Material handling automation is a process, not a purchase

Overview:

  • Automation has high potential to improve efficiency in logistics
  • Acquiring, deploying and maintaining robots represents a large initial cost and ongoing optimization
  • Developing an appropriate automation strategy is critical, and partnerships are key

As automation technology matures in the material handling and logistics fields, it is increasingly common for logistics, warehouse, and process managers to think about integrating robotics and AI-automated processes—and for good reason.

Industrial handling automation offers real advantages in safety and efficiency, which are only improving with time. Robotic intelligence is maturing rapidly and is able to solve issues like queuing, responding to equipment and pathfinding with increasing sophistication. Better technology and continuous learning through application have reduced the required preparation needed for deploying robotics and simplified integration into existing processes. However, even as the field matures, there are still numerous technical and operational challenges that remain.

Think partnerships, not vendors

Challenges aside—automation provides a competitive edge, one that no business can afford to ignore for long. But training and acquiring skilled staff to manage a fleet of robots and complex equipment, not to mention the challenges of planning, programming, and testing for deployment represent a large initial and ongoing investment of time, capital, and human resources.

Usually, the first step for most businesses starts with thinking of robots like computers or devices. While there are some parallels—automation is better understood as a process, not an out of box purchase. Businesses that wish to automate are better suited to looking for a partner first, rather than looking at hardware.

Finding the right equipment, then designing a plan for deployment, integration, maintenance, and upgrade support is a daunting challenge to handle completely in-house, especially when technology and processes are still developing. Navigating the various software and hardware on offer can actually wind up hurting businesses if done without the right expertise. Therefore, many businesses choose to seek partnerships to automate, and why finding the right partner, one who considers the full lifecycle of an automated fleet and is dedicated to 360-degree service is key.

>>>Watch: Aden Group’s automation partner ASAP Rental designs AGV solution for Namei

Process and strategy are the first steps

Automation takes time and is an intensive process that requires reimagining operations and making commitments to change. And as with any long-term process, it’s important to think in terms of both goals and first steps. The goals are clear—safety, efficiency, scalability. But instead of focusing too much on technical specifications, a facility’s operational needs should be approached more holistically. It’s important to think thoroughly about a strategy.

The first steps in the process start with a careful look at your facility in terms of layout, operations, and processes. Robotics are smarter now, yes, but like anything with intelligence, it requires planning and training to integrate into a workforce. Analyzing your facility, equipment, and operations is a critical first step—what exactly can be automated? What company’s AGVs suit the job best? Thinking about strategy first before moving to hardware is critical and will avoid costly missteps in this process.

There’s no shortcut to experience and expertise

By way of analogy, let’s think about deploying a set of workstations for CAD or some other purpose. Ask IT, deploying a new set of computer hardware in your facility is a large undertaking—now imagine if each computer had to be programmed with accurate spatial data and operational instructions. This is the singular challenge of automation. Deployment can take months, and inaccurate data can mean inoperable equipment. If a part of your facility has a graded incline, this data has to be programmed appropriately, or the robot may not be able to scale it.

Think of this deployment process as training for your fleet of robots. Hiring the right personnel is of course key, but providing them with the best training, and putting their intelligence to work is the only way to ensure they perform as required. The same is true with robots, though their training is directly programmed in.

Building and iterating a competitive edge

Integrating the robotics and automated equipment into the software that runs the facility is critical, and yields important dividends—scalability, iterability, and safety. Integrating robotics and automation into the facility control software (the ERP or WMS) improves their visibility in the management process—and what can’t be seen can’t be managed. This level of integration will also make automation another process that is continually optimized in regular operations, and ensure normal functioning.

Iterating and optimizing automation means keeping pace with the progress in a fast-moving field of technology. This poses another challenge—every year AGVs and automated handling equipment are faster, more precise, and more integrable into teams. This means that agility is a priority, a key factor in strategy, the same as analysis and deployment reliability. Finding a partner who prioritizes agility in providing their service is critical. It’s important to not be hung up on finding ‘the next big thing’ in automation, but rather a partner who can provide service that integrates incremental progress without disrupting operations.

Finding the right partner for safer, human-centric, and more efficient warehouses

The purpose of automation is as much efficiency-oriented as it is human-centric. As workloads in logistics skyrocket with global demand, it becomes ever more critical to ensure workplace safety. Robots, as everyone knows, don’t get tired, and don’t make the same kinds of costly, dangerous mistakes that can happen on the floor in a warehouse. Reducing forklift and loading accidents means a safer and healthier workplace.

This doesn’t mean displacing existing workforces—it means providing them with more skills, more safety, and more assurance that they are not overworked, overstressed, or exposed to undue risk. Workers can step back from repetitive, grinding tasks and to value-adding tasks. Automation is a chance to unlock human potential as much as technological potential.

Automation is a challenge—but also an incredible opportunity for logistics. The challenges of planning, deployment integration and upgrading mean that a business requires high-skill partners, ones that take into account the facility’s operations and characteristics, reliably taking strategy, data, hardware, and integration seriously. The opportunities mean that logistics in warehouses, ports, and depots can begin to explore new vistas in safety, efficiency, and employee development.

 
 

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MRO is more than spare parts: it’s an insurance policy for your assets

MRO. Spare-parts supply. Supply-chain optimization. Whatever you call it, keeping your site properly stocked is a core business concern for any industrial facility. While the term “MRO” (standing for maintenance, repair and operations) may sound like technical jargon, the consequences of good or bad MRO strategy directly affect your bottom line. Lacking the right spare parts when needed can have devastating consequences for asset owners or operators. MRO is essential to technical asset management and is best seen as insurance against various risks threatening facility operations.

Bad MRO is a cost you don’t want to pay

Take one instance from a retail store in Ningbo, East China. Recently, during a power outage, the diesel engine on the site’s backup generator failed to start. Discovering that they lacked the needed spare parts for a repair, and would need 24 hours to source a replacement, the facility was forced to shut down for a full workday, with all fresh and frozen food thrown away. For lack of proper MRO strategy, the site lost huge sums of money on revenue and inventory – a disaster that could have been reduced enormously by having the MRO inventory on hand and combined with a solid preventive maintenance plan.

Good MRO is increasingly digitalized & strategic

Optimizing MRO is a highly specialized inventory management task, requiring deep understanding of each asset’s operational context and its contributions to overall plant performance. In short, different assets have different levels of criticality and the best MRO strategy draws on principles of ISO 55000 to identify the strategy for each spare part. As seen in the case from Ningbo, the single biggest source of savings lies in harmonizing your site’s level of MRO inventory against the criticality of various assets they serve.

For MRO, risk analysis usually takes precedence over logistics and direct cost reduction considerations. A good MRO team can conduct this important task jointly with the client, facilitating the whole process through a digital platform, such as Akila.

Integration with a digital platform brings many advantages. Among two of the biggest:

  • Providing a single source of truth on information about asset criticality, asset health & maintenance plans, as well as spare parts movement based on data (either collected from a fresh audit or from clients’ existing system).
  • Continuous running of advanced marketplace analytics. These can proactively point out optimization opportunities.

Through this continuous analysis, substantial performance improvements are identified & captured:

  • Better protection against unanticipated breakdowns whose costs can quickly reach millions.
  • Reduction of “ghost stock” and an immediate clean-up of inventory not related to critical or important use.
  • An opportunity to integrate multiple teams doing MRO on their own as “small fish” with little pooling or coordination.
  • Definition of an MRO care plan. This typically avoiding 5-10% write-off yearly through the proper preventive care of stored items.

Business benefits from an MRO plan

Once the risk & opportunities are clearly established within the framework of the overall asset performance, and the MRO stock is managed accordingly, the following optimization strategies – or a combination of those – can be executed:

Cost control

Optimizing MRO procurement has a measurable impact on your bottom line. Too many businesses underestimate the total amount they’re spending on MRO due to hidden costs within the procurement process. While individual products are typically inexpensive, research suggests that the average organization spends twice as much on procurement as on the product itself.  With the right strategy, you can find and eliminate those inefficiencies and maximize your purchasing power.

Strategic partnership keeps your costs down in several ways:

  • Supply chain consolidation
  • Price deflation – volume leverage, global supplier network
  • Inventory optimization – inventory reduction, buyback, etc.
  • Reduced downtime

Easy plugin, easy scale-up

When you shift from decentralized to unified MRO, getting all teams on board can take time. The fact is, different teams may have different levels of readiness for change, and some may hesitate to disrupt familiar purchasing networks.

The good news is that nothing speaks like results. One of MRO partnership’s greatest advantages is how easy it is to run a pilot that plugs just one team into the global MRO network and then scale up after value has been proven and wider acceptance begins building up.

Aden’s MRO team has done just this for hundreds of MRO customers in Asia. But, by linking one team into our wider MRO services by being on-site for collaboration every week, and delivering concrete value in a short time, we were able to produce an immediate gain that opened the door to further gains on other teams.

More time for core business

MRO is a high mix, low-volume business. If you do it on your own, that means continually making small orders, with plenty of time drain on various teams. Remember, switching to a strategic MRO partner isn’t just about what we’ll do for you. It’s about what we free your people up to do after we come in.

The fact is, many companies only realize how much of a time and energy burden doing their own MRO is after they have outsourced to a strategic partner. The numbers can be staggering – hundreds of suppliers and thousands of purchases at a time.

With a strategic partner, that’s all shifted away from your employees, with your teams seeing a marked freeing of resources and attention to detail in work.

Sustainability & waste reduction

Good MRO is about pinpoint accuracy: forecasting maintenance needs and parts replacement, then buying just the right amount – no more, no less.

This leanness isn’t just a financial win, it’s an environmental win. With every surplus purchase comes extra packaging, energy consumption and carbon burning through the shipping and transport process.

With a strategic MRO partner, you can improve sustainability and reduce your carbon footprint by:

  • Streamlining your supplier network – ship more parts in fewer C02-burning trips.
  • Cutting out redundant purchases.
  • Specifying what kind of suppliers you want to buy from and making sure all purchases meet your in-house sustainability commitments.
 
 

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Technical asset management: more than maintenance

We tend not to think very much about the equipment that keeps workplaces comfortable and functional. Technical assets can be described as a sort of “invisible infrastructure” under a building, behind the walls and over one’s head, but not often noticed. Yet, this infrastructure is absolutely central to the experience of a building. How would you feel working in a building with poor heating, lighting and air circulation?

It is also critical to the carbon footprint of a facility and the total cost of ownership (TCO) for building owners. Technical asset management is a strategy designed to optimize performance and reduce carbon impact with data-backed transparency.

What is a “technical asset” anyway?

According to ISO 55000 GB/T 33172 an asset is anything that can create value for your organization. Technical assets, in this regard, are highly critical equipment and machinery that power the most essential systems in a building, such as electricity, heating and water. In other words, technical assets are the bedrock of your entire operations. If any one of these assets went offline – your production and operations would have to stop, leading to potentially disastrous financial impact.

Technical asset management (TAM) is a holistic and comprehensive approach to keeping critical machinery and systems running reliably and efficiently. It covers the spectrum of needs regarding upkeep, namely:

  • Corrective, preventive & predictive maintenance
  • Flying teams & remote asset management
  • MRO (Maintenance, repair and overhaul) & spare parts
  • OEM (Original equipment manufacturer) & asset installation

All these services rely on robust documentation, equipment data & processes; the whole operational chain is highly digitalized. Aden clients see the results & monitor in real-time the asset management performance through digital dashboards.

TAM is a service that provides businesses with comfort and safety in the office, a controlled production environment and creates a context in which businesses are freed up to focus more on their core needs.

CMMS, MRO, OEM… why are there so many acronyms?

Engineers and technicians love acronyms, but too often they are used as magic words to solve operational and industrial problems. Most of the time, the real answer lies in a deep understanding of the operational and material situation of the client, long experience, and healthy work discipline based on international standards. Never let your service provider hide behind jargon!

Is TAM only used at manufacturing and industrial sites?

Wherever an organization is relying on an asset to perform well and sustainably, TAM has a role to play. We all need high-performing office buildings, schools and hospitals as much as industrial clients need a reliable supply of compressed airHVAC and electricity. Technical asset management is a service needed across the built environment. By ensuring assets are running properly, TAM ensures the safety, comfort and performance of those relying on them to do their daily work.

What is the difference between predictive, preventive and corrective maintenance? And which one is best?

Corrective maintenance is the basic form of maintenance. In short, it means responding to problems after an issue or a breakdown has occurred. If your maintenance plan is heavily reliant on corrective maintenance, you probably have a problem – but that said, corrective maintenance has its place and is often sufficient for rudimentary and less essential assets. Paired with a good maintenance management system, corrective maintenance work orders can also happen in a timely and efficient manner. For critical assets, however, corrective maintenance is something you want to avoid.

Preventive maintenance relates to upkeep before a breakdown happens; it includes inspections and regulatory visits to standard exchange. Highly critical assets at your site should all have a preventive maintenance plan and MRO strategy in place to ensure that assets perform more reliably and at their peak for as long as possible.

Finally, predictive maintenance sits somewhere in the middle, where patterns of wear & tear are identified (often detected through high-level expertise and devices) and used to predict the breakdown potential of an asset before it impacts operations. Using a combination of IoT devices, vibration analysis, and even AI, engineers can pinpoint red flags and act on them to avoid costly downtime or asset failures.

But which one is best? Don’t get fooled by companies that say you need all predictive maintenance, all the time. Proper technical asset management uses a mix of all three types of maintenance, according to the risk profile of the client (operational, reputational and regulatory). The goal is to strike the right balance between the three to optimally use available manpower and to keep systems functioning better and without interruption.

Good asset management vs. bad asset management

In simple terms, a bad TAM provider thinks in day-to-day terms, while a good TAM partner builds a strategy based on where a client wants to be in the coming months and years, proactively finding ways to bring the organization to that point, whether the goals are financial, environmental, or both.

The best asset management takes a deep dive into a client’s operations to understand the criticality and risk level of each piece of equipment, machinery or system. It comprehensively documents which assets are linked to strict governmental regulations, compliance requirements, or ESG targets. All of this information is then used to craft a customized and responsive TAM strategy.

Good technical asset management systemically ensures transparency of this process by digitizing and centralizing all information, making it easily accessible for all stakeholders as required by ISO 55000.

Finally, technical asset management relies on its teams. TAM professionals should be certified, trained and evaluated using a standardized framework focused on the client’s success and asset lifecycle performance.

What’s the connection between technical asset management and Net Zero World Initiative?

TAM combined with digitalization is one of the most concrete areas for action for net-zero efforts. It’s estimated that the building sector accounts for 39% of global C02 emissions. A huge share of this can be traced back to technical assets such as chillers, boilers, compressors, HVAC systems and more.

The lowest carbon-emitting assets are the ones that have been properly designed or selected, correctly installed and tested, and given the proper amount of care throughout their lives. This is the fundamental work of technical asset management. Selecting a TAM partner rather than a simple provider is a critical investment in your organization’s impact and future.

What are the main business outcomes of good TAM strategy?

Businesses with a successful TAM strategy consistently outperform their peers in terms of supply chain agility, operational efficiency and financial profile. Most importantly, they can sustain their performance over long stretches of time, benefitting in the long term from all the value created.

Better performing assets means more comfortable facilities and more reliable business operations, which leads to higher performing employees, steadier business development and stronger relationships with clients. It also makes you more prepared to present operational data for clients, governments and investors. This puts your business at a distinct advantage over your competitors.

 
 

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Serious about sustainability? Don’t overlook your supply chain.

Businesses that invest in sustainable supply chains are also investing in resilience, transparency, and efficiency. In the era of ESG, it is the key to survival. Supply chains contribute significantly to a business’s carbon footprint and social impact and speak directly to the priorities and efficacy of corporate governance. Furthermore, sustainable supply chains deliver value on several fronts, not just for your own business, but also for your clients and the environment.

What are sustainable supply chains?

Many of us first think of renewable energy or recycling when we hear “sustainability”—signifiers of responsibility and stewardship. Supply chains are often overlooked in this regard, even though they are responsible for up to 90% of an organization’s greenhouse gas emissions. However, sustainability in the supply chain is even more multi-faceted, incorporating factors such as social responsibility and corporate governance, aligning almost perfectly with ESG criteria.

A sustainable supply chain is composed of four key traits:

Low carbon

The cornerstone of a sustainable supply chain is decarbonization. Each stage along the chain offers an opportunity to reduce carbon impact, from raw materials, production, suppliers and distribution. This might mean opting for EVs over gas-burning vehicles, choosing energy-efficient appliances for the office, or using biodegradable/recycled products in the disposables category.

Supply chain managers who identify where and how to cut carbon are setting their business up to be more sustainable at every stage of operation that comes afterward – and ultimately preparing their company to improve compliance and ESG scoring.

Low waste
Similar to reducing carbon impact, supply chain or procurement managers play a direct role in reducing waste. Inventory and SKU management is key to reducing financial and material waste (as well as carbon impact from shipping!). A low-waste supply chain strategy will have more precise replenishing and rebalancing practices. It will also actively move towards digitalization as much as possible to reduce paper waste.

Socially responsible
Businesses who prioritize sustainability must consider all factors – including social and corporate governance – when choosing suppliers and ensure they engage in fair-labor practices and anti-corruption policies. Doing so contributes to overall sustainability by safeguarding the integrity of the supply chain when it comes to regulatory compliance and meeting the expectations of clients and customers. It is also an essential consideration for corporate or ESG policies that measure social impact.

Transparent
Most importantly, companies that engage in supply chain practices need to show all of the above clearly and transparently with data. If businesses used to get by on verbal claims alone in the past, that era is quickly ending. Governments, customers and investors alike are all demanding documented compliance to international sustainability and ESG standards.

Benefits of a sustainable supply chain

Moving to a sustainable supply chain will bring a measurable positive impact to the internal functioning of a business as well as its external perception by customers, investors and the public. Companies that push for a sustainable supply chain are creating value on three fronts: for their business, for their clients and for the planet.

Assembly line for solar panel supply chain

Down-chain sustainability cuts costs, drives brand value and reduces risk

Businesses that move towards a more sustainable supply chain can see a variety of benefits. These benefits extend to long-term cost controls, improved brand value and risk mitigation.

Costs are often the number one obstacle to businesses investing in more sustainable supply chains. Because sourcing more sustainably tends to raise costs, businesses are more hesitant to overhaul their procurement practices. However, according to the World Economic Forum, sourcing sustainably can cut costs by up to 16%.

The main ways that businesses can see cost reductions are through the reduction of energy use and waste. Choosing to procure more energy-efficient materials, from vehicles to appliances and lighting, saves much more in the long run. This is particularly relevant for buildings, as 85% of the lifecycle costs are operational. Investing in sustainable materials and construction, which may be more expensive upfront, can create long-lasting sustainable value.

Secondly, businesses that invest in sustainable supply chains will see value creation in improved brand reputation. Whether you are a retail or service business, B2C or B2B, consumers, clients and investors are demanding more and more that the places they choose to spend their money are operating sustainably.

Last, a sustainable supply chain is also a compliant one. Due to the nature of the globalized supply chain, choosing a supplier from regions with different regulations carries some risk. Partnering with a supplier without taking issues like labor rights, particularly around forced and child labor, into consideration can have extremely detrimental impacts on brand reputation and compliance, which can lead to financial consequences.

Making a sustainable supply chain creates value up-chain for your clients

Corporate procurement increasingly relies on internationally standardized business metrics to evaluate ESG criteria. These criteria extend to sourcing and procurement practices and can make or break a business relationship. Just as businesses will need to stay ahead of developments in regulations and ESG standards, suppliers will need to stay abreast of changing corporate vendor guidelines.

These standards are evolving rapidly, and top multinational firms are requiring more and more extensive compliance. Funds across Asia have adopted increasingly stringent ESG guidelines as their economies have matured and developed. The World Business Council for Sustainable Development has partnered with the Singapore Stock Exchange to report ESG criteria to investors.

Institutional weight is rapidly moving behind sustainable supply chain practice. The European Commission now requires sustainability reports for corporate vendors and registered procurement sources. UN groups such as the International Fund for Agricultural Development require sustainability assessments for procurement. Private firms are also ramping up their sustainability policies, with companies such as Daikin in Japan and P&G in the US making commitments for sustainable business practices.

Institutions are beginning to organize industry-level certification schema for different supply chains ranging from textiles to tea to rare earth metals. Consumer preference in repeated surveys from NielsenWeForum, and Ipsos shows that Asian consumers value sustainability. As incomes rise and certification standards become clearer, the market will move to back up these preferences.

The advantage is to the firms that move first and fastest to become truly sustainable—first-mover advantages will wash away under scrutiny if they try to greenwash.

Sustainable supply chains are good for the planet

Meeting ESG guidelines for your product and maintaining a fully functioning sustainable supply chain is a greater feat than just improving efficiency, reputation, and your bottom line. It means reducing carbon footprints and waste at every level of business.

Meeting sustainability requirements for business means less exploitative labor, more reliable and future-proofed suppliers, and a safer, more stable planet. The migration of your business to an ecologically friendly practice means downstream cost reduction and risk avoidance.

Not only does your company benefit from improved efficiency, but the improvements to your carbon footprint and sustainability profile also become direct benefits to your ESG rating.

Steps to a sustainable supply chain

Implementing a sustainable supply chain strategy requires optimizing across multiple aspects of the supply chain using a diverse array of practices. Developing and maintaining a strategy will require a strategic, whole-business approach. Depending on the industry, this can manifest as local sourcing, data-driven procurement, circular economy of recycling, or digitalization.

While demanding transparency, data, and communication from contractors and suppliers is essential, it only kicks the can down the road. Long-term sustainability for any business has to begin at home.

Logistics truck working in supply chain

Step 1: Audit

The most direct and impactful method is to audit your business’ supply chains and to begin looking directly at the teams that comprise your business, from facilities management to client-facing work.
This process will bring unsustainable practices to light and necessitate change. Yet, it has the benefit of identifying which of your practices are currently sustainable—you may have solutions and sustainable practices you didn’t even know about!

Sustainability doesn’t just begin at home—it may well have already begun. Your business may well have high-quality sustainable practices now that are worthy of promotion and emulating. The goal of an audit is ultimately to find and implement sustainable practices as well as eliminate unsustainable ones.

Step 2: Connect

Every team has to be held accountable in this process, your profit centers, as well as your lagging teams, must identify what their sustainability profile is.
They must align with corporate ESG strategy, and define their goals, values, KPIs, and processes to meet the strategy. What are their vulnerabilities? Are there structural changes to be expected in the coming years due to climate change? What are the impacts of sustainable practices on these teams?

A sustainable supply chain connects the impacts and purposes of your business between suppliers, you, the client, and the community at large. Your business has to have a prosocial, pro-community impact on the world. The first purpose is to ensure an enduring system of return in your business. Your migration to a new paradigm of sourcing is meant to have enduring impacts.
Your business has to develop a new paradigm for sourcing that is resilient, renewable, and low-carbon. Managing these transition costs can be achieved through a whole-operation digital transformation.

Step 3: Digitalize

Any modern sustainability strategy must align with ESG reporting standards. This often means that a full-scale digital transformation is necessary to capture and report the relevant data. This transformation must also extend outside of the home office and incorporate suppliers. Without total feedback from all aspects of the business, the strategy will fail.

A single source of truth is the fixed star of sustainability, around which all practices turn. The purpose of the single source of truth is quite simple. You must maintain stable, centralized business knowledge that evolves. Without this, there is no connection between strategy, action, and result. Without this, business growth is impossible.

Sustainably sustainable

Modern business demands a clear vision—knowledge of the total business environment and a strategy that takes reality in plain light and builds a continuous cycle of improvement. Transitioning to a sustainable supply chain means real corporate responsibility. Your business will become sustainable, and grow more sustainable through this transformation.

 
 

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What does China’s carbon trading market mean for your business?

On July 16, China’s national carbon emission trading market opened. More than 2,000 power sector enterprises—accounting for more than 40% of the country’s carbon emissions—entered the market as the first batch of trading entities. On the first day, the average transaction price was 51.23 RMB / ton, the turnover volume was 4.104 million tons and the business volume exceeded 210 million RMB.

So what is carbon trading? Why the need to establish a nationwide unified carbon-trading market? How will this market affect enterprises with carbon emission demands? Here is what you need to know.

What is carbon trading?

Carbon trading, also known as carbon emission allowance (CEA) trading is a market-based mechanism in which carbon dioxide emission allowances are traded as commodities. The carbon market does not actually buy and sell CO2. What it trades are quotas, or allowances, for energy enterprises, industrial plants or other buildings to emit a certain amount of CO2. If a site or building reaches its emissions cap, it must purchase more emissions allowances as a price per ton of CO2 (tCO2) from the carbon trading market. This is also known as a cap-and-trade system.

What is carbon cap and trade?

Before trading, the government will determine the required total amount of local emissions reduction and supply market entities such as enterprises with a quota of allowances based on that figure. If an enterprise emits more than its allowed quota, it has to buy allowances from the market. On the other hand, if a company’s actual carbon emissions total less than the quota, the remaining quota can be sold in the market. This way the enterprises which perform better in terms of greenhouse gas emissions generate a value.

Why the need to establish a nationwide unified carbon market?

China has already proposed the national initiative to reach peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060. Both initiatives were reinforced at the Two Sessions earlier this year when the politburo announced the contents of the new five-year plan. Establishing and gradually improving the national carbon market is one of the core policy tools to achieve these goals.

China’s national carbon market breaks geographical and technology constraints and enables carbon abatement to be produced wherever it is more efficient and cheap, which is expected to significantly reduce the cost of reducing total emissions. The first batch of enterprises included in the national carbon market emits more than 4 billion tons of carbon dioxide, which means that China’s carbon trading market will become the largest carbon emissions trading market in the world.

Who can participate in carbon market trading?

At present, the market is in the initial stage, with 2,225 power generation enterprises taking the lead in trading. However, it is predicted that as the market improves and matures, more industries, industrial and commercial enterprises will enter into the emissions trading market.

The Ministry of Ecology and Environment of the People’s Republic of China has already carried out carbon emission data reporting and verification for enterprises in related industries. In addition to the power generation industry, the report also covers building materials, nonferrous metals, steel, petrochemical, chemical, papermaking, aviation, etc. In the future, with the expansion of the carbon market, enterprises’ demand for energy conservation and emission reduction will continue to increase, thus they will be more inclined to use clean energy and low-carbon energy.

Meanwhile, companies currently not involved in the carbon market can take steps to get their total emissions and carbon impact under control. There are a variety of energy management solutions that can relatively quickly shave off total greenhouse gas contributions such as HVAC optimization and compressed air leak management.

How can companies adapt to the new carbon market?

The best bet for companies who need a quick transition to low carbon operations is to find a strategic partner. A good energy partner can identify exactly where your operations have the highest carbon impact and help reduce it without affecting your bottom line. There are even options to do so with zero CAPEX needed. One of those methods is to collaborate with an ESCO or Energy Service Company that can take over energy management and retrofits, but there can be downsides especially when it comes to discrepancies over transparency. That’s one of the reasons Aden created Tera Energies, which uses Akila—an AI+IoT platform—to track those metrics for total transparency and use machine learning to optimize energy efficiency and reliability.

Moving towards a zero-carbon future

Total carbon emission controls benefit the whole society. However, some companies will face many challenges such as regulatory compliance, cost reduction and efficiency improvement. Nevertheless, businesses still need to keep up with the quick pace of change and respond positively. Finding a solid energy partner can help move your business in the right direction no matter which stages your business is at regarding energy efficiency management or sustainable development. With the opening of the carbon trading market and the national 2030 and 2060 initiatives, there is no better time to start than right now.

 
 

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4 advantages of lithium-ion battery forklifts

Forklift fleet management means considering more than just upfront costs. Forklift servicing needs, lifespan and energy efficiency are all important factors for optimizing your industrial handling operations.

Optimizing a handling fleet is a significant project for any business. There are many different factors to consider, from financial to operational. All fleet managers would like to minimize downtime, reduce accidents, cut down on energy or fuel needs, and meet operational needs with the given machines.

Lithium-ion batteries are powering up

While gas-powered forklifts will remain in the rotation in fleets for years to come, there have been recent developments with electric forklifts. The two primary types of electric forklifts are lead-acid battery-powered and lithium-ion battery-powered. Battery selection can have a considerable impact when it comes to fleet optimization. More than many fleet managers may think.

For work sites in Asia, it is still common for handling equipment to run on traditional lead-acid batteries. There is one main factor driving this decision: lithium-ion batteries are considerably more expensive. However, lithium-ion batteries have greatly improved in terms of capacity, lifespan and efficiency, which is more than making up for the cost.

Now, lithium-ion battery-powered forklifts are gaining more traction with industrial and logistics clients. If your fleet has not yet given a chance to lithium-ion powered forklifts, here are four reasons to consider doing so in place of lead-acid battery trucks.

1. A bigger punch in a smaller package

Compared to lead-acid batteries, which often need to be swapped out at some point during the workday, lithium-ion batteries can keep going. That is because lithium-ion batteries have a higher density of energy storage. The benefits of this are immediately apparent: less downtime during operations. No need to switch batteries means that no man-hours are lost when they are needed most.

Lithium-ion batteries also take up much less physical space than their lead-acid counterparts. Fleets running mostly lead-acid forklifts will need a dedicated room to handle recharging tasks to account for the risk of spills and fumes. No such risk exists for lithium-ion batteries; therefore, they take up less valuable floor space.

2. Quick charging and easy maintenance

Lithium-ion batteries can charge up to 8 times more quickly than lead-acid batteries and have the advantage of not needing a cool-down period. A lithium-ion battery can be fully charged within as little as an hour, meaning less operational downtime. Without the need to spend time waiting for recharging, fewer batteries need to be purchased to keep your fleet running. With more work happening on the floor, dramatically fewer battery changes, and a smaller number of batteries for purchase, lithium-ion batteries more than offset the higher price per battery.

Another benefit to lithium-ion batteries is that they require little to no daily maintenance. Unlike lead-acid batteries, lithium-ion batteries require no ongoing maintenance and don’t have to be watered or monitored for acid spills and corrosion. This means more safety on-site and (yet again) more time on the floor freed up to focus on other tasks.

3. Much longer lifetimes, and no “memory effect”

The numbers speak for themselves. Lithium-ion batteries can deliver up to 6,000 charge cycles while traditional lead-acid batteries last, at the most, for 1,200 charge cycles.

However, the difference in value jumps out when you read the fine print – what counts as one charge cycle for the different battery types? For old-school lead-acid batteries, any charging, regardless of duration, counts as one charge. It doesn’t matter whether you’ve done an 8-hour overnight charge or a short charge during the lunchtime break. Each time you plug in is minus one for your company’s bottom line – the infamous “memory effect” of inefficient lead-acid batteries.

Lithium-ion batteries, on the other hand, have no memory effect. If your staff does a partial charge of 25%, you will lose only what you’ve taken – 25% of one charge cycle. A 50% charge takes half of a charge cycle, and so on. In other words, not only do lithium-ion batteries deliver many more charge cycles, but they also ensure you get the full use of your battery’s lifetime. That’s simply not true for the old lead-acid options.

4. Efficiency and ecology

While it is true that lithium-ion batteries are a higher upfront investment, their lifetime and efficiency pay for themselves, particularly in situations requiring 24/7 battery operation. As we’ve already described, you can expect about four times the extended life cycle on a lithium-ion battery compared to lead-acid batteries. Longer lifecycle = lower carbon footprint from production and disposal.

Moreover, lithium-ion batteries do not use rare metals and are non-toxic, so both their production and post-consumption ecological impacts are lower than other batteries. And their CO2-free and fumeless charging cycles are not only ecologically friendly but also 30% more energy-efficient, which means a lower footprint and a lower bill.

Should every forklift fleet use lithium-ion forklifts?

Any serious fleet manager needs to understand and think about lithium-ion batteries. The truth is, lithium-ion-powered forklifts are game-changers for some sites but less useful for others. It all depends on operational needs.

For fleet managers, warehouse managers, or anyone else curious about integrating lithium-ion forklifts into their fleet, it is important to get a proper audit and consultation. Developing a strategic plan for when, where and how you might integrate lithium-ion trucks ensures minimal disruption to your operations while optimizing for efficiency.

 
 

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Compressed air leaks: what you don’t see may be costing you millions

Compressed air is the invisible backbone of industry, critical to a huge number of tasks in industrial operations. But, as an asset that can literally float away, compressed air systems require careful monitoring and maintenance. The simple fact is leaks happen. Most utility system managers and technicians know this. The problem is that they lack the tools to understand the scope of the problem, find and fix leaks, and set up systematic monitoring and maintenance after repairs.

Compressed air leaks quickly add up

So, if you manage a site that uses compressed air, what might you be losing day-by-day, year-by-year? Even one tiny leak of 0.8mm causes losses of over 20,000 meters cubed per year, which translates to roughly 2,000 RMB (or 250 euro). This may sound small, but the scope of the problem is usually much bigger than one leak. Typically, sites that have never implemented a compressed air leak management program will find hundreds of leaks during the initial audit.

On average, sites without compressed air leak management can expect to lose 20-50% of their air per year. What happens when 50% of this valuable utility is floating away every minute? The system compensates, consuming even more energy to make up for the loss. Overproduction adds up fast and causes pain where businesses can least afford it: C02 production and energy costs.

What causes compressed air leaks?

Before looking at how to manage leakage, it is worth exploring why leaks develop in the first place. Leaks most often occur at joints, connection points and end-use applications for two main reasons.

Material factors

The quality of equipment and materials matters. Attempting to save money upfront by choosing cheaper components, such as joints, hoses and valves will lead to leaks later. Depending on the equipment and materials, deterioration may occur at a different rate of speed with different maintenance pain points. Without a leak management system, it is impossible to find every weak point.

Procedural factors

Many leaks also arise from improper installation, application and operational use. Equipment that is not in use, for example, can be a source of leaks if it is not isolated with a valve during non-operational hours. Misuse, over-pressurization and pressure drops can all also contribute to wasted energy in the air-compressor system. Proper use, monitoring and regulation of the system are integral to preventing compressed air leaks. As is one other major factor: maintenance.

Fixing compressed air leaks: fast turnaround, long-lasting value

One of the biggest advantages of compressed air leak management is a short initial setup time and a quick ROI (less than a year in most cases). Advances in software allow audits and retrofits to be implemented by a small team in a short period. Depending on the size and complexity of a compressed air system, assessments can be completed in as little as one day.

Once assessments are made, then technicians can get to work making repairs. Sometimes this may include replacing improper materials or re-installing certain equipment, addressing the material and procedural mistakes mentioned earlier. Once repairs are completed, site managers still need to ensure continuous improvement. Thankfully, leak management software can also be used to continuously optimize performance through monitoring and analysis. With the proper audit, retrofit and optimization, leaks should stay under 5-10%, the mark of a well-maintained compressed air system.

How much money and carbon do compressed air leaks generate?

If you have any doubts about the financial and environmental benefits of compressed air leak management, let the numbers speak for themselves. Imagine, for instance, you manage a factory without compressed air leak management. You might be seeing a leakage rate of 30%, the average rate for sites that are not managing leaks. Here is what that costs your business every year in terms of money and added CO2 production.

The impact of a 30% leakage rate on different compressor capacities
Compressor capacity Cost CO2 (tons)
250 KW 507,000 RMB 230
500 KW 10 million RMB 920
1000 KW 208 million RMB 4,600

So you’ve fixed your leaks – now what?

One thing to remember is that even the best fixes must be accompanied by a good follow-up plan. Ongoing maintenance and monitoring are critical to achieving the financial/environmental savings shown above. The best solution not only finds and plugs leaks, but it should also leave you better equipped to monitor and manage future leaks. There are various paths to achieving this, but you don’t have to go it alone.

Today in Asia, new energy management models are gaining in popularity. Solutions such as Energy as a Service (EaaS) contracts make it easier for companies to outsource energy management and maintenance to a trusted partner.

Depending on your company’s financial and environmental commitments, another question to consider after you’ve addressed initial leakage problems is your longer-term strategy for compressed air equipment at your site. There is no one-size-fits-all solution here, and depending on the precise situation at your facility, you may choose to:

  • Optimize the performance of your existing equipment through a blend of preventive and predictive maintenance, backed by leak-monitoring software.
  • Upgrade to higher-efficiency compressed-air management systems, possibly in combination with other high-efficiency industrial assets.

The good news is that this is not an either/or choice. All equipment must be replaced eventually – the key is finding the best timing for an upgrade when the cost-benefit ratio for cost, efficiency and C02 emissions is optimal.

 
 

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China’s five-year plan: new energy policies could affect your business

One of the big agendas at this year’s Two Sessions meetings (两会 lianghui), which laid out the economic development plan for the next five years, was green energy and CO2 emissions reduction. The two primary environmental goals for 2025 are reducing energy consumption by 13.5% and CO2 emissions by 18% per unit of GDP. According to Chinese experts, hitting these targets puts the country on track to reach peak emissions in 2030 and carbon-neutrality by 2060, both of which are major commitments made by the government last year.

Although the meeting did not outline specific policy implementation, there has already been some development earlier in the year with the launch of a national Emissions Trading Scheme (ETS) and carbon trading market. A long-expected emissions cap was notably absent from the plan, but that does not mean it won’t come sometime in the future. When it does, it will surely affect industrial and commercial businesses, which right now account for nearly 30% of all energy use.

All eyes on 2025: preparing for bottom-up policy roll-outs

The coming five years will most likely look similar to the last five, where provinces and cities in China were allowed to take different approaches to meet the national targets. Over the previous five-year period, this bottom-up arrangement resulted in some steadily implemented plans and other drastic actions taken by provinces to reach their goals. Businesses should prepare for similar plans and actions over the next five years. In fact, some major businesses, such as Ant Financial, are taking steps to prepare already.

Two meetings 14th five-year plan

Although there is still some level of the unknown, businesses and buildings are not without options to ready themselves. Facility managers and property owners can take action to prepare for whatever policies come down the pipeline.

Several ways they can do this are:

  • Using digital tools to better manage and monitor energy and utilities
  • Upgrading assets to more efficient models
  • Building on-site renewable power sources and storage batteries

Getting a head start to make industrial and commercial sites more sustainable is an investment even without policy pressure. ROIs typically come within the first few years of operations, and can even come within the first year with a CapEx-free Energy as a Service plan (EaaS).

Even if the Two Sessions concluded without a concrete policy rollout, the current trend in China is towards more ecologically conscious and sustainable economic development. Last year in particular made this trend obvious at the national level, and it is continuing to grow at the investor and consumer levels. Over the next five years, bottom-up pressure may prove an even more powerful force than top-down pressure. The overall message is clear: businesses that are not making plans to reduce their emissions and operate in more transparent and sustainable ways are doing so at their own risk.

This post originally appeared on Tera Energies

 
 

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