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Energy Management in MSMEs: Operational Challenges & Opportunities*

CASE STUDY, OPERATIONS MANAGEMENT
ET Cases - GSMC, 24 Pages

Case Preview

Energy Management in MSMEs: Operational Challenges & Opportunities

 

It was a typical morning during the hot summer days in north India. As Rajiv Nath (Rajiv) was prepared to go to office, he looked at a moderately thick report and a notebook lying on his study table. He carried both the report and the notebook to his breakfast table. While munching on his routine breakfast, Rajiv glanced through the pages of the notebook. The report contained a preliminary assessment of the organizational preparedness of a new client his company was consulting. The client was Surjit Glass Works (SGW), a glassware manufacturer situated in Firozabad, an industrial town in the western part of Uttar Pradesh. The notebook, on the other hand, contained a series of notes he took during his interaction, on the day before, while meeting Sandeep Kumar (Sandeep), the owner of SGW. After completing his breakfast, Rajiv picked up both the report and the notebook, and slipped those into his office bag. While driving to his client factory in Firozabad, he pondered over the recent happenings affecting SGW.

The Consulting Assignment

Though the client’s organization was not sufficiently big in size and the project was not exactly financially attractive, but the nature of the project made it extremely  important for both his career and the growth of ‘Energy Saving Institute’ (ESI), the organisation he was currently working for. ESI worked with organisations of various shapes and sizes, across different industries, to identify opportunities of reducing pollution footprints, improving energy efficiency, implementing energy management projects, developing prototype pollution controlling technologies (or identify off-the-shelf third party technologies, if suited), and helping the clients implement the  concerned technologies by seamlessly integrating those within the existing organisational structures and processes. Recently ESI was invited by Firozabad Glass  Industry Association (FGIA), to work with SGW, a member unit of FGIA, to design a solution which could help SGW minimize the pollution being generated in its  manufacturing processes............................

Teaching Note Preview

Energy Management in MSMEs: Operational Challenges & Opportunities

 

Synopsis

Energy management is an important part of sustainable and clean operations management. In the face of environmental degradation, the challenges of energy management and pollution control have assumed greater significance. With the coming in force of the Paris Agreement on Climate Change1, these issues will continue to receive increased focus. Business organizations will have to gear up to take into account environmental regulations, control their carbon footprint and become more energy efficient. The issue of energy management and mitigating pollution is more salient for the micro, small and medium scale enterprises (MSME) as it has been observed that they are significant polluters of environment.

This case study, developed using secondary data, describes the challenges faced by Surjit Glass Works (SGW), a fictional MSME, as it seeks to implement energy management practices in the face of strict environmental regulations. SGW faced with the prospect of closing down, sought help from a consultant, Energy Saving Institute (ESI) to help it navigate through the tough times. As ESI embarked on finding solutions to the problem facing SGW, it realized that there were multiple constraints within which the solution had to be devised. There were challenges of designing a new technology within the required financial constraints. These were compounded by the fact that energy management would entail significant changes in operational practices. In such a situation, it was a tough task for ESI to convince SGW of the viability of its proposed solution.

Prerequisite Conceptual Understanding/Before the Classroom Discussion

The work of Capehart, Turner & Kennedy (2008) provides the basis for teaching this case. According to the authors, energy management is “the judicious and effective use of energy to maximize profits (minimize costs) and enhance competitive positions” (p.1).

The authors further elaborate that energy management includes six desirable sub-objectives:

1. Improving energy efficiency and reducing energy use, thereby reducing costs
2. Cultivating good communication on energy matters
3. Developing and maintaining effective monitoring, reporting and management strategies for wise energy usage
4.....................

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Abstract

Energy management is an important part of sustainable and clean operations management. In the face of environmental degradation, the challenges of energy management and pollution control have assumed greater significance. With the coming in force of the Paris Agreement on Climate Change1, these issues will continue to receive increased focus. Business organizations will have to gear up to take into account environmental regulations, control their carbon footprint and become more  energy efficient. The issue of energy management and mitigating pollution is more salient for the micro, small and medium scale enterprises (MSME) as it has been observed that they are significant polluters of environment.

This case study, developed using secondary data, describes the challenges faced by Surjit Glass Works (SGW), a fictional MSME, as it seeks to implement energy management practices in the face of strict environmental regulations. SGW faced with the prospect of closing down, sought help from a consultant, Energy Saving Institute (ESI) to help it navigate through the tough times. As ESI embarked on finding solutions to the problem facing SGW, it realized that there were multiple constraints within which the solutions had to be devised. There were challenges of designing a new technology within the required financial constraints. These were compounded by the fact that energy management would entail significant changes in operational practices. In such a situation, it was a tough task for ESI to convince SGW of the viability of its proposed solution.



Pedagogical Objectives
Energy management has been recognized as a comprehensive approach for increasing energy efficiency and mitigating the pollution footprint of business organizations. In India, the concept has been institutionalized in the form of organizations such as Bureau of Energy Efficiency (BEE). Energy management, forms an important part of recent trend towards sustainable and clean operations management. In this background, the case introduces the concept of energy management. It will help participants to understand –

  • The concept of energy management and its core elements
  • Operational challenges of implementing energy management in MSMEs

Case Positioning and Setting

The case can be used to introduce the concept of energy management and energy auditing in operations management courses on sustainable and clean manufacturing.

Through this case, the students/audience would become aware of the concept of energy management and recognize the operational challenges in implementing such projects. The case can be used in BBA, MBA and MDP programs for this purpose.



1 http://unfccc.int/paris_agreement/items/9485.php

* GSMC 2017, IIM Raipur

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- Teaching Note (**ONLY for Academicians)
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