In nearly every area of business, emergencies get the attention. From healthcare expenses to the cost of raw materials to cash flow – attention naturally follows the greatest need. It’s natural, but not the best approach when it comes to energy.
Reverse auctions have turned the once-secretive, sealed-bid process for procuring goods and services into an open bidding war – which appears to be to the advantage of the buyer. Under this arrangement, the buyer contracts with a third party that issues a request for quotations from suppliers. At a predetermined day and time, suppliers log into an auction site and input price quotes, competing for the buyer’s business primarily on the basis of who will agree to the lowest price.
Purchasing professionals face some universal issues, whether they are buying cardboard, beef or industrial exhaust systems. Everyone wants the lowest possible cost. No one wants surprises in the contract. And everyone knows that more bidders typically bring more competitive pricing.
It happens everywhere – the energy component of conversion costs skyrockets when production is scaled back. The cause is clear and avoidable. You can avoid this pitfall by taking immediate action with a focus on rigorous energy cost reduction.