How to Use Spikes as a Cue to Institute Positive Change, Streamlined Practices
Price increases are often uncomfortable to discuss, but unfortunately they are an unavoidable part of our business. At SCL, our goal is to help you navigate these occurrences and, if possible, use them as opportunities to strengthen our relationships with customers and help them take a more detailed look at their business practices. Here are a few strategies to keep in mind when price increases occur and some ways you can use them as opportunities to make your business more efficient. 1. THEY’RE OFTEN BEYOND OUR CONTROL – It’s not always understood that price increases occur because of circumstances outside our scope of influence. When it comes to finished lubricants, increases can be due to political unrest, natural disasters like hurricanes or earthquakes, or the rising price of raw materials. It’s critical to understand this is not simply a decision handed down to customers; increases are a result of a number of different factors related to the global economy. It’s also encouraging to note that prices of oil and lubricants are not nearly as volatile as fuel. The most recent increases mark the first in a year while gas/diesel prices typically fluctuate daily based on market conditions. “At SCL we truly believe that even if we’re communicating unfavorable news, it’s important to be communicating with our customers regardless,” said SCL General Manager Travis Becktel. “Price increases will happen one way or another. It’s best this news come from us, and we use it to further our partnerships with customers.” 2. THE ADVANCED NOTICE CAN HELP YOU SAVE – Oftentimes, oil manufacturers will announce prices – like in the most recent case – a few weeks before new rates begin. This advanced notice can open the door for you to place an order larger than normal at current rates. Acting quickly can save on the back end and help cushion the blow of increases. Knowing ahead of time also allows you to take a look at other opportunities to save, including larger product packages with lower per unit costs. For example:• if you’re buying 11 pails or 7 pit packs, a 55-gallon drum would be more cost efficient. • if you’re buying 7 cases of DEF or antifreeze, a drum is more efficient. • if you’re buying 2 drums of DEF, a tote is a better option.
3. THEY SHOULD INSPIRE YOU TO CONSOLIDATE – Whenever budgets are affected it’s always a good idea to consider consolidation on a number of fronts – from the number of vendors you have to the inventory you keep on the shelves. SCL offers volume discounts, and a wide range of premium products that can be applied in a number of different ways. “It’s often cheaper to carry one product than three,” Becktel said. “Even in the case where the one product is more expensive, if you’re using it for three different applications versus three products for three applications, you’re saving money.” As far as vendors go, the savings can be seen in the simple practice of cutting purchase orders. According to PurchaseControl.com, the average company spends between $100-$125 to cut a purchase order. Consolidating three vendors down to one, for example, can save anywhere from $200-$250 each month. Overall, consolidating how you do business overall can greatly impact soft costs you incur.