,
ratio and the respective supply strategy can be the grid data accuracy together with its availability in a timely manner
electricity mix and related CO2 emissions, the costs for is also important to calculate indicators on a regular basis. In
electricity from the grid versus compensation for electricity order to compare current and target state, every KPI needs to
fed into the grid, or the grid stability [11]. be unambiguous regarding its expressiveness and should be
Measuring the performance of on-site energy generation assigned to a certain person or department responsible for
requires specific assessment methods. As an example, an reporting to higher management levels. Therefore, a
assessment for cogeneration should reflect the energy generalized approach to categorize KPIs and to systematically
efficiency improvement on the one hand but also represent the develop KPIs is required.
optimum balance between on-site power generation and
purchase from the utility on the other hand. Moreover, the
adaption to demand changes from production should be
reflected.
760 Christopher Schmidt et al. / Procedia CIRP 57 (2016) 758 763

3. Development of KPIs for Energy Efficiency Assessment for the different management and factory levels, the KPIs
have to suit these levels. Four different levels (factory,
The proposed methodology for development of suitable process line, machine, product) should be distinguished
energy efficiency KPIs is characterized by two parallel during the design process. KPIs on factory level are
processes. As visualized in Figure 2, both processes interact recommended in particular to gain a holistic view, including
with each other during the entire development period. The major interactions between departments, total energy
design process focuses on the creation of new indicators by consumption and related expenses or the overall performance.
following a predefined series of necessary steps. In contrast, indicators on product or machine level enable a
Simultaneously, the prevailing data souring strategy needs to more detailed assessment of the energy consumption and
be analyzed with regards to the availability, collection and costs per manufacturing step. In addition, the evaluation on
storage of data required to run the KPI system most process line level provides the opportunity to compare similar
effectively. The following sub-sections focus on the design processes and adjust the on-site power plant together with the
process and broach the issue of their calculation and production program. The interactions between these different
validation. The data sourcing process is exemplarily levels should generally be considered during KPI
illustrated in the subsequent industrial case study. development. To facilitate the KPI development process, a set
of templates for five KPI types is provided. The templates can
easily be adapted to suit the needs of individual companies.
Their calculation is described in detail in sub-section 3.2.
x Type 1: Energy [] per []
x Type 2: Site energy []
x Type 3: On-site energy efficiency or efficiency increase
x Type 4: Improvement or savings of energy []
x Type 5: Total value of energy []

Fig. 2: Processes for KPI development To close the loop towards the definition of strategic goals
in the first step of the design process, the last step focuses on
3.1. Design process for key performance indicators the determination of target values for the newly developed
KPIs. This enables company management to effectively track
As a KPI system is in general supposed to track a results of implemented energy efficiency measures.
companys performance in the respective area of focus.
Hence, the first step contains the analysis of the super ordinate 3.2. Templates for the generic calculation of KPIs
company strategy and goals. This is the basis for the
derivation of detailed objectives with a focus on energy TYPE 1 KPIs describe energy costs, consumption or share
efficiency which motivate and justify the KPI system. related to a specific quantity. Depending on the level of detail,
In a next step, processes and more importantly the relevant this could refer to a single unit and product or machine,
equipment in regards of energy efficiency have to be process line, and so on. At this point, it has to be clarified that
identified. This includes on the one hand the manufacturing energy share is defined as the respective amount of energy
equipment on the energy demand side. Prioritization strategies provided per source, such as electricity from the grid, natural
such as the application of energy portfolios [21] should be gas or solar power to state only some of them. In brief, this
employed to focus on the most relevant energy demanding method facilitates the establishment of various KPIs on
processes. On the other hand, the supply side requires careful different management levels along with the required
consideration. This includes all forms of energy acquired from resolution. After choosing the correct formula for the
the grid and also the companys energy generation facilities developed indicator, a pre-selection of the required
that are located on-site. information input has to take place before performing the
In order to successfully create new KPIs, it is crucial to calculation properly. Therefore, several alternatives are
analyze and understand the underlying cause and effect provided to pick the matching calculation path as shown in
relationships as well as interdependencies between processes, Figure 3, according to the companys data availability and
equipment, and energy efficiency. Once these are fully measuring instruments installed.
understood, concepts for monitoring and tracking energy TYPE 2 KPIs (see Fig. 4) can be established by directly
efficiency strategies and measures can be developed. As part extracting data from monthly bills at best. As long as this path
of this step, measured variables need to be defined which is used for calculating overall energy costs on site level, the
represent key parameters and reflect the cause and effect invoices values solely need to be summed up. In general, this
relations. At this point, a close link to the data sourcing indicator aims at measuring overall energy costs,
process is important because data availability and consumptions, shares and CO2 emissions from a holistic point
measurability for such parameters are important prerequisites of view. Thus, it is mainly designed to support top
for the following step. management in running and aligning the business operations
On the basis of these preliminary assessments, the actual in a sustainable way. Moreover, a rough calculation and
KPI development can be performed. As the super ordinate multiplication of the energy peak demand and its related peak
company strategy has to be broken down to hierarchical goals prices helps to estimate potential cost savings.
 Christopher Schmidt et al. / Procedia CIRP 57 (2016) 758 763 761

TYPE 3 KPIs focus on the efficiency of equipment

installed. Therefore, the produced energy output is divided by
the necessary input, mostly in forms of natural gas and/or
electricity from the national grid. In general, it would be most
significant if measured on a daily basis. Especially when
taking a closer look at trigeneration plants, the consideration
of conversion factors is crucial for a valid calculation of its
efficiency. Against this background, defining a target unit is
essential, e.g. in Gigajoule, so that each term of the equation
can be converted by using the appropriate multiplier or
conversion factor respectively. As shown in Figure 6,
enhancing efficiencies is of interest particularly for purpose-
built on-site energy generation systems. The applicable
generic formula rests upon a quotient consisting of the value
from a current time slot in the numerator and the
corresponding period from a previous month or year in the
denominator. Moreover, both values of the quotient can be
calculated in relation to a basic parameter. In order to get the
Fig. 3: Calculation method KPI Type 1 accurate percentage value, the quotients result needs to be
subtracted from the figure one before being multiplied by 100.
Depending on the outcomes positive or negative algebraic
sign, an efficiency increase or decrease is indicated
accordingly. In line with superior environmental objectives,
this KPI can be implemented on factory level or on machine
level to reflect the efficiency.

Fig. 4: Calculation method KPI Type 2

Fig. 6: Calculation method KPI Type 3
As already mentioned, this generic calculation aims at a
holistic evaluation on site level. In this context, taking a closer TYPE 4 KPIs (see Figure 7) describe the improvement or
look at an interrelated method is worthwhile to examine the savings of energy costs, consumption or the equivalent share.
ratio of energy produced locally versus power obtained from To quantify advancements due to local power generation, a
the grid. To calculate this indicator, the respective values of comparison between values from the current period to the
both contributions are required first. Subsequently, each share previous period is drawn. This KPI type might be of
is divided by the total sum of self-produced and purchased importance for operational management in particular to
energy as depicted in Figure 5. This indicators purpose is determine energy savings in line with the manufacturing
primarily to highlight the proportions of energy acquired and demand on a daily or weekly basis. To display cost and
generated on-site. consumption savings on process line or factory level with a
new KPI, the second formula provides the opportunity to
compare the post-installation energy usage with the so-called
baseline usage. To determine the baseline, historic data is
helpful to assess the original energy demand before the
implementation of additional on-site power plants took place.
The parameter adjustments might have to be included into
the calculation to represent further impacts such as higher
manufacturing load or varying operating hours.
Fig. 5: Interrelated calculation method KPI Type 2
762 Christopher Schmidt et al. / Procedia CIRP 57 (2016) 758 763

TYPE 5 KPIs (see Figure 8) reflect the fact that companies historical data could be helpful as an initial reference. In this
might have several systems implemented to self-generate context, the examination of the indicators reliability is vital
power. This indicator type summarizes costs, consumptions or to present the measured performance correctly. The reliability
the applications contribution to display the respective amount takes into consideration the necessary assumptions which
of energy generated on-site. It is mainly designed to serve on have to be made while creating the KPI. In general, an
factory and process line level in order to align the daily indicator can be regarded as reliable if only a few minor
energy mixture according to internal and external influences. assumptions are necessary in advance. This also accounts for
As an example, changing weather conditions could result in data and further information provided for the chosen
obtaining more electricity from photovoltaic panels while the computational logic. Another important aspect is the
intake from the national grid is reduced at the same time. indicators improvement orientation. Consequently, the
validation process should analyze the indicators ability to
easily deduce potential improvement measures along with
related fields of action to enhance the companys performance
and energy efficiency on various levels. Last, a final check is
conducted based on major principles outlined in sub-section
3.1. Especially the KPIs alignment with specific or overall
objectives is of interest to verify if target achievement is
realistic. Admittedly, no clear guidelines can be provided for
these checks due to the multitude of derivable KPIs from the
templates.

4. Industrial Case Study

Fig. 7: Calculation method KPI Type 4 The methodology of developing and employing a KPI
system has been conducted for a company from the healthcare
sector. Figure 10 illustrates the principal process chain with
demanded energy inputs and the TBS system. Characteristic
for the company is their on-site trigeneration system with two
1 MW natural gas-driven electric generators that provide
power for the whole manufacturing plant. Further locally
produced electricity derives from photovoltaic panels
supplying the headquarter building.

Fig. 8: Calculation method Type 5

3.3. Validation of generic calculation

Before implementing developed KPIs, their accuracy has

to be validated first. Thus, final plausibility checks guarantee
that the selected metric is applicable and supportive to reach
strategy-related targets. This procedure, visualized in Figure Fig. 10: Energy and material flows in case company
9, is essential to avoid misinterpretations, unwanted
redundancies, obscurities or failure. The validation also 14 sustainability-related KPIs have been developed
verifies the quality of each developed KPI in terms of its according to the described methodology with its KPI
benefits for decision-making on different management levels. templates for the case company. These are listed in the
following whereas Table 1 provides detailed insight on the
calculation method for selected KPIs.
x Energy costs per carrier
x Energy costs per kL produced
x Energy share by carrier
x Energy consumption per kL produced
Fig. 9: Procedure for validating the KPIs calculation
x Energy consumption per energy carrier
x Corporate carbon footprint
The first check inspects the KPIs resulting unit. A x Total water consumption per term
thorough analysis of units, conversion factors and multipliers x Steam KPI [kg/kL produced]
applied might help to reveal inconsistencies in case both units x Trigeneration efficiency [%]
differ. The second check is based on a comparison between x Output [L produced]
the desired and current value of the new indicator. In order to x Water usage KPI [L of production water / L produced]
set the baseline in accordance with the as-is situation, using x Electricity used from on-site energy generation [%]
 Christopher Schmidt et al. / Procedia CIRP 57 (2016) 758 763 763

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