Who’s Watching Your Fuel Program?

May 28, 2010 by  Filed under: Management 

Sounds simple, right? Not so fast. Your company’s fleet management probably has several different components to it. Depending on the size of your fleet, you may have one person take care of it all, or several people that take care of different categories. We have found that even the biggest of big fleets have a hard time keeping all of their fleet management ducks in the water. Today, we will drill down to fuel management as one of the components that gets lost in most organizations. Yes, even the big guys may not have it all handled.

For some companies, fuel for their fleet — fleet fuel, as I like to call it — is their #2 spend. For other companies it might be even higher if no one is watching closely. Do you really believe you are using the best fueling methods or getting the best fuel pricing out there?

There are four main components on how you can buy fleet fuel. There is bulk fuel to your tank, OTR (over the road) fuel that you buy at truckstops, retail fuel (gas stations, card locks) and mobile fleet fuel ( a truck comes on your site and fuels your fleet). If you have others, please let me know.

Big companies get focused on where they spend the most money for these different categories and miss other areas, where tens of thousands of dollars could be wasted because no one is focused on it. Smaller companies do a hand-off in most cases and let the branch manager look after the fleet fuel. The branch manager is critical in most operations and they can be called several different titles depending on your line of business. One thing is for sure, this is a person with way too much stuff on their plate and they probably don’t have much expertise about how fleet fuel is priced.

Here is what happens. At the big company, money can be wasted for years with additional ancillary fees on the fuel they are buying. Certainly the fuel planning or fuel purchasing person is not going to clamor for training or go outside for fuel consulting help. They feel they would look stupid. If only the CEO or CFO knew how much money was being wasted, they would say, “spend the money and hire a fuel management expert to get that straight.”

Small companies believe the branch manager is reviewing all of the fuel prices, reviewing all of the fuel bills, auditing all of the fuel records. This person barely has time to take lunch, and in most cases don’t have the experience to know what they should be looking for. Thrown on top of that, they don’t have the tools to perform a proper audit. How many of you out there subscribe to OPIS, DTN or Platts?

Ask yourself these simple questions: Could we save more money if we knew what we were doing with all aspects of fleet fuel? Do we have a black hole and should we address it now? If my company could save, for instance, $100,000 a year, and it would only cost $30,000 a year to realize those savings, is my company better off?

Next week: margins, margins, margins. Everyone is entitled to make money; otherwise, it would be a hobby or non profit company supplying your fuel. But how should your fuel management program get in tune with making sure you are not being overcharged for fleet fuel?

Glen Sokolis
Sokolis Group
Fuel Management & Fuel Consulting
Industry Expert

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