Return to Previous Page

Energy Management in MSMEs: Operational Challenges & Opportunities*

CASE STUDY, OPERATIONS MANAGEMENT
ET Cases - GSMC, 24 Pages
AUTHOR(S) : Shounak Basak - Doctoral Candidate, IIM Calcutta, Sudhanshu Shekhar - Doctoral Candidate, IIM Calcutta, Kushal Saha - Doctoral Candidate, IIM Calcutta

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............................

The Problem Facing Surjit Glass Works (SGW)

Surjit Glass Works (SGW) was established by Sandeep’s grandfather and had grown from strength to strength over the last fifty years. It had a wide portfolio of products to its credit which included glass utensils and glass lamps. Recently, it had also been successful in securing a large contract for glass bottles from one of the largest FMCG companies. However, all was not well at SGW...............

About Surjit Glass Works (SGW)

Firozabad, a small industrial town in western part of the Uttar Pradesh, located around 40 km from Agra, is called the glass capital of India. The industrial units located in Firozabad account for roughly around 70% of the total glass production in Indian small-scale sector. The glass industry of Firozabad is often compared to that of Belgium for the quality of glassware it produces. It also employs around 5,00,000–6,00,000 workers and does an annual business of INR2,000 crore. More than 50% of the cluster caters to the export market............

Overview of Business Process

SGW purchased its raw materials from the local suppliers. These suppliers catered to most of the small glass factories and supplied silica, soda ash, lime, etc. SGW mostly sourced its silica from RP Silica Private Limited and soda, lime, etc. from EPAH Minerals. The raw materials were brought by manually drawn carts. SGW used coal fired pot furnaces for melting the raw materials into molten glass...........

Recent Developments

Agra, a quaint town situated in the western part of the Indian state of Uttar Pradesh (UP), houses the Taj Mahal, popularly known as the Taj, one of the most famous historical monuments in the world. The Taj is recognized as the greatest monument built and, for years, has captured the imagination of the poets and travellers alike..................

Consultants at SGW

The ESI team paid their first visit to SGW in the month of October, 2005. Sandeep introduced the ESI team to the plant manager, Ram Kumar (Ram). Ram showed them around the plant and guided them on their subsequent visits to the factory. The ESI team was expected to submit their report to Sandeep in the month of January, 2006. The team first decided to conduct an energy audit at the factory................

Energy Audit

Energy audit helps in identifying the possible savings in energy in the production process. The first step in energy audit is preparing an energy balance sheet. The energy balance sheets list down all the breakdown of energy consumption.............

Production Process

The technology used at SGW was a pot furnace with a daily capacity of 6 MT and an annual production of 1500 MT (see Exhibit IV for different types of glass making furnaces). The estimates for production were based on data from monthly observation............

Energy Saving Measures

Based on their observation and analysis the consultants identified the following areas for improving the energy efficiency at SGW.

Improving Operational Practices

• Even Batch Size: It was observed that different batches of glass charged in the furnace were not of same size. Different batch sizes led to considerable loss of heat in the...............

Fuel and Technology Changes

The changes in operating practices could lead to substantial savings in energy consumption. However, it was realised that the quantum of energy savings could be enhanced many times, if the coal fired pot furnace was replaced by a gas or oil fired furnace.............

Monitoring and Evaluation

The other important aspect of energy management was its institutionalization. Considerable savings in energy usage could be achieved..................

Preliminary Assessment of Organisational Preparedness Report

The ESI team had shared a preliminary assessment of organisational preparedness report with the SGW management. It was an interim report containing insights from their study of SGW’s organisational structure and operational processes. The report also touched about alternative technology regimes –pot furnace fired by natural gas, oil, etc. - that ESI thought could fit SGW’s scheme of things.............

Rajiv’s Dilemma

Rajiv slowed down his car as he entered the compounds of SGW factory. He entered the office space allotted to them and began browsing through the preliminary assessment report they had submitted to Sandeep. As he browsed through the report, he felt somewhat reassured as to the potential of energy management project in fulfilling...............

Assignment Questions

I. Prepare an energy balance sheet for the oil and natural gas based pot furnace.
II. Which out of the three fuels –coal, oil and natural gas, is least polluting?
III. ....................

Exhibits

Exhibit I: Organization Chart

Exhibit II: Products Profile of SGW

Exhibit III: Energy Management Program

Exhibit IV: Types of Glass Making Furnaces

Exhibit V: Glass Making Process Map

Exhibit VI: Raw Materials Used in Glass Making

Exhibit VII: Energy Balance Sheet for SGW

Exhibit VIII: Specific Energy Consumption of Different Processes

Exhibit IX: Emissions

Exhibit X: Calorific Value

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.....................

$7.31
Rs 0
Product code: OM-1-0041, OM-1-0041A

Abstract

**IIM RAIPUR – ET CASES Award (GSMC 2017) - For Having Global Implications

Award Winning Case Study

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


This Case Pack Includes:
- Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)


**Electronic downloadable links (PDFs, PPTs, Supplements etc.) are available immediately after purchase. Please use Indian Currency Option (INR) when you are Making Payment within India. "No. of Copies" reflects the number of permissions you intend to use in Classroom Discussions / Corporate Trainings.

No. of Copies
$7.31
Rs 0

Related products




Request for an Inspection Copy

(Strictly for Review Purpose, Not to be Used for Classroom Discussion/Trainings)