With the volatility of energy prices, it’s almost certain that businesses can lower their energy expenses with an effective business energy procurement strategy.
In this article, we’ll look at how businesses can enjoy cost savings and, in some cases, cost avoidance by working with an effective business energy procurement team.
The Benefits of Cost Savings in Energy Procurement for Businesses
Cost savings in energy procurement is a huge positive for businesses for several reasons.
Approaches that ensure cost savings in procurement can boost a company’s profit margins. In turn, this can help ensure financial stability. How much will a 10 to 30% reduction in energy procurement costs save your business? It’s hard to scoff at the resulting numbers, even for smaller companies.
Better Competitive Edge
For businesses with a hefty energy procurement bill, cutting down on energy procurement expenses can help the company offer more competitive prices to their clientele. Boosting the company’s competitiveness is a key element for any roadmap to long-term growth.
Boost in Purchasing Power
Cost savings in business energy procurement can improve a company’s overall purchasing power. You’ll have more resources to allocate to other key areas of your business, from increasing inventory to ramping up marketing or research and development.
Cost reduction in energy procurement can help reduce overhead, eliminate waste, and make the energy procurement process more efficient.
Better Supplier Relationships
Businesses happy with the cost of energy procurement are less likely to go through the hassle of switching to a new supplier. Therefore, they will have more time to focus on the aspects of business sure to positively impact their bottom line.
How Effective Business Energy Procurement Teams Maximize Cost Savings
Business energy procurement management teams are vital in the execution of any business strategy. The most effective ones reduce energy procurement costs in the following ways.
Carrying Out an Energy Audit
Effective business energy procurement teams conduct an audit to understand how much energy your business uses.
Are there periods of inexplicable spikes in energy usage? Is your business premises consuming similar amounts of energy during and after business hours? These are some of the details an audit will uncover.
The audit will highlight areas where you’re wasting money, and the procurement team will recommend possible changes. For example, high energy bills during off-peak periods suggest significant energy wastage. An audit also points to the possible risk of disasters depending on the equipment consuming the energy. Plus, it also gives the business energy procurement team a solid foundation to work on.
Reevaluating the Terms of Existing Business Energy Procurement Contracts
The fast-paced, volatile nature of the energy industry means that you’re likely to find significant savings opportunities in existing contracts. In such contracts, there’s a high likelihood that the pricing is no longer competitive, as the energy market changes every 24 hours.
Simple changes like tweaking the purchasing frequency can help your business get volume discounts. Other factors that can influence the change to the contract include environmental changes, changes to energy consumption across the business, adoption of new technology, and so on.
For example, you’re not getting the best deal if your business is still on the same post-paid energy contract from five years ago when you’ve overhauled your company’s technology multiple times. A modern HVAC unit or CNC machining tool will use significantly less energy than one from five to 10 years ago.
Effective business energy procurement management teams can reduce costs by ensuring that your current contract reflects the current realities of your business.
An effective energy procurement management team will holistically analyze energy-consuming appliances and processes across your business to see what you do and don’t need. The evaluation will also eliminate any unfounded estimations concerning your energy usage.
Preventing Energy Spend Leakage
Do you make energy-related purchases outside of agreed contracts? You could be losing money. This type of spending occurs when poor energy management leads to off-cycle shortages. For example, a business that constantly runs out of fuel before the next supply date may look for short-term alternatives to keep on powering processes. However, that off-cycle purchase will likely be costlier. Instead of ignoring such spending, an effective energy procurement management team will find the reasons for the shortages or reevaluate the purchase cycle.
Recommending a Shift From Uncompetitive Suppliers
In a highly competitive market such as the energy niche, businesses must ensure they are always getting the best deal possible.
An effective business energy procurement team will look at the offerings from existing suppliers to ensure they’re in line with the current market rate. When that isn’t the case, they can help the business find more competitive suppliers.
At Navigate Power, the NEX (the Navigate Exchange) simplifies finding competitive suppliers for all your energy needs. You can see possible suppliers and energy costs in real-time, allowing more flexibility and faster decision-making.
Recommending Collaborative Purchasing Opportunities
Business energy procurement teams can maximize cost savings by exploring collaborative purchasing opportunities. The goal is to seek out businesses near you with similar energy needs and enter a joint contract with a supplier. Depending on the energy needs, your business can record significant savings in such a partnership compared to going into a contract alone.
For example, businesses in the same area can negotiate to take delivery of fuel from the same supplier at the same time. Due to the higher volume, many suppliers will have no problems offering more favorable contract terms at a lower cost.
Exploring Renewable Energy Sources
How much money will you save by pushing some of your energy needs off the grid? An effective business energy procurement solutions provider can look at offsite renewable energy sources like solar parks and wind farms to ensure you have a low-cost, stable energy supply.
Businesses that strike the right mix of renewable and conventional energy sources can enjoy a significant reduction in their energy supply outlay. More businesses are using renewable energy to power gadgets and appliances in offices, only reserving on-grid energy for heavy-duty equipment.
Maximize Business Energy Cost Savings With Navigate Power
In today’s economy, businesses must explore all possible money-saving approaches. Navigate Power can help you achieve this through our business energy procurement services. Our procurement management tools and resources give businesses an edge in a highly competitive landscape.
With Navigate Power, you’ll get the professional guidance you can depend on for your business energy procurement. You can schedule a consultation with our team via email, phone, or in person. We have extensive experience in helping businesses ensure optimum efficiency with their energy usage.
More than 30,000 commercial establishments trust us to help them save money on electricity and natural gas budgets. From the first energy audit, we’ll show you different ways to get more out of your current energy budget.
Hand over your business energy procurement to one of the most experienced energy procurement companies in the country. Contact Navigate Power today through our online form or by phone at (888) 601-1789.