Smart utility meters drive down manufacturing costs—if managers use them

A brand new examine of the extent to which “smart utility meters” can enhance power effectivity in manufacturing finds that the willingness of managers really to utilize the know-how is a key driver in lowering power consumption and associated prices.

The work additionally serves as a proof-of-concept for utilizing “event system theory”—which has traditionally been used to know the affect of sudden phenomena—to tease out the sensible results of deliberate actions within the enterprise group, akin to adopting new applied sciences.

“We had two goals with this study,” says Patrick Flynn, corresponding creator of a paper on the work and an assistant professor of human sources at North Carolina State College’s Poole School of Administration.

“First, we wished to see how efficient sensible utility meters are at lowering power consumption within the manufacturing sector and which elements of the implementation strategy may play a job there,” Flynn says. Good utility meters give real-time data about energy consumption to manufacturing managers, which they will use to make knowledgeable selections about how one can function extra sustainably.

“Second, there’s a lot of work out there that makes use of something called event system theory, which is largely used to help us understand the ripple effects of unexpected events such as the COVID pandemic or a stock market crash,” Flynn says.

“But we know there are a lot of proactive events in the business community where companies make changes intentionally. We wanted to see if we could adapt event system theory to help us more fully understand the knock-on effects of these proactive events.”

To deal with each of those questions, the researchers checked out information from 87 vegetation, all of which had been owned by a Fortune 500 firm that adopted an power administration system that made use of sensible utility meters. The researchers collected information on energy consumption for every manufacturing unit within the 12 months earlier than the sensible utility meters had been put in and for the 12 months after the sensible meter set up was finalized.

The researchers additionally had information on when the sensible meter set up passed off, how lengthy it took for the set up to be finalized, and the way usually manufacturing unit managers accessed information from the sensible utility meters.

“The first finding here is that broadly speaking, the smart utility meters were a success,” says examine co-author Amrou Awaysheh, OneAmerica Basis Endowed Chair and affiliate professor of operations and provide chain administration at Indiana College’s Kelley Faculty of Enterprise.

“On average, energy consumption dropped by 7.46% across all of the factories. And the company saved more than $41 million per year in energy costs.”

Nonetheless, the examine confirmed there was vital variability from manufacturing unit to manufacturing unit and that there have been three variables related to these variations.

“The strongest effect associated with greater energy savings was the extent to which managers accessed the smart meter data,” Awaysheh says. “In other words, our study suggests that people who actually used the data were able to achieve greater reductions in energy consumption. This is extremely important for managers.”

“It isn’t enough to just invest in a new system,” Awaysheh says. “Managers need to make sure that system is being accessed and that behaviors are being changed as a result of the new insights.”

“The two other effects were less obvious,” Flynn says. “Factories that received the smart meters earlier also saw greater energy reductions. In addition, we found that the longer the installation process took, the more likely the factory was to have increased energy efficiency.”

“And there was tremendous variation here, with some installations taking place in one month while others took more than a year. Our hypothesis is that factories that experienced longer installation times were more likely to feel a greater sense of ownership of the smart meters and their potential.”

“Our work also helps demonstrate the viability of these types of investments for sustainability,” says Awaysheh. “The Department of Energy and policymakers around the globe want to increase investments in these kinds of systems to help reach net zero goals. Thus, when companies see that there is a financial benefit to investments in these types of systems, they are more likely to do so.”

The examine additionally lays the groundwork for enterprise researchers to go one step additional.

“This work lays out a blueprint for how we can use event system theory to improve our understanding of any intentional change that a business makes, whether that’s installing a smart utility meter or adopting new human resources software,” Flynn says.

“Not only can event system theory help us understand the impacts that a proactive change had, it can also help us understand the impacts that a proactive change will have,” Flynn says. “And that means our research has greater potential for developing approaches that can help businesses thrive.”

The paper, “From Intent to Impact: A Proactive Event Approach for Amplifying Sustainability Across Time,” is revealed within the Journal of Administration. The paper was co-authored by Amrou Awaysheh of Indiana College; Paul Bliese of the College of South Carolina; and Barbara Flynn of Fundação Getulio Vargas.