We are currently experiencing some of the lowest oil prices we’ve seen in a long time. Prices at the pumps are the lowest they have been since 2009, and retail outlets are over the moon as the consumer has more disposable income to spend.
But what does it mean for the supply chain?
Whilst oil is currently selling cheap, there will be a time when the prices sky rocket again and the prices will begin to affect your supply chain costs. The real question is: how can you guard your costs against rising prices?
Fuel surcharges or increased component and operational costs, is the most common variable when the fuel prices fluctuate. But by planning ahead and evaluating where your supply chain is headed, you can tackle the problems and reduce the negative impact on your operations.
Supply chains have undergone a series of dramatic changes in recent years in line with changing production needs, labour costs, and tax and green requirements. Being flexible in any business is essential as different routes to market can really help stave off any risk. It also helps to provide an effective way of rebalancing product flows in response to input costs.
Responsibility to the Environment
Adopting sustainable practices within the supply chain can help reduce the cost of environmental initiatives. Consider using alternative fuel sources for transportation to avoid volatile oil costs. Environmental initiatives often advocate the use of cleaner alternatives, such as; ethanol, E85, biodiesel and propane.
Simplifying your shipping processes can dramatically impact your results. This doesn’t even need to be complex in order to see a saving; it can just involve initiating deliver dates to key clients in order to consolidate your next round of shipments.
As the oil prices begin to increase again, you need to take time to evaluate where your distribution hubs are in relation to high areas of demand. Higher logistics costs and other requirements have forced some companies to relocate closer to key markets.
Essentially the definition of deferring strategies, means that by sending unpackaged or unassembled goods into regions that are closer to the final destination, companies can save on fuelling and inventory costs.
All of these can be absolutely crucial when attempting to side step rising oil costs; any form of transportation industry can be heavily impacted by rising costs. We can help any supply or logistics chain cut down costs and part of our business is about being proactive rather than reactive. So trust in us and we can get the job done.