SMEs must enhance resource efficiency, profitability

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SMEs must enhance resource efficiency, profitability

Friday, 08 May 2020 | Prahlad Tewari/ Nilay Srivastava

Effective pandemic control followed by a suitable policy drive would be needed to provide enabling conditions for the economy to revive after the nationwide lockdown is lifted

The Indian economy was already struggling before the pandemic struck the world. Now, India’s fiscal woes have been further exacerbate by the Corona-enforced shutdowns that began on March 25 and were subsequently extended till May 17. The 53-day-long work disruption has seriously impacted small and medium enterprises (SMEs) that cover a wide range of sectors and provide employment to 120 million people. The pandemic has hit most of the labour-intensive industries, including the automobile sector, smart phone manufacturers, the solar industry, textile and steel manufacturing to name a few. SMEs are usually hard-pressed to meet production and delivery deadlines. Operational inefficiencies are thus overlooked most of the time, leading to high consumption of resources like energy, raw materials, water and so on. This results in a high cost of production, thereby squeezing profit margins.

However, adoption of Resource-Efficient Cleaner Production (RECP) strategies that optimise use of resources can help SMEs cut production costs while reducing the environmental footprint through lesser waste generation for the same product output. The current situation could thus be an opportunity to move towards more efficient operations and enhance overall productivity and profitability in SMEs around the nation.

During the shutdown period, enterprises can focus on capacity-building of human capital and planning for operations post the lockdown. Given the widespread access to smart phones and internet penetration in India, suitable virtual meeting platforms and the wide range of materials available online can be used to train managers and supervisors in energy management, water management and good housekeeping practices.

These learnings can be utilised subsequently to make workers aware down the chain to enhance their knowledge and skills. Keeping in touch with the workforce during this challenging time would also help reduce their anxieties. Further, during this period, suitable norms could be developed for proper sanitation of the premises and for practising social distancing once the lockdown is lifted.

Once enterprises are allowed to commence operations, the focus would be on productivity while taking care of workers’ safety. To maintain social distancing, enterprises may need to operate in smaller and multiple shifts. It is important to stress the need for good housekeeping measures such as marking man-machine pathways, implementing international best practices for sorting and setting-in-order by providing separate bins for different categories of wastes, designating locations for storage of raw materials, semi-finished and finished goods as well as tools and inventories.

Additionally, inspection of various machines for oiling, dusting, eliminating any external objects and for securing wiring connections should be performed to reduce unexpected breakdowns.

Worker safety can be addressed by non-contact thermal screening using infrared thermometer on a daily basis, access to alcohol-based hand sanitisers and sanitation tunnel combined with an updated Aarogya Setu app on mobile phones for checking the Corona status of the persons entering the factory premises. It is equally essential to acquire and allocate the required Personal Protective Equipment (PPE), ensure workers wear them and provide clean changing and washroom facilities to the staff. While improving housekeeping, low cost or no-cost RECP measures can be implemented to achieve resource savings.

Electricity savings can be realised through lighting optimisation by cleaning fixtures and windows, by providing lighting at the point of use, avoiding lighting at ceiling height and switching off unnecessary lights  during lunch and tea breaks.

Savings can also be accrued by fixing leaks in compressed air systems, water and steam pipelines. For instance, one bar reduction in delivery air will result in six to ten per cent reduction in power consumption in the compressor. Additional opportunities for energy savings include power factor improvement (by capacitor optimisation for reduced penalty in electricity bills); motor optimisation (by providing well-ventilated, dust-free surroundings with proper belt tension and replacement of flat belts with cogged belts and checking electrical connections to avoid heating of terminals); fan and blower optimisation (by ensuring clean and unrestricted inlet air, checking for unwanted noise and vibrations, cleaning filters and fan blades of motors, ensuring adequate belt tension and ensuring leakage-free air distribution network in the ducts); cooling tower optimisation (by routine cleaning of motors, blades and water, replacing metallic fan blades with light-weight fibre-reinforced plastic blades, controlling fan speed as per weather conditions and reducing the algae depositions); compressor optimisation (by providing clean and cool surroundings, reducing the distance between compressor and point of use, installing a closed-loop, low-friction and minimum bending pipeline, conducting free air delivery and leakage test, installing air guns and using compressed air only for high pressure requirements) and heat loss optimisation in boilers and furnaces (by providing adequate insulation, tight door closing and adjusting air to fuel ratio).

Water savings, including reducing wastewater generation, can be achieved by installation of aerators and sensors for flow reduction, placing water-filled bottles in high-volume toilet tanks to reduce amount of water per flush, recycling and reusing of reverse osmosis reject for floor cleaning, washing and other applications should be encouraged. Developing energy and water conservation strategies with periodic reduction targets will further boost resource saving initiatives.

Effective pandemic control followed by a suitable policy drive would be needed to provide enabling conditions for the economy to rebound. SMEs must position themselves for starting sustainable production practices after the lockdown. To deal with the economic slowdown caused by the pandemic and to be on track to achieve the Nationally Determined Contributions to meet Sustainable Development Goals 2030, SMEs need to remain competitive in a sustainable manner. Adoption of RECP strategies would help enterprises reduce costs and enhance their profitability while contributing to economic growth in an environmentally-sustainable manner.

(Tewari is Fellow and Srivastava is Research Associate, TERI. Inputs from Malini Balakrishnan and Vidya Batra, Senior Fellows, TERI)

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