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ForumForumDiscussionsDiscussionsSyndicate Manag...Syndicate Manag...Question - At what order volume of oil do you get the best saving? Question - At what order volume of oil do you get the best saving?
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 03/01/2010 17:23
 
User is offline Steve
10th Level Poster

Joined: 24/12/2009
Posts: 17

I have compared the savings obtained to date for the Merton Oil Buying Group with Richard’s syndicates looking at the relationship of volumes ordered against the discounts obtained... personally, I don't think there would be much in it between 10k, 50k or 100k litre orders.
On this principle, and from the small data set analysed to date, there must be a optimum voulme or threshold where more oil does not mean bigger discounts.
If you run a larger syndicate that regularly orders larger volumes of oil, e.g. 50,000 to 100,000 or even more, what discounts do you get?
It would be useful to see historic ordering data and prices from other syndicates. Obviously geographic location and the timing of the order will have a variance in the cost per litre but the overall principle of ordering more to increase the discount is in question here... do you have the answer????
Thanks
Regards
Steve
mertonoil at hotmail dot co dot uk
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 05/01/2010 11:12
 
User is offline RichardHowells
7th Level Poster

Joined: 14/03/2009
Posts: 47

ISTM that the first level of cost saving is where the supplier brings a tanker to the area and empties it in an hour or so. If they have to bring two tankers there is no additional cost saving to them, it's just more volume.

I have heard a suggestion (no evidence) that if you plan a mega order in advance for a quiet time (agreed with the supplier) then you may be able to do better. The question then is how do you know that you are getting a great price for doing that?

Cheers,

Richard
Agile software mentor, trainer, and developer; part time Oil Syndicate manager!
www.dynamisys.co.uk
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 27/11/2010 10:32
 
User is offline RichardHowells
7th Level Poster

Joined: 14/03/2009
Posts: 47

Steve posed this question almost a year ago. I have some more data.

I'm just about to do my largest ever order. It still has today and tomorrow to build, and it's growing fast. Nine more orders so far today, eight new members in the last 24hours.

I put out an advance notice email to my regular suppliers a while ago. This moring one supplier quoted a price based on 77,000 litres.

In the meantime this order has grown hugely beyond my original guess. I went back to him saying it was now at 200,000 litres. He revised his quote UP by 1p/litre. It would take longer to deliver and there was a larger risk of an adverse price movement during that period.

Now, even if surprised, I have no problem with this and it is a lesson to learn. More is NOT always better in pricing. On Monday, I shall be making sure I ask if the price might be lower if they only took (say) half of it. If appropriate I shall split it between two (or more) suppliers.

Has anyone else seen a similar effect?

Cheers,

Richard
Agile software mentor, trainer, and developer; part time Oil Syndicate manager!
www.dynamisys.co.uk
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 27/11/2010 12:05
 
User is offline Howard
10th Level Poster

Joined: 05/01/2010
Posts: 16

Good morning Richard.

I found your post very interesting but totally without logic from your supplier. We have just placed our November order for over 225,000 litres, I ordered on 11th November at a price of 42.4 ppl + VAT, I gather it has gone up 4 or 5p since. My supplier likes a large order as he buys forward the required amount at a fixed price, then draws it off over the next 2 weeks or so. If the price goes down he does not lose and if it goes up, he gains a windfall on any surplus! This is a very basic business technique, I do wonder at times if some of these suppliers have any brains at all. I do not like to post who I deal with, but if you would like to discuss this further, give me a call.

Regards

Howard
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