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  A Culture of Excellence:Corporate Energy Management at 3M

A Corporate Energy Management Case StudySponsored by the U.S. Department of Energy, Industrial Technologies Program

Contact: Christopher Russell, Director of Industrial Sector, (202) 530-2225 crussell@ase.org OVERVIEW3Mseekstoreduceenergyconsumed(Btus)perpoundof

productby20percentoverthe2000–2005timeframe.Thisgoalwillrequire3M’stier-1plants(52facilitiesworldwide)toachieve3M’sown“WorldClass”energymanagementlabel.3Mhasalreadysurpassedthattargetandpromotesitsenergyperformanceinitsproductmarketing,notingthatsuperiorenergycostcontrolreducestheembeddedenergycostthatcustomerswouldnormallyabsorb.Supportforenergymanagementat3Mbeginsatthecorporatelevel.3M’sexecutivemanagementbelievesthatresourcestewardshipmakesgoodbusinesssense.Asaresult,theprinciplesofenergymanagementareanintegralpartofcorporateculture.What was the desired outcome of the corporate energymanagement (CEM) effort?Momentumforenergymanagementgrewduringtheenergycrisesofthe1970s,whenshortagesandpriceincreasesupsetexpectationsfor“businessasusual.”Duringthe1980s,3M’senergyprogramscontinuedasacost-savingopportunity.Thisfocushasbeenmaintainedeversince. What issues (or symptoms) led to the implementation of CEM?3M’senergymanagementeffortsbeganin1973.Progresshasbeenmonitoredandrecordedsincethen.Duringthe1990s,3Mnotedthatitsplantsgotlittlehelpimplementingnewenergytechnologies.Accordingly,theenergymanagementteamexpandeditsroletoincludetechnologyevaluation.Intendedprimarilytobenefit3M’sownoperations,thesame

knowledgegeneratedbytechnologyimplementationwasalsousedtosupportcertain3Mproductsales.3Mcontinuestofindrevenueopportunitiesrelatedtoitsenergysolutionsknowledge.What technical, managerial, and behavioral elements weredeveloped?Eachplantwithover$1millioninannualenergyexpenditureshasitsownenergymanagementteam.Eachteamhasamandatetoreducetheintensityofitsenergyuse(Btusperpoundofproduct).Implementationbeginswithbehaviorandproceduresrelevanttocurrentequipment.Thebehavior-firststrategysavesmoneytodaywhilealsobuildingdisciplinethatwillraisetheplant’sabilitytoabsorbnewtechnologyanddemonstratetheeffectivenessofitsperformance.

FACTS & FIGURES:

3M: Aglobal,diversified,technologyenterprisecharacterizedbyinter-companycooperationinresearch,manufacturing,andmarketingofproducts.3Mhasaglobalpresenceinhealthcare,industrial,displayandgraphics,consumerandoffice,safety,securityandprotectionservices,electronics,telecommunicationsandelectrical,andtransportation.Revenues:$18.2billion(2003)Scope of operations: Operationsinmorethan60countries.Twenty-eightof3M’sinternationalcompanieshavemanufacturingoperationsrangingfromsmallconvertingoperationstofull-scalemanufacturingofmultipleproductlines. Energy management team:Energymanagementatcorporatelevelinvolvestwopeoplefulltime.Athirdpersonhasinternationalresponsibility.Theirannualbudgetislessthanonepercentoftotalenergyspend.Activitiesaddressplantoperations,environmentalmanagement,engineeringselections,andproductdevelopmentsupportrelatedtoenergyuseinproduction.Responsibilitiesincludedemand-side

management,conservation,andalternativefuels.Procurementfallselsewhere.3Mresourcesexternaltotheenergymanagementactivity,aswellascontractservices,arewidelyused.Key energy professional:SteveSchultz,theleadenergyprogrammanager:“Low-hangingfruitgrowsbacki youdon’tkeepatit,buttechnologyalsogivesyoutallerladders.”

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Plantsareencouragedtoconductawalk-thruenergyauditonceperyear.Theseauditsresultinsuggestionsformonitoringenergyuseandidentifyingprioritiesforcontrol.Auditresultsareofferedassuggestions,notdirections.

Plantsalsohaveaself-assessmentopportunity.Aself-assessmentchecklist,maintainedandofferedbythe3Mcorporateenergymanagementteam,providesa0-100scoredescribinghowwellplantsfollowtheirenergymanagementprograms.Thisexerciseencouragesfundamentals:havinganenergyteaminplacethatincludesrepresentationfrommaintenance,production,andengineering;conductingauditsannually;andidentifyingandprioritizingprojects.Theself-assessmentcallsforaccuratemeasurementofenergyuseandcostallocations.3McorporatemaintainsanImplementationGuideforreferencepurposes.Thecurrentgoalforeachplantintheself-assessmentexerciseistoachievea“WorldClass”scoreof85percentorbetter. How are empowerment and accountability addressed? 3M’scurrentenergymanagementstrategybeganin1998astheresultofabrainstormingsessionwithplantmanagers.Recommendationsfromthisdiscussionwereto“createaccountability,”conductplantself-assessments,anddevelopa

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“WorldClass”concept.Quarterlyoperationsresultsweredevelopedforexecutivevicepresidents,plantenergychampions,andplantmanagers.Performancemetricscompareenergycostanduseperpoundofproductandcurrentversuspast-yearperformanceandplannedtargets.Excessesareflagged.Corporateobserversgetbehindthenumbers,especiallywhensingleplantsshowperformancemetricsthatareoutoflinewiththoseofsimilarfacilities.Graphicsarecrucialtosummarypresentations.Atypicalchartmaydepictenergyconsumptionovertimewithaseriesofbars(histogram)withcostssuperimposedasaline.Momentumismaintainedthroughregionalenergyconferencesconductedonceortwiceperyearthatpullinenergychampionsfromplantsinthesameregiontodiscussprojects,problemsolving,andnewopportunities.Corporatestaffattendtheseeventstoprovidestrategicupdates. What were the barriers to implementation, and how were they overcome?

Inthepast,acertainamountofplant-levelresistancetoenergymanagementwasascribedto“prideinownership,”whichreferstooperatorsbelievingthey“knewbest”abouttheirmachineryandautomaticallydiscountedsolutionsthatwere“notinventedhere.”Successstoriessharedthroughregionalplantstaffgatheringshelpedtoovercomethatthinking.Today,thebarrierstendtobealackoftimeandfunding.However,thatismoreoftentrueforplantsthathavenotsufficientlypreparedthroughuseofenergyauditsandtheself-assessmentexercisesdescribedabove.Still,plantmanagers’agendascomedowntomaintainingproductivityandsatisfyingcustomers,andenergymanagementtaskssometimesmaybesecondary.Energystewardshipisoneofmanyvariablesusedtoevaluateplantperformance.How are results monitored and communicated?3Mdevelopedadatabaseforenergyprojects.Plantsaredirectedtokeepenergyperformancemetricsup-to-datetoallowcorporatereview.Thiscumulativerecordpermitsbenchmarkingthatbenefitsallplants.3M’sdatabasecurrentlyincludesover1,000projectsfromaroundtheworld.Plantmanagersareabletosearchthisdatabasefortechnologies,prices,practices,ratesofreturn,capitalcost,andmore.Cumulativedatarevealstendenciesthatsuggestprioritiesforfuturework,contactsforassistance,andwaystosecurefunding.Internetaccessibilitymakesiteasyfor3Mplantmanagerseverywheretoaccessenergybenchmarks.Smartmanagersusethisdatatodrivetheirenergy-relatedcontractnegotiations,hedging,andsimilarriskmanagement.Similardatameasureenvironmentalcompliance.Resultsaretranslatedintofinancialequivalentsformanagementobservers.Normalizationofenergy-to-productratiosaidsplant-to-plantandyear-to-yearcomparisons.What are the tangible results to date (consumption, emissions, financial, etc.)?Since2000,3Mhasreduceditsenergyintensityby27percent,whichsurpassesits20percentgoalsetfor2005.Thisaccomplishmentactuallyhelps3Mwithitsmarketing,inthatthecompanycanassurecustomersthatthecostofinputspurchasedfrom3Marenotneedlesslyinflatedbyembeddedenergycosts.Makingenergyreductiongoalspublicisintegraltothismarketingstrategy. Who is the audience for the results?Asidefromdownstreammanufacturerswhopurchaseinputsfrom3M,observersincludeWallStreetanalysts.3MconsistentlyrankshighamongfirmsrecognizedbytheDowJonesSustainabilityIndexrating,whichincludesanenergyusageindicator.Aseriesofads,placedintheNewYorkTimes andWallStreetJournal andpaidforbythePackard

Foundation,recognized3MasoneoffivecompaniesselectedbytheAlliancetoSaveEnergyforoutstandingenergy-efficiencyperformance.Inaddition,industrypeersmonitor3M’sprogressthroughtradeassociationsandtheU.S.EnvironmentalProtectionAgency’sEnergyStarnetwork. How do awards and recognition play a part?3Mrecentlylaunchedanenergyperformanceawardsprogramwhichoffersarangeofprizesfromgettingacertificatetodiningoutatthecompany’sexpense.In what way have BestPractices and related U.S. Department of Energy resources contributed to energy management?3MisaU.S.DepartmentofEnergyAlliedPartner,whichisarelationshipthatpermitsDOEand3Mtocollaborateinmutuallybeneficialenergyresearch,development,anddeployment.Also,3MpersonnelhavecontributedtheirtimetovariousDOEadvisoryfunctions,suchastheBestPracticesSteamSteeringCommittee.What are the threats to the durability of the CEM effort, and how are these addressed?

3M’scorporateenergymanagementeffortshouldbeabletoendureachangeinpersonnelorleadership.Thewildcardisanycrisisinthewidereconomy,whichmayforceashiftinpriorities.Duringthe2000-2003economicdown-turn,energymanagementflourishedasacost-savingopportunity.What remains to be done?Overall,3Mplantsneedtobetterunderstandandpursueevolutionarytechnologieslikecombinedheatandpower(cogeneration)andwaste-to-energysystems.Therearealwaysmoreopportunitiestoexpandwhattheyarecurrentlydoing.