For my latest chat over chips and salsa, I was fortunate enough to have Walt Taylor in my rollerdex. He is the Director of Energy & Building Materials at the SSG Co-op, which serves Wendy’s and Arby’s. A part of life’s rich tapestry, I figured Walt would have some interesting perspectives on some tough and trivial questions. And of course, he did: » read more
Posts Tagged ‘energy purchase strategy’
I had the pleasure of meeting Mike Miller of PepsiCo earlier this year at the grand opening of our London office, and he was both an interesting and highly entertaining character. So when I decided to interview someone for the burrito, my first choice of interviewee was an easy decision. So Mike good-humoredly provided answers to some random questions I threw at him this week:
1) What is your current role at PepsiCo and what was your journey to get there?
Sr. Group Manager, Energy Risk. I have been in the energy industry since 1997, starting out as an engineering computer drawing specialist with Kansas City Power and Light. I then got into customer service of the largest 1000 tier 2 customers, followed by an Account Representative for the largest industrial customers in the service territory. I then went onto positions at Utilicorp and TXU in an energy management role for both companies. After both companies ceased their energy management services operations I ended up at PepsiCo.
2) What has been the biggest change you have seen since joining PepsiCo?
Risk management has changed everywhere based on more stringent controls. These changes have made my role more challenging.
I think it would be cool to be able to fly.
4) What is your favorite aspect of your job?
The challenging, never dull, environment at PepsiCo. I work in an area of many type A personalities and I realize that I would not be satisfied at any workplace that did not have this characteristic.
5) From your perspective, what is going to be the biggest challenge in the energy world over the next decade?
Moving away from the use of crude oil and products – globally. The world’s economic growth engine is powered by middle distillates and there do not appear to be ample substitutes that will be able to offset the global population growth, coupled with the economic surges of emerging countries such as China, India and Brazil.
6) When we met earlier in the year, you spoke of your love of 1920s and 1930s blues, and how you’d even studied it at evening classes. What song would be the soundtrack to one of your better days at work?
Blind Lemon Jefferson – Father of the Texas Blues – Song: Got the Blues.
7) Sustainability is a key aspect of your business; do you believe your focus has shifted towards being more sustainable at the expense of price risk management, or are the two concepts mutually exclusive at PepsiCo?
PepsiCo has a very strong world class sustainability program. My group mostly focuses on price risk and energy management for the physical and financial exposures within PepsiCo. I do not believe there has been a negative effect from the sustainability program on our ability to manage price risk.
8) Your day has just taken a turn for the worse. What song would now be the soundtrack to your day?
I would have to turn to some sort of heavy – alternative rock like Linkin Park.
9) What’s your favorite commodity, and why?
Crude Oil – because it is a global commodity and it is more challenging to analyze on a fundamental basis than natural gas, since it is more of a regional commodity.
10) I understand you used to be a trader, and still use technical analysis in your current role. Technical analysis is great, isn’t it?
Technical analysis is useful for indentifying short term trends which can be advantageous for trading or forecasting activities within the next couple months. I spend much more of my time on fundamental analysis since it provides more viable information for the longer term.
Reeses Peanut butter cup. I grew up on peanut butter sandwiches when I was a kid.
12) Do you have a motto or a key phrase which resonates with you?
Thanks so much, Mike, for the insights. Rock on indeed!
There’s a hilarious line in the film Role Models, where Paul Rudd turns to Seann William Scott and says, exasperated: ‘That’s not a motto, that’s just you saying a bunch of things’. Not only did this make me chuckle, but it struck a chord, as there are many mottos bantered around in financial markets which are, well, just a bunch of things and little else. So this week I thought I would seek inspiration from my work colleagues – my own role models, per se – to provide me with some words of wisdom. Some relate to energy, and some relate to life. But all we can relate to, so enjoy:
‘Without energy there is no capacity to do work.’
– This makes sense in a couple of ways, my learned colleague told me; not only is this the dictionary definition for energy, but without energy, there would be no Summit. He’s got a point (well, two in fact).
‘You may not believe everything that is said, but if you look hard enough, and take the emotion out of it, you might see some truth worth hearing.’
– This is a message we try to get across to clients; even if you don’t believe us, we are here to tell you the stark truths.
‘Change will come when the pain of staying the same is worse than the pain of change.”
– Again, at some point, clients realize it is wrong to fear change, especially when maintaining the status quo involves the pain of losing money.
‘You can’t always get what you want…but when you try sometimes, you get what you need.’
– This is something our CFO tells (sings?) to his kids, but it relates just as well to hedging strategies; you may not get what you want (= the lowest price), but you get what you need (= budget certainty).
‘You know what you get when you don’t get what you want…experience.’
– And the flip-side of not hedging; if the market turns against you, you gain the experience of why hedging makes sense.
Five further mottos for life:
–‘Never mistake activity for achievement.’
–‘Never celebrate mediocrity.’
–‘No one said life is easy.’
–‘You get what you get and you don’t throw a fit.’
–‘I will not idly tiptoe through life only to arrive safely at death’s doorstep.’
Thanks so much to this week’s role models…Ann Barzak, Deena Burnett, Evan Cox, George Willett, Joe Higgins, Joyce Gee, Michelle Kerbow, Phil Wafford, Roger Durham, Tom Muddell.
I leave you with two mottos from our CEO, Steve Wilhite (it’s great he humors my occasional whims…), one for work and one for life:
‘Most people fail to plan, not plan to fail…but failing to plan is like planning to fail.’
‘Work then play, work then play, work then play – if you do that, the work is better and so is the play.’
To tie in with the shindig that is the launch party of our UK office at Shakespeare’s Globe Theatre on June 15th, I present to thee forthwith ten quotes Billy the Bard would say if he were involved in commodity risk management:
1) There is nothing either good or bad; but thinking makes it so – yes, markets are driven by various forces passing the parcel, from fundamentals to technical analysis to outside influences. But sentiment, opinion and fear/greed also play a starring role. So even if something is not in bad shape, if the consensus makes it so, then prices will reflect this.
2) Measure for Measure – a measured approach to mitigating risk is the way forward, and ties directly to my haiku on risk management: uncertainty is…..an ever-present threat so….hedge hedge hedge hedge hedge.
3) Chaos is come again – Othello knew where it was at…crude down 23% in 13 unlucky trading days, from top of the pops (high of the year $87.15 on May 3rd) to the drop of all drops ($66.91 today – May 20th).
5) Though this be madness, yet there is method in’t – why it makes sense to quantify risk in commodity markets. Although no-one can perfectly predict the future, by equipping yourself with a Batman-like utility belt of tools for assessing the potential evolution and volatility of a market – from macroeconomic or econometric models to Value-at-Risk to technical analysis – you can establish parameters to quantify present and future risk and reward.
6) Foregone conclusion – Pah! Shazbat! Unlike in Othello, there is no foregone conclusion in commodity markets. Which is probably a good thing too, as there would be no need for an energy consultant (= Unhooray!).
7) Screw your courage to the sticking-place, and we’ll not fail – having the knowledge to stand by your convictions on market opinions is key. And then develop, evolve, and expand on this opinion by using research, analysis, facts, and cement.
9) When shall we three meet again? – the witches from Macbeth are always good for a quote, even without mentioning hubbling and bubbling, toil and troubling. There’s many clichés to describe this – a rising tide lifts all boats, in times of crises all markets correlate, etc, etc, – the point is, following commodities is about monitoring all assets – be it equities, bonds or currencies, as they all influence each other, and can provide insight into the short-term movement in another.
10) By the pricking of my thumb, something wicked this way comes – two words for you – hurricane season. This year is predicted to be one of the most active seasons for years based on some key factors. That said, some say a trained chimp can predict hurricanes better than NOAA.
If you wish to attend the UK event, please click on the ‘Much Ado..’ picture at the top of the post.
I bid thee farewell.
On the twelfth day of Christmas,
Summit Energy gave to me –
Eleven consumption workshops,
Nine budget projections,
Eight thousand bill validations,
Seven rates analyses,
Six hedging strategies,
Five new site rollouts,
Three French RFPs,
Two Summitized contracts,
And a password and access to DV*!
In addition to the above ditty, please see below our efforts to keep in Santa’s good books. This year we must be odds on favorites for good presents as we have helped him go green. Click on the image below to see us making sure we don’t get coal the fruits of our labor: