Oil market volatility
Operational efficiency can help fuel suppliers weather volatile markets and lean margins.

You’d be hard pressed to find someone who’d disagree with the statement that the fuel industry can be unpredictable. It’s complex and volatile, interweaving each part of the fuel supply chain—from refiners to retailers—into a tapestry wherein each thread directly impacts and is in some way reliant on the other.

Last year presented a perfect case study in the fuel industry’s ups, downs and interconnectivity. In the spring of 2018, gasoline margins for convenience retailers hit a 16-month low as a result of rising crude and wholesale fuel prices. Yep, retailers were feeling the pinch. All that changed toward the end of the year when oil prices took a nosedive due to less than optimistic consumption outlook and excess supply. But retailers aren’t the only victims and beneficiaries of the market’s moods; petroleum wholesalers are too. Here are a few easy tips to help optimize your fuel supply operation and weather the storm.

Inventory Control

On-hand inventory is likely one of the biggest contributors to daily operating expenses for petroleum marketers. So, control it. A sophisticated inventory management solution provides accurate insight into your inventory levels down to the smallest detail. Whether you’re managing bulk plant product or operating a warehouse with lubricants and other petroleum-based packaged goods, it’s imperative to maintain that delicate balance between over- and under-stocking, especially during periods of fluctuating demand. And while predicting demand isn’t an exact science, basing your inventory decisions on historical data or other contributing factors, such as special events in your area, can go a long way in helping produce accurate forecasts that prevent inventory excesses or shortages.

Bill of Lading (BOL) Automation

It’s true that automating the fuel supply chain has been a lengthy, uphill climb. It wasn’t so long ago that providing an accurate BOL and invoice took days or weeks, especially for those fuel suppliers who delivered them via snail mail. The industry has come a long way since then, but even in the age of automation, it’s not unusual to find suppliers kickin’ it old school when it comes to delivering bills of lading and processing invoices. If this sounds like someone you know, be a friend, and stage an intervention…fast. Here’s why it matters. The BOL is one of the most important documents in a fuel supplier’s day. Among other things, it contains critical information about what, how much and to whom product was delivered. It essentially serves as the foundation for the invoice that follows. If you repeatedly get crucial details wrong as a result of manual processes, not only do you delay your time-to-cash, but you also risk creating such a horrible service experience that your customers begin entertaining other suppliers.

Credit Management

Properly managing credit and collections is a big deal for any fuel supplier, but it becomes even more important when sales are declining and margins are low. At that point, every penny counts. For large suppliers with multiple business lines and thousands of customer accounts, it isn’t unusual to see multi-million-dollar fluctuations on the books from week to week. A good solution provides essential tools to easily monitor your accounts and automate the credit management process. For example, if a customer exceeds their credit limit, it generally means they are not consistently paying their invoices in a timely manner. In this case, the system should automatically enact a hold on their credit that prevents them from placing an order until the matter is resolved. Many of today’s solutions are also capable of sending out rules-triggered customer communications before a bill is due or when an account is overdue by a specified number of days.

While times of low sales and squeezed margins can be uncomfortable, they don’t have to become devastating. Keeping your operation nimble and efficient can help you avoid common mistakes and survive to fight another year when others falter.

Did You Know: Your Source for PDI News provided by PDI, the leader in enterprise management software for the convenience retail and petroleum wholesale markets.