Recent blogs

Price Volatility: What’s a Fleet To Do?

It’s no surprise that a recent survey by the Procurement Strategy Council contends that commodity price volatility is a chief concern among procurement professionals. But what did strike me as interesting was what they found in terms of tools their audience uses to manage these peaks and valleys:

• Fixed price contracts and supplier partnerships (71 percent)
• Buying substitute parts (14 percent)
• Hedging, futures, swaps and options (9 percent)

From industry to industry, what is considered a commodity changes. For the majority of the truck fleets we serve through private label programs, aftermarket truck parts could be considered a commodity. And you can bet that these fleets have well-trained professionals charged with negotiating fixed prices with manufacturers on the aftermarket parts they buy most often.

But that’s only half the battle. You see, in the commercial trucking industry, these fleets don’t buy aftermarket parts direct from manufacturers; they buy them from an OEM’s independently-owned dealerships. With some dealer networks numbering 500 locations or more, it’s easy to understand why a fleet can’t expend the resources to negotiate individually with each and every dealership.

So what’s a fleet to do? Hope an OEM has the pull to persuade its dealers to adhere to the fixed prices they’ve agreed to? …Enter a private label program…

With a private label program, an OEM can collect transaction data from its entire dealer network in order to provide the fleet customer with a consolidated bill. Doing so offers the OEM (or its private label program provider) the opportunity to compare dealer prices to the fixed prices the OEM has negotiated with fleets and correct overcharges prior to billing. And voila! Fixed pricing contracts paired with guaranteed, accurate charges on billing statements solve the riddle of commodity price volatility for fleets.

-Jenny