August 4, 2008
Pain at the pump: Emory offices, labs have weapons to fight fuel cost increases
Rex Hardaway is senior manager, contract administration, in the Division of Finance.
As the onslaught of higher prices at the pump erodes our personal economics, it is important to realize that the pain is also beginning to erode operating budgets.
Let’s look at travel costs as an example. Recently we learned that most airlines were raising their fares and that the latest round of increases will be paired with route reductions and personnel layoffs. It seems it is now cheaper to park the planes than put them into service.
With all the negative publicity at the pump, other industries we rely on to supply our offices and laboratories are adjusting prices in order to stop the drain on profits. The doubling of the cost of diesel fuel means higher shipping costs and fuel surcharges, sometimes as high as 38 percent of the original cost
of the shipment. Overnight letters and packages bear the higher cost of jet fuel and diesel and are carrying higher surcharges as a result.
Food, fuel — almost everything we buy is going up in price. The purpose of this article is not to tell you what you already know, but to suggest things you might do to mitigate the impact we are seeing in the marketplace. A few simple things could add up and help you avoid or at least offset, some of the increases for Emory.
Below are but a few ideas that may help offset the impact of rapidly increasing prices. If you have found other ways to save, please share them at firstname.lastname@example.org so we can help others navigate through these unpredictable times. We look forward to a continuing dialogue around this important topic.
How you can help offset fuel increases while at work
Use Emory’s Preferred Suppliers whenever possible.
In nearly every instance the rates charged for freight and handling have been the subject of much negotiation. In many instances the cost of freight is included in the price — or at least fixed as a price or percentage — for the next 12 months or more.
Make use of the core lists within the contracts.
In addition to the negotiated discounts, Emory’s two largest suppliers, Fisher Scientific and Staples, also offer firm fixed prices for Emory’s highest volume items. These items are reviewed annually and the prices held firm for at least the next 12 months. Most of these prices were negotiated prior to the recent rise in crude oil and as such will not be impacted until 2009. An example of this can be seen in the core list price for recycled copy paper, on the core list from Staples at approximately $23/carton compared to a current market price in excess of $32.
Consider changing the service requirement for an overnight package delivery.
Simply by changing your delivery requirement from “10 AM” to “Next Day” will more than pay for the added fuel surcharge on the shipment. If you really want to save, schedule the package to arrive in two days and save at least 40 percent.
Consolidate your orders.
Even if the contract price does not include freight, added surcharges are normally assessed on a per order basis. A large order is assessed the same surcharge as a smaller one. Many contract suppliers, Staples as an example, offer instant savings based on order size. Consolidating shipments reduces the supplier’s cost of delivery, saves energy, and in today’s environment just makes sense.
A version of this article first appeared in Emory Finance