How a Leading Manufacturing Company Reduced Energy Costs by $1.3 Million With Procure Analytics

Overview

A leading producer of motors and related components sought Procure Analytics’ sourcing expertise to help organize its energy management activities. Tradition Energy was introduced to the manufacturer through its Procure Analytics relationship. 

Challenges

The company engaged Procure Analytics to streamline its energy management practices. The absence of an established procurement strategy necessitated urgent identification and prioritization of attainable opportunities. 

Approach

Tradition’s discovery process revealed numerous issues resulting from procurement inefficiency: many electricity and natural gas agreements were expired, billing procedures were inconsistent, and energy rates were unprotected by floating post-contractually or on standard utility rates. The Tradition team worked quickly to gather energy bills from all company facilities and then consolidated the energy data, which would serve as a baseline for developing a pricing strategy. 

Tradition utilized its proprietary pricing technology, TEPS, to issue multiple RFPs for both electricity and gas. This competitive process helped determine which supplier offers were best aligned with the company’s procurement goals. During the analysis, Tradition recommended that the company not proceed in one market as the utility provided a more competitive solution than the third-party supplier market. 

Results

Tradition’s proactive approach yielded significant results, enhancing the manufacturer’s energy management efficiency: 

• Tradition enabled the manufacturer to promptly pinpoint opportunities to avoid fluctuating market rates, resulting in a cost reduction of $1.3 million. 

• Tradition protected the manufacturer from future market volatility and increased costs by locking in electricity and natural gas budgets. 

• Tradition’s contract negotiations achieved purchasing flexibility for the company, which will allow them to buy or sell locations without paying penalties moving forward. 

• Consolidated purchasing procedures and increased efficiency has enabled proactive account management and the identification of new opportunities. 

Tradition continues to maximize value for the member via ongoing energy savings.