Professional Documents
Culture Documents
As Seen In
WasteAdvantage
The Advantage in the Waste Industry
Fuel is a signiFicant cost Factor in the waste industry, accounting for billions of dollars a year in fact, and its price volatility lead to less predictable operating expenses and margins. The fuel supply chain complexity combined with erratic price cycles caused by market and weather issues causes concern for CFOs and purchasing executives when attempting to minimize expenses. Fleet managers in the industry that are charged with overseeing supply portfolios and maintaining adequate stock levels, often at multiple sites, should consider a centralized approach to their fuel management. In addition, the demand for fuelefficient and hybrid trucks, the expanding array of waste and recycled products, and the availability of different types of fuels, continue to make a fleet managers role challenging and are key to a companys overall strategy. This is why many waste management professionals are centralizing fuel management to: Mitigate the impact of price volatility Manage price predictability Optimize the deployment of working capital
Gain competitive advantage by better managing fuel price volatility and the timing of fuel purchases Reduce costs
Outsourcing
One way to centralize the fuel management process is to consider outsourcing to a trusted provider. By using outsourced solutions, fleet managers can access sophisticated data in order to better manage operational budgets and centralize controlyielding levels of visibility across the organization. Centralized outsourcing can achieve an average savings of 4 to 6 cents per gallon and provide waste executives with a viable long-term option that combines the knowledge of industry experts, best practices used by some of the worlds preeminent fleet companies, and the strength of proven fuel management automation systems. With additional levels of automation and rigor around forecasting, procurement, management and financial reconciliation, outsourcing fuel management also allows staff to focus on their core areas of expertise logistics, customer service and operational excellence. The outsourcing process begins with an in-depth spend analysis that takes into account the entire fuel lifecycle. The analysis should take into account spending trends, supplier arrangements, market dynamics and other business processes to recommend opportunities for gaining efficiencies. This establishes a best practices baseline from which the program will be measured and compares current operations to industry standard pricing and performance. Having the right strategy and identifying goals for a fuel program are imperative to purchasing fuel at the best price. Armed with the data from the spend analysis, the outsourced fuel management team assimilates the intelligence to proactively balance security of supply, desired cost and margins. Aggregating volumes and centralizing control creates forecasting, sourcing, inventory management and reconciliation synergies, and strengthens negotiating power with suppliers. With an effective outsourced arrangement, the
32
As Seen In
Fueling the waste industry
WasteAdvantage
The Advantage in the Waste Industry
impact of supply shortages can also be diminished to ensure the fleet has the fuel it needs at the right time at a competitive price. Expert teams can provide a strategic
procurement plan that will enable fleet managers to gain strategic consulting on supply portfolios and negotiate long-term supply contracts that are either fixed price or index-based, using industry information services like OPIS, Argus and Platts (see Industry Information Services sidebar). The use of indexbased contracts which float with the daily markets helps ensure supply security and that you can lock in the ability to buy better than your competitors on a daily basis throughout the year. To handle long-term price volatility, fleet managers can use fixed price contracts to lock in a price for a period of time. This practice can help operators meet their budget objectives and create predictability.
WasteAdvantage Magazine
January 2011
As Seen In
arbitrage, or changing the sourcing location to a different one based on price advantagethis can be particularly advantageous for locations midway between two markets.
Financial Settlement
Once supply and transport options are vetted and in-ventories optimized, the final link in the supply chain is financial settlement. An outsourced fuel management solution can compare and verify accuracy of quoted price, bill of lading, invoices, delivered gallons and freight and taxesall essential factors to increasing operational transparency and controlling fuel costs. Automating financial reconciliation and ensuring tax compliance increases operational transparency and rapidly resolves billing and invoice discrepancies via financial matching. This means the fleet manager can control and manage fuel costs in a centralized, end-to-end manner from procurement to management and financial reconciliation.
FuelQuests Fuel Center provides an outsourced fuel management solution for clients who wish to counter high motor better managing the complexity in the fuel supply chain. Outsourcing to the FuelQuest Fuel Center team provides lowerthe Waste Industry The Advantage in administrative costs while allowing customers to focus on their core business. By not owning trucks, fuel or other assets, Fuel Centers interests align perfectly with those of customers. They act as an extension of your team and manage your fuel in the same manner as many of the worlds most successful fleets and retailers. For more information, visit www.fuelquest.com.
WasteAdvantage
Fleet managers choosing to outsource fuel management gain the operational predictability that comes with supply security and lower overall fuel costs. Supported by a team of fuel experts, they can now manage any level of fuel volumes in an economical and sophisticated way without the need for additional overhead costs. By reducing financial exposure to volatile markets, waste management executives can create a competitive edge, secure in the knowledge they are obtaining fuel required to power their fleets at a cost-effective price and make a significant impact on the organizations overall strategy. | WA Ryan Mossman is vice president and general manager of FuelQuests Fuel Services. He leads both of FuelQuests outsourced fuel services divisions: Fuel Center and Alarm Management Systems. Ryans FuelQuest experience includes leading largescale supply chain optimization, technology and business process implementations at large fleet and energy companies including UPS, U.S. Freightway and Chevron. He can be reached at rmossman@fuelquest.com.
2011 Waste Advantage Magazine, All Rights Reserved. Reprinted from Waste Advantage Magazine. Contents cannot be reprinted without permission from the publisher. WasteAdvantage Magazine January 2011
35