Supply Excellence — Are You Getting Gouged at the Pump?

Are You Getting Gouged at the Pump?

January 17th, 2007 · by Tim Minahan · No Comments · best practices, supply management, supply market dynamics

There is some good news admist the current global supply market funk. Oil prices last week slumped to an 18-month low, thanks to mild winter weather in the U.S. and Western Europe. (I guess the analysts are ignoring the state of Colorado.)

And while recent OPEC production cuts and uncertainty whether dimplomacy will win out between Russia and Belarus to reopen a major pipeline could stem the slide, the price dip should provide you leverage to remove fuel surcharges from your transportation and other supply bills.

David Rotor, blogmaster at Procurement Investor, for tipped me off to this recommendation in his comment to my Top Picks for 2007 post. On his own blog post, David reports that oil prices have declined 25% in the past six months.

Most transportation and travel service contracts include clear rules for fuel surcharges. These are usually tied to an oil price index, to enable both parties to clearly monitor and apply or remove surcharges based on fluctuations in the index.

However, David points out that, “Less obvious will be suppliers of other goods that add fuel surcharges to their freight/delivery charges, depending on how those are negotiated. Having had a look in recent weeks at some corporate invoices, those surcharges don’t seem to be declining as quickly as they rose.”

Upshot: it may be time to push suppliers to remove fuel surcharges. It’s only fair. And it should come as a welcome relief to offset some of the price increases you are experiencing in other areas, such as precious metals or travel.

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