Opportunities for savings not always visible to energy users

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Summit Energy Prescribes a New Energy Supplier (and Savings) for Pharmaceutical Manufacturer

A global pharmaceutical company had a long-term relationship with an incumbent supplier that limited its ability to see more cost-effective alternatives. Summit Energy identified an energy procurement opportunity that saved its client more than 70,000 € annually.

The Best Opportunity for Energy Savings Often Comes Via Competition: Energy users who develop lasting relationships with incumbent suppliers do not always question the conditions of their contracts. Incumbent suppliers try to build strong “emotional” ties with their clients by negotiating long-term agreements that allow them to avoid aggressive price competition and maintain higher prices. To maximize value and get the best price, end-users need to challenge their suppliers and be prepared to make a change.

SITUATION
Over many years, a large pharmaceutical manufacturer had built up a strong professional and psychological attachment to the energy supplier for its four Belgian sites. The renewal of the company’s energy agreements became expected, and a continued relationship with the incumbent supplier was taken for granted.

However, when the manufacturer became a client of Summit Energy, Summit did not automatically assume that the incumbent supplier had the best pricing for the company. In fact, while working with other clients in that region, Summit had seen pricing that was much more competitive. Although the company had not requested Summit to look for savings opportunities, it was time to take action.

LEADERSHIP
Summit distributed a tender to the incumbent supplier as well as to four other suppliers, requesting a renewal offer for the next three years. Compared to the incumbent’s offer, an alternate supplier’s bid proposed a more favorable rate and more flexibility by not including a compulsory bandwidth.

Switching to a more competitive supplier with a more attractive offering was the best option. Summit Energy’s thorough recommendation, backed by analysis and evidence of concrete savings, convinced company leaders to change suppliers.

RESULTS
Summit’s industry insight and resulting recommendation to examine alternate suppliers resulted in annual savings of €70,000 ($100,800) for the pharmaceutical manufacturer. The more flexible agreement with the new supplier also eliminated penalties on trespassing bandwidth. Through unbiased diligence, Summit demonstrated the importance of exploring the market for the best price, identified significant savings, and executed a successful transition to its new supplier.

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