For refinery managers, the answer to savings lies not in expensive technologies or complex restructuring, but in something more simple: pocketing supplier profit centers hidden in your Cost of Capital, cross-functional collaboration, vendor alignment, and a unified strategy.
In many operations, Procurement, Maintenance, Turnarounds, Engineering, and Capital Project teams operate in silos. Each group optimizes for its own goals, but without a unified voice or shared visibility. Vendors receive conflicting information. Vendors control your supply chain, and end up costing you money and time. Compliance at the gate suffers, where exceptions happen regularly, heightening risk. Buying everything on a “Prepaid” basis balloon your costs.
The result is a cascade of inefficiencies—late shipments, overtime production, and inflated costs that silently erode your margins.
The solution starts by claiming control of your supply chain, and both capital costs and freight costs. Bringing these disparate teams together around a common goal gets departments to collaborate, communicate, and act with accountability. This isn’t just a cultural shift, it is also a financial one. When Procurement, Maintenance, Turnarounds, Engineering, and Capital Project teams are aligned, they can collectively demand that your vendors to deliver on time, at the best price, and with realistic lead times.
To achieve this alignment, ideally you will have:
Changing to “freight collect” saves you anywhere from 10-20% of the Cost of Capital! How? It removes the most costly and hidden profit center from your vendors, keeping that cash on your balance sheet.
By dictating which carrier the vendor uses, it gives you 100% compliance on Refinery Access Agreement, reducing non-compliance and health and safety risk; it keeps the burden of loss/damage/delay on your vendor until the freight delivers to you; and gives you 100% visibility into all Purchase Order ETAs. Plus, you’ll save on freight.
In some cases, you’ll reduce the need for second and third shifts placed by vendors on production, by illuminating everyone to true deadlines, versus Vendor-imposed false deadlines. Vendors won’t scramble to meet deadlines. That means fewer premium charges, better vendor relationships, and lower costs of goods, which is where real savings stack up.
This is about more than process. It’s about organizational behavior. When refinery leaders insist on collaboration, set clear expectations, and enforce accountability across the supply chain, the organization doesn’t just get more efficient; it gets smarter.
The cost of capital isn't just about interest rates or financial markets. It's about how wisely and efficiently you use the money you've already committed. By reshaping your operational behaviors and insisting on a new standard of collaboration, you can unlock at least a 5%, or maybe as high as 15% savings that goes straight to the bottom line.
If 5-15% savings on capital isn’t good enough, by having one operation knowing every Due Date/Must Deliver By date, and validating those dates, hundreds or maybe thousands of expedited shipments can be avoided. Emergencies happen, but those dollars should be spent on true emergencies, not needless ones.
Need help getting your teams aligned and consolidating your freight expenditures? Let’s talk. The transformation starts with a conversation.
