Why pay more when you can pay less? Whatever Industrial sector your business may belong, whether the manufacturing or the service industry; maintaining energy efficiency should never be overlooked.

With ever-mounting up expenses, maintaining energy efficiency could be a great way to curb expenses and improve profitability.

What is energy efficiency?

In reality, efficiency is achieving a certain desired result with the least waste of resources. It goes without saying that, a method is not efficient if there is another method that could achieve the same result with a lower employment of resources.

Thus, energy efficiency is using the least energy to derive the same outcome. A great example is the light bulb. The fluorescent light bulb requires lesser energy to provide lightening in comparison to the incandescent light bulb which requires a higher energy to derive the same outcome of lightning. Hence, to use the incandescent light bulb for lightning would be energy inefficient and a waste of resources because there is another method that provides the same service at a lower cost.

Why is energy efficiency important?

You may ask; why is saving energy important to my business? What are the benefits? Do I really need to maintain energy efficiency?

Not to worry we’d go through the benefits real quick:

It increases profitability

Findings show that businesses could increase profitability by 2% – 10% a year. Every time you save energy, you save money. Electricity costs are an integral part of running your business. So, when you save energy you reduce business operating costs, thereby, increasing profitability.

Saving energy may involve you purchasing energy-saving appliances, but in the end, it would reduce costs drastically.

It promotes productivity

If your business is energy efficient, it implies you are doing more with less which implies productivity. In fact productivity in another word is efficiency; so once your business is energy efficient, your business is productive.

It cuts cost

It is possible to cut the energy costs of your business by at least 20%. You can cut about 10% energy costs at no upfront charge. It is also reported that energy saving programmes have helped to cut energy cost by a third.  Hence, saving energy is a great way to cut costs.

How can you maintain energy efficiency in your industry?

Energy efficiency assessment

Without an energy efficiency assessment, it would be difficult to ascertain the most effective actions to take to reduce energy consumption. An energy efficiency assessment would measure your current energy consumption and greenhouse gas emission. This would go a long way in determining the most effective measures to take in order to maintain energy efficiency.

Routine equipment maintenance

A well-maintained equipment is more energy efficient in comparison to an equipment that isn’t well maintained. Well maintained equipment like heaters, boilers, air conditioners, Ovens etc. Run efficiently. Make sure the equipment you use is properly maintained on a routine basis.

Get your workers on board

Without getting your workers on board, your energy efficiency efforts may prove futile, ineffective and may not be maintained. Therefore, it is important to get them on board and ensure you imbibe an energy-saving culture in them. Create an energy efficient work culture in your business.

Opt for energy saving equipment

From light bulbs to Pcs; make sure you always purchase equipment with energy saving capabilities.

Switch-off equipment that is not in use

Although this sounds very straightforward, you could save a great percentage of energy by switching off appliances and equipment that are not in use. For example, a single computer on for 24 hours could accumulate to $200 a year.

Verdict

Running an energy efficient business would cut cost, increase productivity and profitability. You can always pay less to get more, that is what efficiency is all about. So, choose to pay less by maintaining energy efficiency in your industry.

Capacity utilization is an important concept in determining industrial performance. It can be used to ascertain if your business is underperforming or outperforming. Utilizing industrial capacity to the full extent is critical to the successful existence of your business.

So why don’t we look at what capacity utilization implies real quick?

What is Capacity Utilization?

Capacity utilization is basically the extent to which a business or an economy uses its productive capacity.

It is the relationship between the output derived using a business’s production equipment and the potential output which could be derived using the same production equipment if capacity was fully utilized. Does this make your head spin? If yes, all you need to understand is that capacity utilization is the extent to which a business uses its productive capacity.

Productive capacity is the maximum possible output a business can produce.

Capacity is not fully utilized if a business can increase unit of production without increasing production cost. Hence, until production can’t be increased without incurring additional production cost, capacity is not fully utilized.

What is the Ideal Capacity Utilization Rate?

Capacity utilization rate cannot exceed 100%, but the reasonable or ideal expected capacity utilization can be said to be 90% because issues could arise with production machinery and workers. The machinery used for production could develop issues that would prevent it from working at its optimum. And if you agree with me, no worker could work at full capacity always. Putting these in mind, 90% could be said to be an ideal capacity utilization rate.

What is the Importance of Fully Utilizing Capacity?

Considering the fact that increasing capacity could prove expensive. It is wise for a business to make full use of its existing capacity.

The importance of fully utilizing capacity include:

It ensures productivity – Fully utilizing capacity ensures productivity because output produced increases without a rise in production cost. In simpler terms, you increase production without incurring additional expenses.

It reduces cost- A rise in output produced is usually accompanied by a fall in production cost. Hence, working to increase capacity utilization would reduce cost since increased capacity utilization is associated with a rise in output production.

It could Increase Profitability- A rise in output and a reduction in production cost, would result in increased profits for your business. However, if there is a reduction in demand and a loss in market share, it would not translate to an increase in profits.

How can you Increase Capacity Utilization in your Industry?

Proper planning

If you ever want to increase capacity utilization in your business, you have to plan properly and ahead. Planning ahead would help you employ your business resources in the best possible way. It would also help you easily adjust to the ever-changing business climate; making you react in the best possible way to the changes in demand, market share, manufacturing etc. Plan ahead to boost manufacturing, market share, and your product demand.

Structured approach

Your approach should be balancing your capacity with your product demand and market share to ensure profitability. Never increase capacity without an increase in your product demand or market share. Make sure the existing capacity in your business is fully used, before opting for a greater one.

Strategic decision making

In business, the strategy is everything. Your strategy should be to expand your business, maximize capital benefits with low production costs and increase market share. Your strategic decisions would go a long way in determining your level of capacity utilization.