One of the areas that manufacturers may not take into account when looking at their manufacturing costs is energy usage. This can happen for many reasons, but most often this happens because it is hard to measure exactly how much energy is used for any given task since the cost of energy can differ depending on the time of day, day of the week, etc.
Nevertheless, most companies allocate energy costs on a product in retrospect, basing the allocation on some algorithm or percentage of measurements made during the installation of the machines. This is done with a very gross level of approximation, despite values that affect the total cost of production by several tens of percentage points, and are therefore critical to the profitability of the company.
Today, the amount of energy needed to produce a certain good deserves to be treated as any other ingredient or component. Energy use should be included in the processes of planning, procurement and financial statements just as any other item needed for production.
Through automation, though, more exact information can be gathered about the energy it takes to perform different activities. This, tied with energy rate and demand information, can help manufacturers better gauge the most cost-effective times to operate or perform tasks. Energy use, and automation, are a simple way to cut overhead for a manufacturer.
Read more about how energy use can be used as part of a overhead cutting calculation.