Welcome to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. Today, I\u2019ll be reviewing a whitepaper entitled \u201cHowever You Slice It, Buying Energy Is Unique\u201d from Summit Energy and Purchasing Magazine.<\/p>\n
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The simple premise of this whitepaper is to demonstrate that energy is a commodity unlike others and, therefore, the procurement of it should be approached differently. It bases this argument on five key differences, represented in five discreet sections of the document.<\/p>\n
Difference #1 \u2013 Geography Matters.<\/strong> This section is packed with quotes from energy buyers who attest that regulations in different states complicate the buying of energy and that one has to be familiar with each market in order to optimally identify the right approach in each market.<\/p>\n Difference #2 \u2013 Volatile Pricing and Tight Timing.<\/strong> While commodity buyers certainly understand the roller-coaster-like nature of commodity prices, this whitepaper tries to establish that the timing of energy purchases is among the tightest of any commodity, with pricing validity often measured in hours.<\/p>\n Difference #3 \u2013 Necessity of Market Intelligence.<\/strong> While I would argue that market intelligence is necessary for any commodity, this section points out that some activities like being familiar with regulations that differ by location and keeping track of pending legislation are employed with energy buying but not with other commodities.<\/p>\n Difference #4 \u2013 Not Just Aggregation.<\/strong> Having never been responsible for multi-site energy acquisition, I found these excerpts from this section to be rather interesting: \u201cEven if multiple sites can aggregate their buy from a single supplier, they may get better rates by going it alone. For example, one site may reside within a business unit of the parent company and not secure credit terms as favorable as the other site. Many factors can drive contract preference, and all too often, procurement professionals too quickly assume that aggregating volume is the most effective tool in the shed. In addition to the size of your load, the shape of your load can drastically impact pricing. The time of day when a facility requires the most energy and its pattern of use can significantly impact the site\u2019s utility rate, contract terms or price offerings.\u201d<\/p>\n Difference #5 \u2013 Measures of Success.<\/strong> Because the market prices for energy change frequently, one cannot expect energy costs to go down year-over-year for any significant duration of time. That makes reporting traditional cost savings difficult. David Bush, the CEO of procurement solution provider and Purchasing Certification Blog sponsor Iasta, was quoted in this section as saying \u201cIt\u2019s hard to pin down cost savings with energy\u2026You look at what you would have paid if you hadn\u2019t acted versus what you did pay.\u201d The whitepaper concludes this section by saying sometimes cost savings plays second fiddle to actually having predictable costs, which pleases investors.<\/p>\n I\u2019ve always found learning about new categories \u2013 including those that I was not likely to purchase in the near future \u2013 to be fascinating and helpful in my development as a purchasing professional. If you\u2019re like me, you\u2019ll probably enjoy reading this whitepaper. You can download your own copy from Purchasing Magazine\u2019s Web site (registration required).<\/p>\n","protected":false},"excerpt":{"rendered":" Welcome to another installment of Whitepaper Wednesday here on the […]<\/p>\n","protected":false},"author":12,"featured_media":4015,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2771","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-procurement"],"yoast_head":"\n