July 2021 - Quarterly Market Letter
On behalf of the team at 5, I am pleased to forward our market letter for the second quarter of...
A competitive bid process is a critical aspect of any procurement strategy, but it is often difficult for clients to run a fair and effective process on their own. There are many obstacles that clients face when pricing on their own and additional issues to consider when using a typical energy broker.
One of the first hurdles that a client must overcome is selecting the relevant set of suppliers given the client’s size, location, and type of business. While there are countless suppliers in every deregulated market, only a few have the relevant capabilities that align with a given set of clients. It is also critical to assess a supplier’s financial stability, operational capabilities, and billing automation, in addition to their product offerings and rates.
Because of the daily movement of the commodity markets, most energy supply offers are only good for a matter of hours and must be repriced each day. When clients or brokers are not able to gather supplier offers on the same day, with the same contract terms and conditions, a winning bid may be selected without a fair playing field for each participant. This process can be frustrating and exhausting for the client as they struggle to synchronize the bids with limited time, knowledge, and resources. To make matters worse, some energy brokers exploit this confusion and complexity to their own advantage, positioning one supplier as more competitive than others because of some personal gain for the broker.
5’s proven process for competitive sourcing allows clients to approach each procurement exercise with peace of mind and confidence. 5 works with more than 80 suppliers of electricity, natural gas, and other services throughout North America and reviews them regularly to determine which client types, sizes, products, and geographies are the best fit for each. After selecting the relevant suppliers for a procurement process, 5 completes an initial pricing round to ensure that each supplier is using the correct data and providing offers that are comparable to the others. In subsequent rounds of pricing, 5 provides blind feedback to the suppliers on their competitiveness and guides the client to narrow down suppliers for the “best and final” offer. By the time a client is reviewing final offers, 5 has already addressed the product structuring needs and completed any contract review and negotiation.
The competitive sourcing process is part of 5’s comprehensive approach to controlling and reducing energy costs for clients.
Contact Us to begin leveraging 5 for your next procurement process.