Most people have heard of the term 3PL or Third-Party Logistics. Fewer have heard of the term 4PL, which stands for Fourth-Party Logistics. Rarer still is the application of 4PL to the fuel industry. 4PL, as a term, was coined by Accenture in 1996 and is generally defined as “A service partner that optimizes all the resources, capabilities, and technology of multiple providers to deliver a comprehensive supply chain solution”. Businesses leverage a 4PL when they are looking to improve efficiencies and increase the bottom line.
Now that we have cleared up what a 4PL is, let’s apply the logic to the fuel industry and, more specifically, the bulk-fuel consumer. If your company buys fuel in quantities of 4500-8500 gallons per delivery, you are a bulk-fuel consumer. You are buying in large quantities because you have a fleet to fuel or equipment to run and the wisdom of buying in bulk is readily apparent. But because you are a consumer of fuel as opposed to actually being in the fuel business as a reseller or retailer, there are numerous challenges to efficiency and optimization that need to be overcome.
The first challenge that cascades down to all the others is that because your business is not reselling or retailing fuel, your procurement and accounting team is focused and excels at whatever your core business is rather than fuel. That is no slight on the procurement and accounting professionals at all. The reason is that when it comes to the downstream fuel supply chain, there is simply no substitute for direct experience. The more deep and varied the experience, the more likely that talent works for the refiner that refines the fuel, the marketer that sells it to you, or the transportation provider that delivers it – since they provide the highest salaries and job opportunities for that experience. So as a procurement professional, you pull from what info you do know and lean in on relationships….after all fuel IS a relationship business. Most of the vendors out there are responsible and reliable and will give you what you ask for. Knowing what to ask for, when to ask for it, and how to put it in a contract is a robust subject that we will unpack in future blogs. We will also get into the aforementioned cascading challenges.
Until then, to the procurement professionals whose inclination is to call your CFO to say, “Houston, we have a problem”….instead still call that CFO but say, “The answer to our problem is a company out of Houston”. FuelHub, based out of Houston, TX is a 4PL for bulk-fuel consumers. We take on the complexity and save you money so you can focus on getting back to your business.
Learn more by contacting us for a free consultation: 1.833.FUELHUB or info@fuelhubservices.com
