Manufacturers’ Energy Purchasing Strategies

Every manufacturing facility in Houston, as well as around the world, is concerned about rising energy prices. Managers must look at energy savings in two ways: reducing energy consumption, or adopting better energy buying strategies, and switching to renewable energy sources. In a 2005 survey, 98% of respondents stated that high energy prices had already affected their business. This is a significant amount of money.

Managers of plants can use the first tactic to reduce energy consumption in two areas: the manufacturing process, and the facilities/buildings. Many managers are hesitant about changing their manufacturing processes to reduce energy consumption. Managers don’t want to compromise productivity or quality in order to save money that could have adverse effects on their bottom line. Managers are faced with dual pressures to cut energy consumption and not compromise output.

Another way to save energy is to use best practices in energy purchasing strategies. This requires no compromises in manufacturing. Complexity of the energy markets and available technologies means that it takes some knowledge to understand the risks and take advantage of the opportunities. Many companies have begun to hire energy consultants who are able to handle all aspects of the energy markets and the available technologies.

Legacy has helped many clients identify multiple energy price and contract options and determine the risk exposures in various scenarios. Other consultants or Legacy can:

• To create an accurate representation of the load profile at each level (meter, plant, enterprise), you can combine historical and ongoing load data.
• Assess your risk tolerance, budget goals, and constraints
• Variations in energy consumption across facilities of a company are possible to model
• Use state-of the-art technology to simulate forward energy market prices
• Collaborate with management to identify existing commodity price and usage risks, and create a risk management strategy.
• To help the company manage its energy portfolio, provide ongoing risk simulations and energy-related earnings at risk analyses.
• Use an experienced legal team that focuses on the client’s end-use needs.
• You can suggest technologies that will help the operational and management team better understand and manage their loads
• To the extent that such strategies are compatible to the company’s operating strategy, develop strategies to reap financial benefits from load reduction

The Manufacturing Management Training Courses current energy crisis is only one of many challenges facing American manufacturers recently, especially small-sized manufacturing companies. Companies already face rising costs, including in health care, pensions and regulatory requirements. There is also new competition due to new import laws that allow for duty-free imports from other countries. All of these factors deplete valuable resources and profit margins. Added to these problems, rising energy costs have a negative impact on manufacturers’ human, capital and raw material resources.