Services, Food & Fuel: Innovations Improve Customer Experience

Services, Food and Fuel (SDF) Program Manager Troy Seymour answers questions about the Exchange fuel program and initiatives implemented in 2016, plus what’s in store for 2017.

What new initiatives were implemented in 2016?

In 2016 the Veeder Root 450+ upgrade and the centralized pricing system were implemented.

Upgrading the Veeder Root systems created an automated, networked and transparent management system for monitoring and measuring physical inventory losses. By networking Veeder Root and the local station’s fuel controller, fuel in the tank is reconciled every hour taking into account beginning inventory, sales and deliveries. If there is an unexplained loss of fuel for any reason, the system will produce an alert. This system ensures that any fuel losses are followed up on as quickly as possible to determine the source and institute corrective action. Manual store level processes related to inventory reconciliation have been eliminated.

The centralized pricing system, OPIS Price Pro, was implemented at all 204 U.S. locations. This system eliminates the need for store personnel to survey competition by providing updated pricing of designated primary competitors for each location. The system sends out an alert to store personnel when a competitor changes its price. By reacting faster to market changes, our customers can be assured of receiving the lowest possible price for fuel.

What were sales and earnings for 2016? 

In 2016, the Exchange worldwide sold 450 million gallons of fuel for almost $1 billion. Gross profit before credit card fees, maintenance or equipment depreciation was $122 million.

What has been done to get better prices from the wholesalers, and have the savings been passed along to customers? 

The Exchange conducts an annual solicitation for fuel in the U.S. from more than 100 of the top fuel suppliers. The solicitation list is composed of major oil companies, large fuel marketers and even a few smaller, but efficient operators in hard-to-reach areas like Alaska. Effort was expended on creating industry standard contracts during the past two years and meeting with potential suppliers to educate them on the Exchange mission. The results of the contracting process have reduced annual fuel costs by $25 million during the past two years. By minimizing purchase costs, the Exchange stays competitive on a retail level and still produces earnings that help fund the organization’s annual dividend payment.

Do you have examples of how these new initiatives have helped gas station associates?

Both the Veeder Root and centralized pricing system are designed to assist the station associate by reducing the labor with inventory management and pricing. A team of fuel experts in the FuelCenter in Houston monitors our inventory 24/7 to make sure that fuel is resupplied on a consistent basis.  SFD HQ monitors the pricing system and provides guidance and support to the field in the area of pricing according to the Exchange’s official pricing policy. Working with our third-party logistics provider, Insite 360 FuelQuest, the FuelCenter is becoming more proactive in communicating with store personnel to let them know the status of fuel deliveries.

What was the impact for customers?   

The Exchange is monitoring fuel for potential issues, such as water intrusion or tank debris that slows dispenser flow rates.  We have automated systems to shut down operations if anything is discovered that could negatively impact customers. By reacting faster to price changes, customers have confidence they are receiving fuel at a price competitive with the local market. 

What else will be implemented in 2017? 

In 2017, the focus will be on executing of the aforementioned systems. We are researching and developing a system to possibly introduce TOPTIER fuel at the Exchange locations in the U.S. We are also researching how to implement a cost-accounting system for fuel that would eliminate the need for markup and markdowns on fuel.  To lower purchasing costs even further, we are developing an online reverse auction system for purchasing fuel off contract where suppliers will bid each day on a certain percentage of our fuel needs.

Plus, the Exchange has contracted to upgrade all U.S. dispensers with digital marketing monitors to advertise at the pump.