Pepsi Beverages Company–Alternative Energy Project

Project Outline

Project Purpose

The intention of this alternative energy project is to make sound business decisions to include the strategic rationale, economic justification and the sustainability impact of consuming recycled oil verses natural gas as an alternative fuel to reduce gas consumption to heat an area of the building. The project includes pricing new equipment or modifying existing equipment to burn used recycled oil, while reducing natural gas consumption, emissions, and carbon footprint at the Denver, Colorado Pepsi Beverages Company.

History

Our goal at Pepsi is to reduce energy consumption by 5% to prior year. In order to meet this sustainability impact,gas conservation projects are a necessity. In 2010, the plant consumed 42,642 mmBTU’s of natural gas,a reduction from prior year by 6,614 mmBTU’s; but annual cost of gas increased from prior year by $45,858. Through the first six months of 2011, the plants gas consumption is at 21,730mmBTU’s, which will result in consumption increase if consumption reduction is not implemented.

Project Objectives

Perform research to find options to use fleet recycled oil generated at Pepsi reducing natural gas consumption, i.e. current space heaters can be converted to burn oil.

-Track and record alternative options to use recycled oil

-Obtain supplier quotes for each option

-Develop the Strategic Rational for Alternative Energy Projects

-Create a matrix that analyzes the following:

  • Current natural gas consumption versus alternative fuel consumption
  • Reduction in greenhouse gases
  • Change in carbon footprint
  • Meets corporate goal of reduced fuel intensity by 25 per unit produced
  • Return on investment meets a cost hurdle rates for simple return and IRR, 30% national target

-Write the strategic rational synopses for each opportunity covering the following topics with a combined goal of meeting natural gas reduction of 10%:

  • Critical strategy
  • Environmental impact
  • Government tax rebates
  • Economic justification
  • Plan of action
  • Strategic rationale
  • Cost savings

-Present final recommendations to Management.

Project Scope

In-Scope

The Scope of the project is natural gas conservation, reducing the amount of natural gas consumed at the facility. Individuals taking on this project will utilize the resources available to understand and track energy consumption and develop a natural gas alternative energy conservation plan for the Pepsi facility. Quality of product or production processes cannot be compromised by the energy conservation.

-Description of each alternative energy point by consumption amount, cost, percent of savings from waste, and opportunities for conservation.

-Action plan to conserve energy categorized by:

  • No cost versus cost to change process for conservation.
  • Quick wins—i.e. no cost other than a simple process change.
  • Minor cost quick wins.
  • Prioritized by largest reduction in energy usage to least favorable reduction.
  • Potential rebates for conservation.
  • Present conservation projects.

Out of scope

-Making monetary promises to suppliers or venders

-Any changes that will effect product quality or negative image of PBC

-Implementation of conservation projects.

Deliverables

-Develop a set of plans to reduce annual natural gasconsumption by 10%, which includes:

  • A one page synopsis for each of the best areas of opportunity
  • Critical strategy
  • Economic justification
  • ROI < 3 Years
  • Action Plan
  • Project or task.
  • Accountable individuals or team of individuals.
  • Timeline for completion.
  • Completion date.
  • Savings.
  • Strategic rationale.
  • Cost savings

-Other Deliverables

  • Energyconservation defined by consumption points and cost
  • Design and execute brainstorming session(s)
  • Work with energy and service supplier to establish rebate potential,if any, for conservation.
  • Develop awareness campaign plan so employees understand the importance of the corporate mission statement and how it effects everyone in respect to this project
  • Communicate opportunities, goals, and obtain interaction required to make changes
  • Package results for hand-off to plant for further development

Project Approach

-Review Pepsi Manufacturing Practices and Rules

-Review current building heating system

-Meet with Dan Frauenfelder and Erik Olen to receive tour of facilities

-Receive necessary briefings on and documentation related to current measurement processes, points, and approaches

-Outline energy process flows in addition to measurement points; confirm flows and points w/Pepsi

-Capture conservation measurements

-Research and brainstorm as necessary on opportunities and action plans. Pepsi personnel involved in the brainstorm process are:

  • Rich Garrimone (Fleet Manager)
  • Erik Olsen (Fleet Supervisor)
  • Paul Gonzales (Facility Maintenance Technician)
  • Dan Frauenfelder (Process Compliance Manager)
  • Sean Crowell (Process Control Manager)
  • Suppliers you would like to engage with

-Utilizing daily electrical energy usage report to determine best opportunity for improvements, alongwith knowledge from plant tour

-Utilize the 80/20 rule to work on items that use and or waste the highest percentage of energy

-Develop and finalize synopsizes

-Present results

-Package result and feedback for hand off

Critical Milestones and Event Dates

September

-Review of manufacturing process and initial plant tour

-Validate natural gasflow process and obtain measurements

-Research team’s initial thoughts on savings opportunities

-Design brainstorming session & identify any additional constituencies and/or participants

-Execute brainstorming session (end of month)

October

-Compile and handout from brainstorming session results

-Identify KPIs

-Identify preliminary savings strategies

-Develop draft synopsizes (due at end of October)

-Define and design employee awareness plan

-Obtain first pass on supplier quotes

November

-Continue development of synopsizes

-Initiate rebate research

-Define and design employee awareness plan

-First draft on awareness plan to sell natural gas conservation

December

-Finalize plans

-Present results

-Compile results and feedback

Celebrate wins as they occur

Quality Considerations

Conservation projects cannot compromise quality of product or processes associated with product quality in any way. Any process changes must be defined without compromising quality of product or process

If ROI in not <3 years broaden scope to include other alternative energy sources – methane / BOD, etc

Roles & Responsibilities

Students / Pepsi
Develop synopsis and approach to conservation goals / Agree on action plans and goals
  • Dan Frauenfelder (Project Manager)
  • Erik Olsen (Project Mentor)
  • Matt McLaughlin (Plant Manager)

Establish execution planner and track progress / Ensure executional planner tracks progress
  • Dan Frauenfelder (Project Manager )
  • Erik Olsen (Project Mentor)

Establish conservation goals from prioritizing potential opportunities / Agree with or realignment with goals and opportunities
  • Dan Frauenfelder (Project Manager)
  • Erik Olsen (Project Mentor)
  • Matt McLaughlin (Plant Manager)

Present conservation goals and priorities to Operations Management Staff / Gain alignment and help work with to reach conservation goals
Operations Management Staff
  • Rich Garrimone (Fleet Manager)
  • Erik Olsen (Project Mentor)
  • Bob Dunst (Warehouse Manager)
  • Katie Ojennes (Production Manager)
Other managers affected by changes
Initiate process changes to conserve energy / Collaborate with students to ensure on track and savings visible
  • Dan Frauenfelder (Project Manager)
  • Erik Olsen (Project Mentor)

-Open communication with EnergySupplier and initiate rebate programs.
-Develop tracking spread sheet of savings / Sign off with suppliers rebate programs agreed upon

Assumptions

-Project teams shall have reasonable access to project-related facility locations as requested, provided sufficient notification of the student visit is given

-Some measurement devices needed for project success are currently in place; others may need to be installed to accurately measure usage

-Any accurate documentation regarding energy or energy flow beneficial to the project is shared with the student team

-The project team will designate one point-of-contact for PBC

-A status meeting will occur at least once a week with PBC. (In person or conference call)

Additional Notes:

When working in corporate environment expect the following:

-Expect candid feedback, do not take personal

-Validate your findings & provide backup data to support findings

University of Colorado – LeedsSchool of Business

Project Outline Document

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