To streamline energy buying and maximize savings, you need a granular understanding of your company’s portfolio and the markets. And a “granular understanding” requires having the right information at the right time, at both a macro and micro level.
Here are four steps your organization can take to improve its procurement program through better energy data management. Each recommendation is accompanied by a question to get you thinking about how well you know your own energy costs.
Step 1: Centralize
You need to dedicate your resources to the opportunities with the highest return on investment. Sounds intuitive, but it’s not always simple. To ensure you are not missing the next big cost-cutting prospect, all of your data needs to be integrated and accessible. Robust management and visualization software enables your organization to capture and anlayze its energy data in one system. This provides a global picture of cost and consumption for all commodities, not just electric power and natural gas.
Q: Across all countries in which you operate, what is the spread in the unit rate you pay for each commodity?
Step 2: Localize
Hang on, wasn’t the first step to centralize? True, but it’s vitally important you don’t lose local detail during that process. Centralization does not equal a one-size-fits-all approach, nor does it require the dilution of energy data as it moves up the chain. Organizations need a bottom-up approach to capture every line item from invoices — in the local language, currency and unit of measure. While summary information is ideal for initial review, the devil (and the savings) is in the details.
Q: What proportion of your bill is related to non-commodity costs? How does this differ per country? How is this trending over time?
Step 3: Contextualize
Energy spend is not just about markets and price per unit. Another essential element is how much energy you use, which can vary significantly depending on the type of facility or operation. For example, a retailer could have four different store classifications, as well as distribution centers, offices and data centers. Each type of facility will have a unique energy profile and potential for savings. In this case, organizations need to understand consumption patterns and identify opportunities by grouping similar facilities together. Then, they can layer in key facility and operational metrics like square footage or cost of goods sold on top of energy use.
Q: How much energy do you consume per product sold or produced? How does this differ across your portfolio?
Step 4: Analyze
You can achieve Steps 1, 2, and 3 with a flexible energy data management tool — to turn line-item details on invoices into actionable information. In parallel, more companies are going beyond invoices to understand what drives consumption. Knowing how and, as important, when you use energy across your portfolio opens new savings opportunities.
This not only drives efficiencies, it provides the insight necessary to shift loads to less expensive periods or smooth load profiles to avoid costly peak-demand charges.
Q: How much energy is consumed during peak periods? When does peak demand occur and how does this impact the bill? How much of your bill can you attribute to out-of-hours consumption?
Savings through better energy data management; it’s possible for all organizations. Pulling all your data into a single location and then making it available to your stakeholders will create both quick and long-term wins. And, best of all, this approach doesn’t necessarily require a significant investment in metering and technology. A greater understanding of your operations and the impact on energy consumption puts you in a far better position to improve performance, forecasting and budgeting.
p.s., If your answer to any of the questions above is “I don’t know” or “Give me a month and I might be able to tell you,” you could benefit from our free Energy Procurement Toolbox.