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| 1 minute read

As costs inflate, it’s time to pay attention to what hasn’t been a priority: utilities

In today’s world, there isn’t a shortage of conversation on rising costs, inflation, unreliable supply chains, and ESG. Whether it is in meetings, on earnings calls, in political forums, or over dinner with your family, all of these are at the top of the buzzword list. At the end of every discussion, I find myself asking, “What can a company tactically do about this?” 

Between trying to speed up parts at your current suppliers, setting up alternate suppliers, or keeping up with ESG goals, sometimes it pays to stop, take a deep breath, and go back to the basics of being an operator.

For our clients, we create practical solutions to complicated problems. One of the problems we consistently face is how to increase profitability. When the topics above are compared, all have one risk in common: a risk to profitability. But instead of trying to solve all the challenging issues present in today’s market at once, operators must prioritize and achieve some quick wins with a lower risk of failure. With a low-risk mindset centered on profitability, a different, more solvable question emerges: How can I improve my profitability while achieving ESG?

The answer may lie in what companies are not paying attention to and have greater control over. One of these areas is utilities, which are often far from most companies’ primary focus. At the end of the day, it is “keeping the lights on” to produce a product. Just “keeping the lights on” may be the problem, however.

Many companies have programs that focus on solar power or installing LED lighting. But a comprehensive approach to utilities cost reduction can leverage a plethora of other levers, including heat-recovery systems, ultrasonic air-leak detection, peak-load shaving, power-factor improvement using capacitor banks, variable-frequency drives (VFD’s), PLC equipment auto-shutdown, utility data web scraping, utility rebates, off-peak usage, etc.

Tags

consumer products, private equity

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