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18 Aug 2021

How to make your fuel deliveries cost effective

Jan Tønder

Your margins leave no room for error or inefficiencies. Product availability is always fluctuating. You have to deal with laid-in costs and prices at fuel depots. High oil prices and other factors can lead to demand contraction.

For petrol stations, fuel is typically a loss leader, and the fizzy drinks and snacks sold inside are where their profits are made. For the fuel distributor, transportation costs are around 45% of operating costs, with the cost of fuel to transport the product accounting for 40% of that figure. Any fluctuation in price can have a significant impact on business.

According to the American Petroleum Institute, other costs include inventory carryover, which accounts for up to 24% of your operating costs. Storage, 22%. And administration, 10%. Every company and region will vary, so take these figures as approximates.

Another issue confronting your margins: As of this writing – April 2021 – EU gas storage sites are less than 30% full due to a cold spell earlier in the month, which meant facilities switched back to net withdrawals. According to S&P Global, the market is concerned about whether or not stocks can be refilled over the summer. As a result, European gas prices for Q3 delivery are on the rise.

This is the volatile world of downstream fuel distribution: complex, challenging and not for the faint of heart.

Making it easier on yourself and your margins

According to the World Economic Forum, digitalisation could create $1 trillion U.S. of value in the oil and gas supply industry. To get a piece of that, fuel distributors need to maximise the potential in their companies. And to do that, they’ll need to embrace digitalisation.

It’s really a simple concept. The silos within companies and supply chains give way to interconnectivity, replacing time-consuming manual processes. Devices communicate with each other at every stage of the supply chain. This is the Internet of Things (IoT). Processes are monitored in real time. Cloud computing enables central co-ordination. Your company is run with incredible efficiency so that operating costs fall and profit rise.

AMCS Fuel Planner: how it works

AMCS Fuel Planner is a best-in-class system designed specifically for the fuel distribution industry. Specially, it’s SaaS, operating on the cloud. Its rich functionality handles the entire planning process, including operational planning and scheduling, execution in real time, and delivery of operational data.

AMCS VMI Manager is an integrated module of Fuel Planner. They work seamlessly together to ensure you keep operating costs down. The system calculates expected demand based on historical data and either data from sensors or dip readings, and then automatically generates replenishment orders. (Note, manual dip readings are more prone to error than sensors and require labour, but they can still work.)

A closer look

With a user-friendly interface, planners and dispatchers can see images representing tanks of a fuel truck. They can also see specific tanks at specific petrol stations. For example, you can see different tanks of petrol and diesel, and an overview of the current stock levels, time to minimum stock level, critical time and then someone can be sent to fill those tanks. Before a delivery is sent, it considers other strategies, such as pairing tanks and simultaneous dry runs. That’s when the order is generated, which is then planned and optimised in combination with the total pool of orders.

Mobile solution and stakeholder web portals

The on-board computer and cab table enables the driver to update and receive data as needed. You can find out the specifics of a delivery or lift in real time, for example. Paper is no longer needed, which speeds up the processes the driver is responsible for. It provides smooth back-office integration while reducing overheads and manual work. A specialty web portal lets the customer access their account to view past and current orders, alleviating customer service.  Third-party hauliers can also access information through their own web portal. This is about streamlining the accessibility of information and allowing your office to focus on other jobs.

At a glance:

Here are the ways AMCS Fuel Planner boosts your company’s efficiencies, which in turn makes your deliveries more cost effective:

  • View compartments on trucks and trailers
  • Automatic compartment load planning
  • Choose to automatically reduce order sizes to fit according to compartments and route optimisation, which is embedded in the engine of AMCS Fuel Planner.
  • Update of actual vehicle stock level per compartment by volume and weight as trips are executed
  • A look at specific tanks on site, such as petrol stations
  • Replenishment orders generated based on the expected consumption rate and next dry running
  • Automatic forecasting for specific tanks, based on historical data and either manually using dipsticks or digitally using sensors to measure tank level
  • Ability to balance costs of lifting products at source depots against transportation costs during automatic planning
  • Prioritisation of orders in terms of distribution costs versus service demands
  • Visibility across ERP/order-receiving, fuel depots, monitoring and on-board computer system

The numbers: cost-effective deliveries

  • With accurate data at your fingertips, you can reduce the number of vehicles you put on the road by up to 15%.
  • Reduce mileage, driving time, and CO2 emissions by up to 20%.
  • Cut planning and resource rostering time by up to 75%.
  • Spend up to 60% less time on registration, reporting, administration and follow-up.

By reducing operating costs, you also improve cash flow. And by optimising workflows and integrating your IT systems, you significantly reduce operating costs, along with stress on colleagues and your margins.