PharmaView: What’s Your Saving Story?

April 11, 2011
There’s nothing like a good tale of frugality to make your day.

There’s a crafty little miser in all of us who loves a bargain, a juicy coupon, or an airline upgrade, or feels genuine accomplishment haggling a $25 yard sale lamp down to 10 bucks. There’s pride in knowing that you’ve gotten bang for your buck or something for nothing.

These past few years, in a struggling industry and a down economy, our frugal sides have been rewarded at work—it’s been our job to save, not spend. And often, the dollar savings have fringe benefits, such as green savings.

I love a good saving story, and I’m not the only one. At March’s Interphex show in New York, for instance, Chris Broome, senior engineer on Merck’s global energy team, talked about cutting energy use. Broome, it was clear, was a proud saver. “The cheapest and greenest kilowatt hour is the one you don’t use,” he said, citing a common phrase.

He took particular enjoyment in the little things his company does to save: installing high-efficiency motors, converting from T12 to T8 fluorescent lights, using LEDs in Exit signs because they run 24 hours a day. At Whitehouse Station, Broome said, designated workers roam the facility looking for piping to insulate. In Puerto Rico, employees have done treasure hunts to search for potential energy- and cost-saving improvement projects.

It got me thinking. There must be millions of saving stories out there, just waiting to be heard. They ought to be shared. So here’s another one, courtesy of Allen Brewer, facility and maintenance manager for API manufacturer Ash Stevens, Inc. Brewer told me recenlty how ASI’s Michigan facilities have saved on energy usage and costs by the simple act of renegotiating its gas contract:  

PhM: What prompted you to reassess your gas contracts? Was it just a cost issue?

A.B.: Ash Stevens hired an energy consultant, Development Solutions, to conduct an energy audit of our facility and make recommendations to cut our energy usage and costs. The first cost reduction identified was to utilize a gas broker for our gas supplier and change our billing rates with [Detroit-based] DTE Energy. We recognized, for a facility of our size and production capacity, we were spending too much on energy usage and we needed to look for ways to cut those costs.

PhM: How did you renegotiate the contract?

A.B.: First, we contacted DTE to examine their billing structure for our company. Next, we identified available suppliers and requested bids for a one-year contract for a defined amount of gas to be purchased throughout the year. Through experience, price and availability, we selected a brokerage service, Integrys Energy Group, and signed a one-year contract.

PhM: What have you saved as a result of the renegotiation?

A.B.: Our gas costs are $50,000 less than last year at this time—although our usage is down slightly, too. Per our contract, we have a one-month supply of gas in storage that adds to those savings. This year, we’re adding an additional 10,000 square feet of manufacturing facilities, so our total energy bill will rise again—but our rates will still be lower. We also locked in a 1% lower gas purchase price for 2011 by monitoring the gas market and fortunately timing a 12-month contract with Integrys.

PhM: Do you think other drug manufacturers can easily do a similar renegotiation and reap benefits?

A.B.: Although the potential savings were attractive, we were wary of attempting renegotiation because we were uncertain of potential pitfalls and hidden costs. It turns out that this process was not as complicated as it first seemed. Certainly others can realize significant savings by renegotiating contracts and using market data to advantageously time signing the contract.

Ah, there’s nothing like a saving story to satisfy the miser in all of us. Know one? Email me ([email protected]) and we’ll share it with our readers.

About the Author

Paul Thomas | Senior Editor