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.
4. THEY’RE AN OPPORTUNITY TO EXPLORE NEW PRODUCTS – Price increases should open the doors to discussions about premium products that allow machines to go longer between service, and other investments like oil analysis that can help extend drain intervals. For Heavy Duty Motor Oil (HDMO) and commercial segments, specifically, this could mean introducing products with higher fuel economy like HD 10W30. For automotive customers, it could mean selling more synthetic blend and high-mileage oils.
5. THEY’RE AN OPPORTUNITY TO SEEK OUTSIDE PERSPECTIVE – Every company has different goals and perspectives, and oftentimes, decisionmakers at a business feel there is only one way to meet their unique needs. Price increases should be used as an opportunity to re-think the path to goals and perspectives. Maybe that entails re-thinking inventory choices, maybe that entails new measures like preventative maintenance programs that save money in the long run. “While oftentimes our first reaction to price increases is to compensate by getting less expensive products, maybe it should instead inspire us to take a look at our business as a whole,” Becktel said. “There are always other ways to save, other ways to bring in more profit to account for those losses. The good thing is that we have SCL experts that can offer insight into a multitude of industries.”
Contact an SCL Consultant today
In a wide range of automotive, industrial and commercial sectors, SCL remains steadfast on its commitment to product and industry knowledge, performance satisfaction and superior logistics. We protect and optimize the machines that keep our country moving. For more information on how we help can help with services including bulk purchasing or managing inventory, contact an SCL expert today.