The Show Must Go On: The Importance of Developing Business Metrics to Manage Your Electricity Costs
One of the challenges we hear from almost all of our clients is how do they manage electricity costs while still meeting the daily, and changing demands of their business? For our manufacturing clients they still need to make and deliver their products on time and at a high quality. And, our retail customers still need to ensure they satisfy their customers with quality product in a comfortable environment.
Business managers can’t stop or change these business critical functions just to meet an electricity budget. As they say, the show must go on.
This is why it’s critical to convert your electricity costs into a metric or key performance indicator that makes sense for your business. If you’re in the business of manufacturing, the metric important to you is probably $ electricity spend\unit of output. For a retail business the metric is probably $ electricity spend\sq. ft. This allows business managers to look at electricity cost as they should – in relation to the main drivers of their business.
Why are these metrics so important to managing electricity costs?
The importance of these metrics becomes clear with a simple example. Jane Smith run’s a chain of 100 coffee shops around Ontario and she’s set a budget for her electricity costs by store by month based on the expected demand for coffee. With the extreme winter we’ve had in Ontario the demand for coffee at Jane’s stores has doubled – which has dramatically increased the electricity consumption across her portfolio. Revenues are up; but costs are up too. What if the cost of all the extra coffee is greater than the revenues?
What’s Jane to do? If Jane was tracking her electricity costs as $ in cost \coffee sold she would be able to tell immediately if the extra coffee sales were profitable for her. Suddenly, she’s converted her electricity expense into a leading indicator of the profitability of her business. Maybe as coffee demand is increasing the demand for electricity is increasing even more. That’s critical information to help Jane run a profitable business.
Many companies find developing these metrics difficult as they don’t have ready access to their electricity consumption or cost information. Nor are they able to easily correlate this information with information from their internal systems about production or client demand. This is one of the areas where Big Data is transforming how companies manage their electricity costs; and ultimately improve they way companies are managing their business.
As Kate has explained in her previous posts, Big Data is starting to be used by companies to help them pursue energy efficiencies. With a Big Data energy platform companies are able to store all that business relevant information in a single place and easily report on those business metrics; from one convenient location.
That’s why Bruce Power Direct has made a significant investment in a Big Data platform; to provide that capability to our clients to help them better understand, manage and control their electricity expense.
Get in touch to see how our Big Data platform can help you convert electricity costs into something relevant for you.