A long-term energy procurement strategy can save you money, advises Mike Chessum, sales director, Industrial & Commercial Energy and Services at British Gas Business.
If there’s one watchword for business trends today, it’s disruption. We all know the stories: Amazon changing shopping habits and then, with drone deliveries, the logistics industry; Uber and AirBnB revolutionising how we book transport and accommodation; on-demand viewing replacing scheduled television.
Technology changes everything: how we shop, travel, even how we relax. Tech disrupts it all. The energy industry is not immune. Both suppliers and consumers are encountering more innovative ways to manage demand.
Artificial intelligence predicts forward trends. Smart assets respond to spot market price signals through dynamic demand. Decentralised plant generates and stores power on-site with power purchase agreements used to procure the residual requirement at long-term fixed wholesale costs.
This change, however, comes with complications. Good energy procurement is no longer about the lowest unit price but what other capabilities a supplier can offer.
Can they provide a bespoke trading strategy to suit your business’s procurement risk appetite? Can they support your energy efficiency objectives, for example through energy performance contracts? Can they help your decarbonisation targets by sourcing energy from renewable and low carbon sources? Most importantly, can they keep it simple so it can be understood?
Savvy businesses know that navigating through disruptive changes requires demonstrable long-term value which can be recognised by stakeholders ranging from operations and sustainability to company shareholders. At the same time, any contract must deliver to financial expectations today.
The quickest way to action this ambition is to form long-term partnerships. A strong relationship which drives continual improvement. Effective contract management holds the supplier to account but creates a spirit of teamwork where supplier and customer learn from and work with each other. Collaboration, not confrontation draws out best value.
Instead of looking purely at unit price or supplier management fee where cost opportunities are minimal, procurement leaders develop a long-term budget and decarbonisation strategy based on data-led efficiency programmes, smart energy management and optimal trading. A supplier like British Gas Business brings knowledge and experience in buying, managing and generating energy. While combining different procurement streams can be more complicated, those customers who engage with regular conversations about value, and work together with a likeminded supplier to identify and action energy saving opportunities, quickly reap the rewards.
The conversation is moving away from short-term transactional arrangements but not quickly enough.
Effective procurement and ongoing supplier relationship management doesn’t just save money, they provide a valuable, maintainable boost to the bottom line. Energy purchasing offers a perfect opportunity to demonstrate how indispensable such skills are.
At British Gas Business, we want to develop the skill-set of tomorrow so as businesses become more astute, we welcome the conversation. Are you ready to put effective energy procurement on the cost-saving agenda?
To find out how British Gas Business can help save you money through a long-term energy procurement strategy, data insights or operational flexibility, call us on 0845 070 3720, or visit britishgas.co.uk/business