With all the day-to-day responsibilities fleet managers face, including managing drivers, fleet replacement, security and maintenance, compliance with government regulations and tracking and diagnostics of vehicles, one that affects nearly all areas of fleet operations is fuel—its procurement, price and management.
Buying fuel can be a slow and complex process that is difficult to manage. If too much time is spent organizing fuel deliveries, it may be time to consider taking the fuel burden off your shoulders and purchasing fuel in bulk.
Bulking Up
Outsourcing fuel delivery to a fuel provider ensures that fuel is delivered safely and to your specifications. Depending on the provider, inventory management and fuel usage tracking capabilities may also be available to help you pinpoint problem areas, control costs and give your bottom line a healthy boost.
When choosing a bulk fuel provider your goal is to get the best price and the best options that meet the needs of your fleet. What you don’t want to do is to get on the phone discussing contracts with a provider before doing some homework. Mistakes are easy to make and will end up costing you time and money. Here are some of the more common ones to avoid.
Partnering with a Single-Source Fuel Provider
This is pretty much common sense—like not putting all your eggs in one basket. If you depend on a single source of fuel, you are potentially doing more harm than good. A single source fuel provider is vulnerable to fuel shortages. A low supply for them means a higher price for you, or no fuel at all.
Partnering with a provider with an extensive network of nationwide carriers or with multiple sources is the way to go. Weather or unexpected events happen all the time. Making sure your provider can deliver 24/7/365 provides peace of mind and keeps your drivers on the road.
Not Knowing Your Provider
You don’t have to invite them to dinner, but developing a good relationship and getting to know your provider on a personal level is always a good idea. It’s better to be on the top of their mind so that when you need them, they are ready to help.
Your provider and their services are essential to your bottom line. The better you get to know them, the more you’ll find voice mails, phone calls and emails answered and the more control you’ll have. Making the effort to be a name and not a number is well worth it.
Fear of Commitment
A long-term commitment with a provider you trust is exactly what you want, unless they are providing sub-par service. That said, some managers think signing a contract may mean missing out on a lower price and prefer to bounce back and forth between providers.
If this sounds unstable and time consuming, that’s because it is. Stability is key in a market as volatile as fuel. There are always going to be wild swings, spikes and dips. A contract based on a benchmark that moves with the market is what you want. That way, you are assured that you are consistently buying better and more efficiently that your competitors.
Discuss your fuel needs with your provider, make sure they understand them and commit to the gallons. You’ll find yourself in the driver’s seat when it comes to negotiating price, and you’ll say goodbye to the never-ending worries associated with fluctuating prices.
Lack of Market Knowledge
The more you understand the market, the better your decision- making process. And, the better your decision process, the better your overall operations. Market knowledge gives you a firmer grip on what is affecting fuel prices each day, where they are trending and why.
We are not talking a Ph.D. Just a few minutes a day, asking the right questions and using the right tools can help make you a confident pricing star that buys better and saves more. Plus, it makes the conversation with your fuel provider much more of a “two-way”, which is always a good thing.
Last-Minute Buying When Tanks Are Running on Empty
Contacting a fuel provider only when you’re running low or are out of fuel is not a good idea. With so many factors affecting fuel supply, you’re playing a guessing game that can put your operations in jeopardy and cause your fleet to be grounded.
A better idea is to track the amount of fuel you use each day, month and year. Work with a provider who will guarantee you’ll always have the fuel you need, on hand, no matter what weather event you might encounter — rain, sleet, snow, tornadoes, etc.
Using these tips, you can start purchasing bulk fuel today and save the headaches of tomorrow.