EC 047: Lean and Energy Efficiency with Kjell van Zoen of Energy 350
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In this podcast, I share a presentation given by Kjell van Zoen, who was a lean consultant and small business owner, and who now runs the Strategic Energy Management (SEM) program for Energy 350. He explains how there are strong overlaps in SEM and Lean principles, and how he is applying his lean skills to SEM in order to further Energy 350’s mission to “mine energy efficiency as a resource to displace power plants, save businesses money, and protect the environment.”
Since it’s inception in 2005, and According to the Consortium for Energy Efficiency, Strategic Energy Management (SEM) takes a “holistic approach to managing energy use in order to continuously improve energy performance, by achieving persistent energy and cost savings over the long term. It focuses on business practice change from senior management through shop floor staff, affecting organizational culture to reduce energy waste and improve energy intensity. SEM emphasizes equipping and enabling plant management and staff to impact energy consumption through behavioral and operational change.”
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Transcript
Kjell: Thanks for coming out today. For those of you who don’t know, this is a Lean Portland happy hour. Lean Portland, our tagline, as you can see here, is “Helping people make work better.” We’re obviously an organization. We don’t make any money whatsoever. What we do is we do pro bono consulting for nonprofits, and it’s based on an organization that Toyota started, helping nonprofits as well. We also put on educational events that we teach Lean workshops, which is for anybody in the community who is interested and then we do these happy hour events. Sometimes the happy hours have a certain topic like today. Today’s is about Lean and energy efficiency.
A quick agenda: Network, have drinks and free beer – you guys are on that – listen to me ramble for a while, ask some questions maybe, and then, afterwards, we can network a little more and drink some more free beer. Anybody have any questions about that?
My name is Kjell von Zoen. I work here as an SEM coach, I’ll talk more about what that means in a minute. I work at Energy 350. I’m also a Lean operation educator. I teach at PSU and then also through Lean Portland and sometimes through the Center for… I’m sorry, I’m totally losing my mind on that one. Sometimes I also teach through PCC CLIMB Center. I’m the education and events lead for Lean Portland as well.
Energy 350, this is the wonderful space you’re in today. This is Energy 350. We’re a consulting firm and, as you can see here, we mine energy efficiency as a resource to displace power plants, save businesses money, and protect the environment. If you want to learn more about Energy 350, you can ask Mike here or myself or you can go and look at our website.
I’m going to talk about Lean and energy efficiency and we’re going to talk about it, really, from the perspective of one program, which is the Industrial SEM Program run by Energy Trust. That’s not because it’s the only one out there; it’s just because it’s the only one that I have direct experience with. But just to understand that there’s a lot more programs out there, like SEM, that are not run by Energy Trust but run by other people as well. But mostly, we’re going to be focused on this one here.
I also want to make clear that I’m not here representing Energy Trust. That’s why I’m wearing a hat, Energy 350, but I do work mostly with Energy Trust and for Energy Trust.
Male: I’ll say more about that. There are a couple of Energy Trust folks in the room, Katie and Abby.
Kjell: Yeah, and if you guys have more questions about Energy Trust, you can talk directly to them. They love questions.
Male: Energy Trust is one of our clients.
Kjell: A little bit of history. What is known now as SEM was initially started by NEEA, which is the Northwest Energy Efficiency Alliance, and that was around 2004/2005. They started tweaking something called, at the time, it was called Continuous Energy Improvement, CEI, and they developed that between 2005 to 2012. Energy Trust started their program around 2009/2010, that’s when they developed their core program and then, from there on, they’ve continued developing it all the way through now and, obviously, it’s still running to this day and that’s what we’re going to be talking about. As you can see here, there’s a whole bunch of other ones as well that were started by different either utilities themselves or by other organizations working with utilities as well. So it’s been around for roughly 10 to 15 years, so it’s still fairly new.
To give you a little bit of a flavor of what I do and how it all works, at least here in Oregon. If anybody here is paying their bills for electricity or gas, if you look at your bills, you’re going to see a line down here that says public purpose charge. That’s something that’s mandated by the state of Oregon; everybody pays that to the utilities, utilities have to charge that to you, including industrial customers. Mine is like $.12 or something, it’s like nothing, but for industrial customers, because they use so much energy, it’s quite a lot higher. That money is all collected and pooled by the utilities and they have to spend that money on decreasing energy use, so like energy efficiency, because it’s much, much cheaper, at a 1 to… What is it ratio?
Mike It’s like a 3 to 1 ratio.
Kjell: 3 to 1 ratio to save energy than it is to build new infrastructure to produce more energy. This might be building wind farms, if it’s renewable, or whether it’s a coal power plant, it’s so bad; you don’t want to do it. If you can use less, it’s better. So that’s the whole point in that.
What they do is they actually invest a lot of their money into a program that’s run by Energy Trust. Energy Trust is a third-party that’s working with utilities and they created a program called SEM, that we’re going to talk about today, and then Energy Trust partner with program delivery contractors, or PDCs, which is us, Energy 350, to deliver the SEM program back to the industrial customers. Everybody got that? It’s complicated but it’s a whole circle thing, it’s kind of cool. One of the big selling points to the industrials is you’re paying for this anyway, you might as well use it, but it’s still very hard to sell.
Just like Lean, SEM is not a top priority for big industrial clients. Their number one priority, hopefully, is safety. Their number two priority probably would be something like production output, getting product to the customer. After that, quality, because that’s pretty important, then customer service and then, somewhere down here, is SEM and Lean. But the interesting thing about both of these is that they do have a positive effect on gross margin, so they actually get into production output and also customer service because everybody likes it cheaper. So that’s an interesting overlap right there, right off the bat, but it’s also is true that they’re not a top priority.
When I was a Lean consultant in my past life, and now being an SEM coach, I know, from just getting started trying people to sign on for SEM, and even the people on our side of SEM, it’s not as easy a sell as you think. That means that we have to incentivize it somehow and that’s done through the public purpose charge. So it is an incentive that we pay and that’s paid, basically, through myself, as a coach, my services working with the industrial clients is completely free to industrial clients. They pay the public purpose charge instead, but they pay that regardless. When we come in and run SEM with them, it’s totally free. Plus, I’m not an engineer but everybody else almost that’s in this company here is an engineer, so we have engineering and technical expertise that we bring to the table that is also completely free. Energy Trust has developed workshops that I and others teach to them and that is also all completely free. On top of that, for every kilowatt hour they save, they get a kickback, so there’s actually quite a bit that they got. And even with that, it’s still a hard sell. Why? because it’s not their primary focus and that’s actually the exact same as Lean. I’ll get into a little bit more about why that is as well.
Let’s look at a little bit about SEM savings data, what does this really do? we’re putting all this money into this program, what does it actually produce? the 10 sites that we work with that participated in a treasure hunt event in January 2019. A treasure hunt is kind of like a kaizen event where we go around the plant and look for energy-savings opportunities. As an employee engagement event, people love it; it’s always a good time. We work with these 10 sites and these 10 industrial sites have a goal that they’ve set for the year, to save roughly 5% on their energy use.
If you add up the total savings that they should produce, and most of them are on track or some of them have already met their goals, but most of them are on track for their goals or already met their goals. If they do that, they’re going to save 4 million kWh of energy this year, which is the same as powering 500 homes or 1250 people at roughly 2.5 people per home in Oregon. That’s the equivalent of the city of Cascade Locks. That’s just 10 sites that we work with at this company. If they don’t backslide on those savings and they don’t fall back into old ways or people don’t update things, then obviously, those can fall away. If they keep them going, and that’s a really important fact that we’ll get into later, how do you keep it going, if they keep it going, that means that Cascade Locks basically gets free energy when they’re building any more infrastructure forever. It doesn’t quite work that way, as it would backslide.
In 2017, the Energy Trust of Oregon Industrial SEM Program itself, the whole thing for that year, was able to save 16 million kWh, so that’s 2000 homes, 5000 people, which is about Tillamook. Again, it adds up, right?
Actually, one thing I have to say here as well that’s really important, SEM is not focused on let’s buy a new piece of equipment because it’s more energy efficient. That does not count as SEM; that is completely separate from SEM. These are all small operational maintenance improvements, kind of like what Lean focuses on. Lean is not interested in you buying new equipment. If anything, Lean goes against that idea. Lean is really focused on building a culture of continuous improvement, tweaking little things to make things better and SEM is the same way that way. These are all small things they’re doing, like, “This machine runs during the lunch hour but we don’t actually use it. Let’s turn it off. All of these conveyors run throughout lunchtime. Let’s turn them off.” It doesn’t sound like much, but it adds up.
Over the last 10 years that Energy Trust has been running the Industrial SEM Program, and also, to be clear there, there’s a whole other SEM program, which is Commercial SEM. I don’t know the numbers of that now because that’s not something I’m part of, but there’s a lot more to it than just industrial. But for the Industrial SEM, over the last 10 years, we saved 220 million kWh, which is 27,000 homes or 67,000 peoples’ worth, which is about the size of Corvallis and Newport combined. That’s a lot of energy.
So we’ll take it to the next level. The Consortium for Energy Efficiency, in 2014, brought out a paper where they looked at SEM – where it was going, where it was at, etc. They looked at all of the manufacturing sector in USA and Canada and said how much does manufacturing in USA and Canada use in energy and what are the savings from these SEM programs showing so far? at that point, it was around 5.4% savings, which is not far off where we are now still, and this is first year participants in SEM. That’s also another point. Often, they’re able to continue reducing year after year after year. We have certain ones going into… I know we have one site I work with going into third year. I don’t know how long these ones are.
Mike: Finishing third year.
Kjell: Yeah? finishing third year.
Female: We have a new frontier, year four.
Mike: The fourth year will be the end.
Kjell: Nice. So it’s like 5% the first year and a few more percent the next year and so on and so on and you can build up; these aggregate. If the US and Canada, if everybody in manufacturing said, “SEM is a great idea because we care about Planet Earth,” and they save 5.4%, these guys calculated that would be 47.8 billion kWh of energy saved. This is not to buying new equipment or doing anything fancy; this is really about just using what you already have and just using it more efficiently. That actually equates to about three and half times of Oregon, of all the people in homes in Oregon. That’s a lot of energy.
So what’s the whole point here? Well, small changes add up. They really do, and that’s true for both Lean as it is for SEM.
To backtrack a little there, we’re going to go back about 60, 70 years to Toyota. Toyota are known as being the father of Lean. They were the people that really started it. Back in the 40s or 50s, when they were coming out of World War II, Toyota was not doing so well, because their country had been blown to pieces for starters, and they had very little money. Whereas America, on the other hand, was doing very well and manufacturing here was just in its heyday. America was just pumping out cars. In fact, if you look behind you, it kind of gives you a little bit of a picture of pre-World War II and where they went from there. It’s kind of a cool picture.
They really went to town here, and Toyota didn’t have the same resources to be able to do that. You couldn’t build a factory for every car that you produced, so they had to get really fast about changeovers. Here, you see a dye press. This is for pressing out parts of cars. In the 1950s, it used to take them three hours to change out the dyes on those presses and do a changeover for new model and they went, “We can’t do this. We can’t just keep on having to build the same model for days and days. It’s too much inventory, we can’t afford it, we need to switch them out several times a day,” and people were like, “You’re crazy. We can’t do that,” and it was like, “Yes, we can. We can work together, we can make this work.” It took them a good 10 years, but they got it down to 15 minutes and then they keep tweaking it and then they were down to three minutes. This is small changes adding up. They probably did some big ones in there as well, but most of them were just little things about how they did things and how they worked.
So what is Lean? it’s a whole systems or a holistic approach to continuous incremental improvements. Incremental is a really important word and it’s about baby steps. If you think of the opposite of incremental, it’s often what government tries to do. Obamacare is the opposite of incremental; it’s a huge leap. In a good direction, but it’s too far in one go and then what happens? it doesn’t work very well and the system gets broken because they took too big of a step in one go. I know that’s what we have to do in government to get voted in, but the point is it’s not so great but the incremental ones tend to work much better over time and you get better ROI on it as well.
Another way of thinking of holistic systems or whole systems is to think of it in paradigms of science. The science of the paradigm, number one would be analysis. That’s really what we think of… Mostly, this is what we understand. When we’re raised and go through school, we’re taught analysis – physics, engineering, it’s all analysis whereas something like ecology gets more into synthesis. Synthesis is high interconnectivity, high interdependency whereas analysis is low interconnectivity and low interdependency.
What’s this got to do with SEM and Lean? the point is that you have to look at things from a holistic perspective in order to understand it properly and you also have to look at things from a holistic perspective to understand that just because you put a bunch of effort into one thing that didn’t quite work out, you don’t throw away the baby with the bathwater. You keep going because, over time, you’ll find some that will work out. In some ways, investors understand this really well. They’ll investment in 10 companies knowing that nine of them are going to completely tank but one is going to be huge, so they have a bigger picture view. It’s the same idea, but I wouldn’t say that, necessarily, our economic systems are holistic because they’re not.
So it’s really about thinking outside the box. You’ve got to think outside the box, that’s whole systems thinking. The hardest thing about talking about whole systems thinking to people is that everybody wants to put their thoughts and their ideas into a box and that’s not what this is about; it’s about thinking outside the box.
The Consortium for Energy Efficiency, we talked about this a little earlier. In 2014, they put out a paper where they talked about what are the minimum elements required for something to be considered an SEM program and that is something Energy Trust followed when they were developing their SEM program. One of the things in the definition they talk about is that it can be simply defined as taking a holistic approach to managing energy and continuously improving energy performance, so there’s some overlap there already. That’s actually one of the biggest things about SEM and Lean, as far as I understand it and as far as my background in Lean and now SEM. I’ve been doing SEM since September, so I’m still very new to this. I am in no way, in any way amazing at this, but I’m working towards it.
The interesting thing is that, if we go a little bit further, it also says that it’s about affecting organizational culture, so let’s talk about that a little bit. We talk about Lean often having two sides, one is about process engineering and that’s easy-ish. You go to school for a couple of years and get a degree, no offense, to become an engineer.
Male: It probably took me longer than most.
Kjell: The other side of it is this, which is people and collaborative culture. This is super hard because this is about getting people to change how they behave. Who here is really bad at changing their own behavior? so you’re trying to change other people’s behavior is even harder. You actually can’t change other people’s behavior; you can only incentivize them.
The point here is that if you only knew the guys who’ve got this cool thing called Lean, here’s the engineering, we do just in time, we do single piece flow. Those are all engineering process things in Lean. Let’s get a group of 10 people together, we’ll teach them now and like, “Okay, go,” and then they do it and you come back a month later and they’ve reduced the number of people they need now to nine. They’re like, “Great, fire one guy. Okay, nine guys, let’s do it again.” It doesn’t work. It’s a one-time deal so you don’t have a very good ROI. You might get a decent ROI on that one project, but no one’s going to do it again. You’re killing the culture and that’s not what Lean is about. Lean is about how do you do this by not doing that. How do you have these people in a collaborative culture, and when you do that, it has a very, very high ROI and I’ve been seeing the same from what I’ve read so far, some of the studies I’ve read about SEM and what I’m experiencing myself on my sites. The one was to have a good culture. Well, actually, there’s two ways of getting good savings in SEM, either someone who’s really engaged, an individual who is a superhero and takes on everything themselves or an engaged culture. Now, which one is going to last longer?
Female: Culture.
Kjell: Right, because if the super-engaged individual leaves, then your SEM program leaves with that person, so you’ve got to have the culture if you want to make it a long-term thing. That gets a little further into this definition: SEM emphasizes equipping and enabling plant managers and staff to impact energy consumption through behavioral and operational change. If we say, well, there’s two sides of SEM, there’s engineering operations, which is operational change, and there’s people and collaborative culture, which is behavioral change.
So they’re the same thing, it’s the same. You’re just looking at… Lean is about the whole big picture, the entire organization and everything they’re doing, whereas SEM is just focused on one thing, which is energy savings, but you can’t just look at energy savings without thinking about the whole thing and that’s the point here, that’s the whole systems thing. You can’t just say, “We’re going to put SEM into a box and we’re just thinking about energy and everything else doesn’t matter.” It’s like, well, no, because everything affects each other, that’s the whole idea behind whole systems and synthesis. Again, this one is easy-ish. It’s not super hard but you’ve got to do both if you want to get the ROI.
Let’s talk a little bit more about the holistic approach, whole systems or holistic approach. Whole systems, really, is focused on the relations between the elements. It’s not about analyzing just one part; it’s about focusing on the relationships between everything and why you’re analyzing on that one part. I think of it as like when I’m zoomed on this really myopic thing that I’m trying to figure out, I’m also constantly aware of everything else that it might affect. It’s a really hard way to think, but that’s what you have to do. You have to constantly zoom in and out and once you do that, you start thinking about the ways those elements are put together and arranged into the functioning of the entirety.
Let’s think of the biggest element we can think of that really affects us, Planet Earth. That’s pretty much it. That’s kind of the closest, for all intents and purposes, for us unless you’re Elon Musk. Within Planet Earth, you have two subsystems. You have natural systems. If Planet Earth is the parent, you have two children, natural systems and sociotechnical systems. Those are good divides to make. Sociotechnical systems is everything that we do as humans pretty much. Everything we do is almost pretty much a social energy system. It’s everything that we conceive. Our economy is a sociotechnical system, the boundaries that we have in our countries are sociotechnical systems. They don’t actually exist, they’re not a natural phenomenon; we created them and made them up.
An organization is a sociotechnical system and think of an organization just as two or more people collaborating to do something together. Right now, we are an organization for just 30 minutes. We all agreed to sit in this room and listen to me spew out about SEM. My wife and I are an organization at home and we have geographic boundaries. That’s my side of the bed, that’s her side of the bed. Sometimes we fight about that. You have large organizations, small organizations, nonprofit organizations, government organizations, neighborhood organizations, etc., you get the idea. There is an organization and every organization has material flow. This is where energy comes in. Energy is a form of material flow. It literally is. It’s electrons moving through the wire, it’s a form of material flow. Now, where does all material flow start? what is the root of all material flow? Where does it all come from?
Female: Nature.
Male: Nature.
Kjell: Yeah, Planet Earth, right? everything comes from Planet Earth. If you trace this home back all the way to its root upstream, as we call it in Lean, it always gets to Planet Earth, it gets back to our natural systems as does energy.
Information flow, the law of information flow of organizations. What’s the single most valuable thing we all share as people? what’s the most important thing to you? what did you give up here tonight to come?
Female: Time.
Kjell: Right, time. You’re born, you live roughly 0 to 122 years, and then you’re gone. It’s pretty important. I think it’s important. This guy here thought it was important too, Taiichi Ohno. He is known as the father of Lean, industrial engineer. He said, “Employees give their valuable energy and time to the company and if they’re not given the opportunity to save the company money by working effectively, there can be no joy.” And for a company to deny that opportunity, in his mind, it was against the principle of respect for humanity. In fact, he believed this so much that, for a long time at Toyota, Lean was actually called the Respect for Humanity System.
By the way, the reason they didn’t fire people is because they couldn’t. That’s true, but they couldn’t and they didn’t because they believed it was wrong because, as a culture, Japan thought that wasn’t a good idea, so they voted for laws to come into place that basically gave people lifetime employment. So for them, it wasn’t an option and that’s the thing that was kind of lost in translation when Lean came here. Why Lean has a bad name in the US, often, is because they didn’t realize that you can’t take it from that culture with that law and put it in this culture where we have lifetime employment and they work the same way. Anyway, a whole bunch of other names and there is Lean. So people’s time and energy, pretty damn important. And then the last one was cash.
These are the four flows, I think, of going through an organization. They come in, they go through, there’s throughput, you do something with it, and then there’s an output and sometimes there’s waste and sometimes there’s actual value that you created. But the point is that you’re trying to control these flows and by trying to control these flows, you also get into the material flow, which gets into the energy. SEM is a sociotechnical system that encourages us to collaborate in order to control and regulate those four flows to reduce energy waste.
Lean is a sociotechnical system that encourages us to collaborate and control and regulate the four flows in order to decrease our overall, basically, material and information flow and increase the amount of time and cash we have available. That’s Lean’s focus. SEM’s focus is just the same but just one subset, which is really focused on that one part of material flow of energy.
By the way, I won’t talk about it, but gas is also part of SEM as well, it’s just a smaller part of it.
We do this by developing a culture that thinks outside the box. The sociotechnical system is that culture of thinking outside of the box and it’s everything that goes into that. In SEM, it’s me going out and working with them. I’m part of that culture through the engagement of SEM for a whole year or multiple years if they go into continuous. When it comes to the workshops, that’s also part of that sociotechnical system, it’s something that we created and built and it’s part of that.
The thing about culture is you can’t copy it. Often, you think it’s easy to copy things. You can’t copy culture; it has to be developed slowly over time because you have to get people to change the way they think and work together and relate to each other. This is a great, great This American Life episode and it’s all about Toyota and GM working together in Fremont, California. They turned what was GM’s worst factory that they closed down because it was the worst, hired back all the same people and turned it into their best factory in two years by applying Lean and it was Toyota’s proof to say it’s not about the people; it’s about the culture you create around those people, it’s about a sociotechnical system.
The interesting thing is that GM tried to copy that same factory by taking pictures of all the machinery and then replicating the setups in their other factories and it didn’t work. Why? because you can’t take pictures of culture. The savings we get in SEM are a byproduct of the people doing the work and the people doing the work represent the culture. You can’t have one without the other and it’s the same with Lean. Someone might come up with an incredibly amazing and efficient way of doing something and you could take a picture of how they do it, but probably, a month and a half later, because of continuous improvement, they’ve already changed that, so they’re always going to be one step ahead of you. You know when they say if someone is copying you, that means you’re probably doing the right thing? you’ve got to worry when someone is not copying you. If someone is copying you, you’re okay. That means that you’re one step ahead and that’s what Toyota always is, one step ahead, because they’re not copying, they’re just constantly trying to improve. They may take ideas from other people, of course.
Another way to think about culture is through this model that’s fairly well-known in the world of organizational psychology. There’s a guy called Edgar Schein who is an organizational psychologist and he put this thing together called the Onion Model. This one is being a little bit developed here by Matt at the back there. Thank you, Matt.
Basically, the underlying thing of it is that you have three core layers. You have a corporate culture, a middle layer, and an outer layer. The corporate culture is the basic underlying assumption about the organization. It’s like what we think about the organization when we’re by our team or whatever. And then there’s the things we say, which are our espoused values, as Edgar Schein called them, and then there are the things we do, which are the artifacts and symbols, that are things we create and what we do, the actions that we take. What we’ve done is tagged those onto things within Lean and how you’re going to build this continuous improvement, CI, culture.
One of the things is how we think – what is our beliefs? do we have respect for each other, respect for humanity? do we believe that continuous improvement is an important and good thing to do? and is there some kind of scientific rigor around what we do? do we believe in that? so if you apply this to SEM, well, we do respect each other, that’s important regardless. Do we believe in continuous improvement? That’s what SEM is about as well. And then do we believe in a scientific method? are we actually going to look at the data? that’s a huge part of SEM is that we build a regression model for them with them and let them run that model so that they can prove to themselves if they’re actually saving energy and we work with them and we provide technical and engineering expertise and make sure that we do that.
Then the systems, which is like what we say, how we talk about things and how we communicate things, everybody gets in what we call SEM practices and that’s when we align. Like if we set some kind of goal, have we communicated that with the rest of the organization? Are we managing our processes in a way that makes sense? for instance, when we buy a new piece of equipment, is there some kind of reminder on whatever SOP, standard operating procedure or checklist, that we have for buying new equipment that says, “Have you checked that this is energy efficient?” because sometimes it doesn’t cost us more. Sometimes they’re actually incentivized and it costs less.
It’s also about the process management of building your products. Something that, often, people don’t realize is if you make a product with less waste… If you’re a food manufacturer and 10% of whatever goes in ends up on the floor before it goes out the door as a product, you’re wasting 10% of your energy, give or take, on that product that’s on the floor, especially if it’s at the end of the line. If you can reduce that, you’re reducing the amount of energy you’re using for each product you put out the door, so that really gets into the process management as well and the systems.
Discovery management is really about do you have a good way of people to find opportunities? in SEM, we have something that we do is we have these tags that we introduce to people that are leak tags because air leaks are a huge, huge, huge waste of energy in a lot of industrial plants. So special tags, that I wish I had one in my hand right now, that people can put up around plants and that’s encouraging them to discover these opportunities. We also have what we call the seven quick wins and we put posters up and there’s tags for that too.
And then it gets into the actions and that’s the process improvement part. That’s them actually fixing things and it’s actually putting up visual controls about reminders. We have stickers that we provide that they can put on a piece of equipment saying, “This piece of equipment is going to save this much per year in energy by keeping this set point,” because people love to tweak their equipment based on what they think. Again, coming back to air, “We need 110 psi.” Need or want? it’s one piece of equipment that’s 110 psi right at the end of the line and the rest of it can operate at 95 and he can tell you how much that would save you. What is that?
Male: 7.5%. I’m making up a number.
Kjell: And then there’s production system design. Have you designed your production system for the least amount of conveyance? conveyance is a massive energy hog. Massive energy hog. Conveyors, especially if you think of things like sawmills where you’re conveying logs, you need a lot of energy to do that and if you’re conveying a lot further than you need to all the time, every day, that adds up.
So you can see here, but it’s, often, we start here. We’re like, “Okay, let’s do this,” before we’ve even talked about the systems and the goal alignment and what we call the SEM practices or really had a heart-to-heart about do we really want to do this, like do we really care about this. In SEM, the way that we get people to care is through… Actually, it’s the same in Lean and SEM. The way you get people to care is to tie in something they’re already doing. A good one with places is safety. Safety is number one, so it’s an easy tie in. They already have systems to communicate, visually, safety, they already have systems around goal alignment around safety all the way up to the top level of management down to the shop floor and there’s a respect for safety and each other and there’s method around how they look at safety and think about safety and they’re constantly improving their safety, so they already have systems in place. So find something like that and then you can plug SEM into it or Lean.
I want to end on this slide before questions. This just came out a few weeks ago. The city of Corvallis, Oregon, this is one of the sites that we work with, and James W_____, this guy here, he’s their energy champion on their energy team. He said, “The goal of the program was to change the culture and optimize the systems and equipment that we already have,” so it’s about small improvements and working with what you already have. “We’re looking at things through a new filter,” holistic, “and breaking the old ways of thinking.” This is awesome to see this. These guys are doing amazing work here and it’s really about, I will say, a little bit, I will say, just to be fair, that a lot of it rides on him. But however, when we did our treasure hunt, that was one of the best attended treasure hunts I think we’ve ever done and we really, really engaged. It’s cool to see salt-of-the-earth dudes, and it is all dudes, engaging in a way that’s fun and they actually care and they care about saving energy because it makes sense to them.
That was it. Thank you.
Female: That was great.
Kjell: Any questions at all or observations, comments?
Male: I was expecting this to be a little more disjointed.
Kjell: Thanks a lot.
Male: That’s what he said. That was great. Just a question that came up at the end about the treasure hunts. When you do these, is it optional or do you leave it up to the organization to decide who’s going to show up or they’re going to require employees or what are your expectations when you come in?
Kjell: They have what we call an energy team, which is three people and, for them, it’s technically not optional.
Male: For those three?
Kjell: For those three, and they will bring in other people onto the energy team. Ideally, when you’re trying to do a treasure hunt, like when you’re trying to do a kaizen event in Lean, you want to bring what we call the whole system into the room. You want good representation from around the plant from different people and then we break up into teams and have good representation on the teams. We’ll bring people from here, we’ll have, usually, at least one technical lead on the teams, so that’s an engineer or somebody else, a technical lead. Actually, something we just did, this is going to be news to the people at Energy Trust as well, actually, at the last…
Male: Spoiler.
Kjell: At the last treasure hunt, I led a team and we looked at their operational systems. We first walked around the plant and I talked to people and it was really interesting because the interns actually gave me the most amount of information. We mapped out their operational systems and I’m actually going to do a flowchart of it to show exactly where SEM would fit in. It was there safety systems primarily, but also, they have some systems for reporting downtime or reporting issues on the line. We mapped it all out and then we figured out where that would fit in, so get more into the process flow of information around how SEM can already go into the existing process flow.
Male: Can you explain the treasure hunt, what that process looks like?
Kjell: It’s usually around a six-ish hour event. We get together, there’s anywhere from… It’s usually around a dozen people, so three teams, let’s say, that we’ll break up into. In the beginning, we talk about some of the opportunities they might find. We have the seven quick wins poster I talked about earlier, so we’ll talk about the seven quick wins and what they might look for. We’ll talk about where the biggest loads are, so we’ve already done what we call an energy map. An energy map is not like a value stream map, but it’s loosely associated, I guess, with the value stream map where you’re looking at how energy flows through your organization and where the big hogs are and then you try and focus your attention on those systems if possible. Then what we’ll do is we’ll have the different people walk the site. The teams will break up and they’ll say, “We’ll start at this end and move that way,” and, “We’ll start at that end and then move that way.” They may meet in the middle, they may not, depending on how much they find. Then we come back and then we do a value graph, like the four quadrants where you put things based on this is how much energy it’s going to save and this is how hard it is going to be to do.
Female: Impact.
Kjell: Yeah, impact.
Mike: Pain in the ass factor.
Kjell: Yeah. We normally come up with anywhere from, if it’s a first year site, it’s anywhere from 50 to 125 I think we’ve had opportunities. These don’t include things like there’s a leak here, there’s a light bulb that needs replacing there. Those all fall under one opportunity, all the light bulbs and all the leaks. These are actual opportunities. By the time we value graph them, what we do then is we add up all of the… We do back-of-the-napkin calculations with them for the total energy saved per opportunity that we find and what we have on the right-hand section of the value graph.
Male: Biggest bang for the buck.
Kjell: Biggest bang for the buck. Usually, anywhere between 5 and 15 will give them… Actually, less than that. Anywhere between…
Male: It’s 5 and 10 usually is the goal for the year, 5% goal if we’re lucky.
Male: So that’s just a matter of execution, right? The treasure hunt is the funnest part and it’s, in some sense, the easy part because executing, making sure those changes persist, that’s really the challenge that we tackle over the next six months or whatever.
Kjell: Persistence is a huge one. I’ve been putting a lot of focus on that one. It’s kind of like you guys are familiar with 5S?
Female: Yes.
Kjell: The 5th S is the hardest one, Sustain. I just want to sustain.
Male: Is that how long you typically stay with the company? you normally do the treasure hunt first and then stay with them for about six months?
Kjell: No, it’s 12 months. Actually, it’s 13 months.
Male: The treasure hunt just kind of lands in like month five, typically, of the engagement. There’s a very defined progression schedule of workshops and introducing them to energy management, building the tools by which we can measure and report savings. It’s a really full curriculum, so by the time we get around to the treasure hunt, it’s usually month five, and then they start to implement projects, then we actually measure savings over a portion of the year, once they’ve had a few projects under their belt, and then we extrapolate that out towards representing the year.
They kind of go through this progression, but as Kjell alluded to, it’s a lot to ask of an industrial site to do it in one year, which is why Energy Trust created continuous SEM for folks that still had the willingness and the opportunities and wanted the ongoing support because continuous improvement never ends. Plan, do, check out repeats itself. We’re actually seeing, as a program, really good success out of continuous SEM and there’s a good healthy appetite for it in the market.
Kjell: It’s worth mentioning, with all the first year’s cohort, like one of our cohorts will have like 10 companies in a cohort and they come together to do the workshops and they also are invited to each other’s treasure hunts. We’ve had people come from different sites who are similar, like two organizations that have a lot of refrigeration systems will come to each other’s treasure hunts and help each other out.
Male: Or wastewater plants, too, is a great example because they don’t have intellectual property to be afraid of sharing and so there’s a really great collaborative culture gain to be had there and they really respect their peers in the industry, so it’s a great opportunity.
Kjell: And I find, as well, that sometimes I think some of the… When we go in and we’re excited about the program and we’re excited about helping them and we’re excited about building the team, it builds excitement with them and when you build excitement with them, then all of a sudden, it becomes a little bit more important. And if you’re nice to them and you’re kind and you follow up with them and do what you said you were going to do, they’ll actually respect you a lot more than that, so you start going up the list of how important you are to them when it comes to all the other stuff. If the line goes down and the line is down, I’m still not going to get on my call with my site, but that happens a lot because, often, we work with the maintenance crews because that makes a lot of sense. That’s often the challenge, but the way I see it is you’ve got to throw everything out to make it as easy as possible for them to do this while also teaching them how to do it, which is exactly what you do as a Lean coach as well.
Female: Is it hard, then, to not fall into that Lean coach role and expand what you want to share with them or what their opportunities are?
Kjell: At first, I thought it might be, but it really isn’t because I don’t work with the right people to be able to do that. Actually, a lot of them have some kind of rudimentary, and some, somewhat advanced Lean programs or continuous improvement programs in place, so we just plug into that. When they do, I’ll figure out what language they’re using, whether it’s 5S or 6S or continuous improvement or kaizen or whatever, and I can speak towards that as well. I’m really focused on…
It’s a good question because, at first, I thought that might be really hard for me to not fall into that role, but I didn’t really have time, to be honest. I have so little time on my sites that, when I’m there, we’re focused on stuff we need to do and there’s no time for that. With just in time and single piece flow… What I did recently on a treasure hunt, when we mapped out the process, that felt a lot more like going back to my older role, but it’s going to be very useful for them and they’re more advanced to be able to do that, but not every site is like that.
Male: They’re a second year continuous site.
Kjell: It’s not that, though, it’s more that they’re an advanced…
Male: They’re very advanced.
Kjell: Their operations are really advanced and that’s also something that’s been very surprising to me, is the advancement of their… When I say operations, I mean the social technical system that drive the organization, both their equipment as well as their 5S and SOPs and how they update things and what the feedback is and catch ball and all that stuff. In some sites, they’re very small and it’s amazing; other sites that have been around for like 50 years and they are horrible. It’s not about the size of the site or a how long they’ve been around; it’s whether they’ve adopted it or not or really put time and energy into it.
Male: In that example, that’s one thing I’m so excited about as energy engineer who fumbles his way through Lean principles, I have somebody like Kjell on my team who can really complement me in areas that I’m really weak and I can handle the energy and engineering stuff. So far, it seems to be serving the customers well.
Kjell: I get a lot of questions that I can’t answer, and it’s just like, “I’ll let you know this afternoon.”
Male: What are the some of the things you’ve seen organizations do more successful in keeping up momentum once they’ve passed the quick wins or the plateau or the next phase seems really far off?
Kjell: As far as finding the opportunities?
Male: Or just keeping up internal momentum and motivation. You can have an incremental improvement today and that can be hard to stay motivated by when you’re not seeing the results and you’re on those plateaus.
Kjell: A couple of answers on that I guess. One is that I mentioned earlier that we build a model for them, a regression model, where we look back at the last two years of electrical data and production data and weather data and we build a model that should model their energy efficiency or energy use moving forward. Then, as it starts predicting their energy use and they start implementing projects, they start seeing a CUSUM graph which is a sum of energy-savings going down, meaning that they’re saving energy. That’s part of what keeps them going because it’s exciting to see those savings, and then we work with them on how to share their savings with the rest of the organizations.
Then you have to equate it back to something. We did something called a taco truck party where we celebrated savings of last year and we converted the amount of savings they had to the amount of kilojoules and how much tacos that represented, which was like 6 million tacos. They had, literally, a taco shop come to the plant and provide free lunch for everybody and, as they came to go their lunch, we were there with the flyers with the 6 million savings and some Energy Trust swag to give out to them and everybody had a good time and, all of a sudden, they’re like, “Oh yeah, SEM, that’s cool.” So it’s really about getting people excited about it as well, other people excited.
One of the other things you asked about as far as getting new opportunities, we have a treasure hunt every year. I was just saying to Katie earlier today, actually, that I’m always surprised, and I think everybody is surprised at these treasure hunts in year two and year three and so on, how many more opportunities they find every year. We actually do a little thing, because as I started seeing this and it being a surprise, I came up with this idea where we ask everybody in the room, before we do the hunt, how many opportunities do you think we’ll find and we post it on a board with sticky notes and then whoever gets closest wins an Energy Trust water bottle. But people are always way underestimating and it’s kind of surprising. I think it’s just like in Lean, people ask that question as well, like “Aren’t you ever going to run out of continuous improvement?” and it’s like, “No.” Have you ever been contented with your life that you’re perfect in fitness and everything is perfect and you don’t need any help and I don’t need to do anything about myself and everything is great? of course not.
Male: Yeah.
Kjell: Apart from Mike.
Male: Yesterday, for three minutes.
Kjell: It’s hard to find that kind of contentment. But big manufacturing operations, stuff is changing all the time and, especially right now, they have a massive turnover, most of them. The economy is good, so holding onto good people is really hard. The economy is good, but people still don’t want to pay any more so it’s hard.
