Many Oil Company downstream customers are making a fortune.

July 29th, 2022

I am fairly sure the consumer, your customer is already aware of that.


Today’s post is by Ronald D. Southard, CEO at SafeSourcing Inc.

So, what happens when the price of oil goes back down, and the price of gas and diesel drop? What if you were not too careful about monitoring your current cost of goods and expense categories. I have no doubt all of your wholesale suppliers have told you that they have supply chain issues. It does not matter whether they really do or not, that is the excuse for raising your prices. So now you have to raise prices to your customer, and they are already hurting. I doubt there is a wholesaler with whom you do business that has not added to their uplift fees over the last two years. You know that percentage they add that covers the cost of their operations that are focused on you. I might have been 8% and is now 10% or even higher. It is easy to absorb when you are making money hand over fist on fuel sales.

Here is the thing, when the fuel benefit goes away and I will, your supplier costs will not drop, you will then have to resource every category you have like store supplies, cleaning services, lawncare and snow removal and all for resale products in order to claw back anything in the name of reduction of cost of goods costs and resulting gross margin improvement or expense items and net profit.

There are great companies out there that are doing both. It is not their fault that they are benefiting from fuel sales, but they still have a business to run, and they are doing it. Here are some things they have sourced this year at much lower costs than you might think possible.

  1. Lawncare
  2. Firewood
  3. Cleaning Services
  4. Bottled Water
  5. Waste Removal
  6. Construction Materials
  7. Rental Equipment
  8. Ice Programs
  9. Coffee
  10. Beer Caves
  11. Doors and Windows
  12. Facia
  13. Lighting
  14. Floor Tiles
  15. Ceiling Tile
  16. Many Proteins related Commodities

It is great when you are making a lot of money and can take your eyes off managing all of your profit centers, but the above examples are making smart companies improve margins and expense and they will continue to win, when things return to normal.

SafeSourcing is an eprocurement company that operates across multiple industries. As such we have specific experience in almost any commodity, service or capital related spend. Our SafeSourceIt™ Global Supplier Database has over 500,000 suppliers that can reduce your costs today. You are probably paying too much for about everything. To learn more, please contact a SafeSourcing customer services associate.



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