Pinguin use innovative Energy Strategy Review approach to drive down costs

Pinguin Foods specialises in producing freshly harvested and high quality vegetables, fruits and convenience products for the main supermarket chains and the food service industry. Pinguin evolved from a simple green-grower to a leading, international company who now produce over 400,000 tons of finished produce to over 90 countries and supermarket chains around the world.

Our Challenge

In 2014 Pinguin decided to look outside their 7 year relationship with their incumbent energy consultant, for innovative ways to manage their £3.5m annual energy expenditure.

The objectives included:

  • Increasing the number of suppliers competing for their business when they went out to tender for energy supply contracts
  • Resolving tariff and tolerance issues caused by the seasonality of their crop driven business and sporadic gas demand
  • Understanding issues regarding gas winter annual ratios
  • Maintaining their CCA agreement
  • Understanding how to benchmark fixed and flexible contract offers
  • Understanding the risks in energy technology offers.

After exploring the market for a specialist to take on these challenges Pinguin Foods accepted an energy strategy review from Beond

The Review

After several fact-finding meetings, Beond provided Pinguin with a contract reverse engineering exercise and a risk strategy workshop.

The contract reverse engineering exercise revealed hidden risk premiums within the contract and six errors in the incumbent broker offer. The exercise also exposed several factors that would restrict competition and pricing improvements during competitive energy tendering.

During the risk strategy workshop Beond was able to review a variety of hedging scenarios with the Managing Director, Financial Controller and Chief Engineer, to establish the most appropriate risk preferences for their business. The exercise concluded that Pinguin would remove their budget risks and keep it simple by using a fixed price supply contract.

Beond then ran an energy tender with a focus on reducing the cost of energy by running a highly transparent and competitive online reverse auction.

The Energy Strategy Review also examined Pinguin’s energy policies and energy technology opportunities which included issues with CCAs and tolerances for installing solar PV.

The Results

All procurement issues were resolved within 3 months of engaging with Beond. This allowed Pinguin Foods to:

  • Attract 12 suppliers to their tenders process opposed to 2 offered by the incumbent broker (this also avoided paying £650k security deposit requested by the incumbents offers)
  • Attract 21 bids to the live reverse energy auction
  • Expose a difference of £308k (9.5%) between best and worst market offers
  • Force the incumbent supplier from a £69k margin down to a £171 margin to retain the business
  • Negotiate satisfactory contract tolerance terms, to meet erratic seasonal demand
  • Beat their incumbents broker’s best offer by £45k

Testimonial

“Beond are clearly experts at what they do, but what sets them apart is the ongoing attention paid to our account and their communication with us.”

Arjan Buschman – Finance Director

Case Study Highlights

The procurement results were unequivocal; proving that running a highly transparent and competitive online reverse energy auction can drive down supplier bids to negligible margins (0.01% in this case).

Beond continue to work with Pinguin Foods advising on the markets, carbon compliance and technology risks as they arise.

Beond Services

Beond are a privately owned specialist energy market consultancy – offering innovative and bespoke services to a wide range of energy and carbon consumers. Our business is built on offering tailored energy management and purchasing solutions, supported by our proprietary software and managed by our dedicated team of experts.

Our staff are the key to our success and significant investment has been placed in recruiting and retaining the best talent in the industry sector – with our Consulting Directors holding an average of 20 years’ individual energy market expertise and experience.

With over 500 major energy consumers under management we have an excellent track record in delivering:

  • Innovations in energy procurement to deliver best value to our clients
  • Dedicated portfolio management and on-going data collation and analysis
  • Tailored and bespoke risk management hedging strategies – able to adapt to the ever changing markets
  • Studies on the impact of future changes to an organisation to mitigate risk
  • Structural site works, upgrades and network connections
  • Bill validation, reporting and analysis
  • Compliance to carbon schemes such as the CRC and ESOS with an excellent track record of success
  • Innovations in energy management to bring bespoke solutions with strong financial return
  • Energy auditing and technology services to introduce the right technology to reduce energy consumption

For more information regarding our latest innovations please contact the consultancy team on 020 8899 7385.

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