EU Energy Crisis

Your manufacturing planning doesn’t have to run out of gas

By now, we have all heard of the ongoing energy crisis in Europe brought by the post-pandemic economic slowdown, soaring inflation and made worse by Russia’s invasion of Ukraine. Even the hot weather has been against us this year with dropping river levels impacting transport, material availability and costs.

Manufacturers are already feeling the effects of sky-high bills which are expected to get even higher. According to the latest study by Make UK, 42% of manufacturers had their electricity bills doubled in the last year and 52% expect them to rise even further over the next twelve months. What’s more, 60% already consider the increased energy costs threatening to the business.

The severity of the energy crisis impact on the manufacturing industry has been calling for greater government support across all European countries. In the UK, Prime Minister Liz Truss recently unveiled the energy plan, which was broadly welcomed by manufacturing professionals, but gave very little detail on how it would work and instead, brought concerns over its limited six-month timescale.

Across the English Channel, Russia indefinitely suspended natural gas flows through the Nord Stream 1 pipeline, leading to Europe’s risk of recession deepening even more and energy rationing and conservation becoming all too real this winter. As sustained recovery from the pandemic is threatened and businesses are facing worst-case scenarios of closing down, they need to take additional and immediate measures to prevent catastrophic disruption to their production lines.

Four things manufacturers can do to minimise the effects of the energy crisis

Manufacturers and their planning teams have already been struggling through an unending torrent of supply chain disruptions. Now, as they’re facing shutdowns of entire plants due to soaring energy prices, they need to think one step ahead and adopt, or reinforce, some core planning principles and capabilities.

1) Increase synchronisation of planning, scheduling and execution processes

Considering today’s supply chain complexity and volatility, manual, Excel-based processes are no longer sufficient both in speed and intelligence to help manufacturers gain the much-needed agility to deal with the unexpected. The outdated technology will simply continue to struggle to keep all stakeholders, processes, systems and data synchronised in a timely manner. That’s the opposite of what manufacturers need right now.

Better synchronisation of planning, scheduling and execution can only come if manufacturers say goodbye to legacy systems and utilise more flexible, modern technology, underpinned by smart algorithms and fast scenario generation. Armed with better tools, planners and decision makers can plan and act in time to make an impact.

2) Adopt a Continuous Planning & Execution mindset

Planning and execution are no longer discrete activities with predetermined cadences. Such a mindset tends to be less responsive than is required by current disruptions. Decision makers, and the technology that supports them, have to always be planning and executing. The information flow between planning and execution has to be timely and meaningful to close the loop.

3) Create, evaluate and operationalize numerous scenarios for greater preparedness

Crafting one plan based on one set of inputs is not sufficient. Planners have to be able to consider multiple business scenarios and pick the one that they believe to be the most likely. The increased agility and synchronisation discussed above gives planners the time and capability to model, run and evaluate multiple scenarios.

4) Treat natural resources with the same planning rigour as “direct material and resources”

With the risk of rationing gas and energy to keep some production lines going, it’s worth first expanding the visibility into natural resources consumption by plant, line or product. Treating, for example, energy and water, with the same planning rigour as direct materials and resources will help manufacturers better allocate resources to lines and products that best meet business objectives, such as customer satisfaction or profitability. This approach will allow to better plan production that significantly reduces energy, and subsequently, keeps the bills to a manageable level.

How Replan can help during the energy crisis

To support manufacturers and planning teams during the energy crisis, we have introduced a specific capability into our solution that allows you to begin treating natural resources as direct material. With Replan, you can configure planning algorithms to treat energy and water as hard or soft constraints, and prioritise them relative to other constraints like labour, safety stock or customer service. With easy-to-understand analytics on SKU- or Group-level natural resource consumption, you can better allocate resources and successfully weather the energy crisis.

For more information on how Replan’s solution and new capability can help you during the energy crisis, click here.