Webinar Recap: Inventory Control Best Practices Fuel Retailers Can’t Afford to Ignore

In our recently released Downstream Fuel Industry Report, fuel inventory optimization was identified as the most widely used strategy for addressing rising operational costs.  

Titan Cloud Director of Solutions Consulting Nick Viola and Solutions Consultant Trevor Hopman discussed the critical role of inventory management in our most recent webinar, including how real-time data analytics enable retail fuel operators to spot inventory variance issues early on, identify root cause, and track historical consumption data to predict and plan more efficiently. Here are some highlights from their conversation. 

Capturing Value: Reducing Write-Offs 

Losing revenue to fuel loss is a preventable problem that starts with recognizing that write-offs aren’t just the cost of doing business. Hopman talked about the extent of the issue using statistics from Titan Cloud’s recent Downstream Fuel Industry Report.  

“We asked operators in the industry, mid-market and enterprise, how big was their write-off as a percentage of sales. Around 20% of the industry had a write-off smaller than 1%. But close to 60% of the mid-market, and almost 50% of enterprise businesses, had a write-off greater than 1% of their revenue. That’s a substantial amount,” he said. “Then there was another large portion that didn’t understand their write-off. They didn’t have enough data or simply just did not know the size of their write-off.” 

“Ultimately, your financials are how you make decisions within your business,” said Viola. “If they’re not reflected correctly, that’s going to have a massive impact on how you control your operations and inventory day to day; and on your business as a whole. How do you make those decisions correctly without the right information?” 

Inventory variance: A business-wide problem 

Next, the conversation moved toward the specific impact of fuel loss on different factions of the retail fuel business. 

“We see it grouped into four basic areas around compliance and operations, accounting and maintenance. Each of these teams have different goals,” explained Viola. “On the compliance side, you want to make sure the variance isn’t due to leaks that can lead to fines. For operations, you’re trying to maximize fuel sales while also maximizing fuel margin. On the accounting side, you’re trying to make sure that everything matches on both the P & L and the balance sheet so you can make the right business decisions. And for maintenance, you’re trying to keep uptime, working closely with the operations and environmental side.” 

Tank Charts: Pinpoint Accuracy, Digitally Delivered 

Diving into inventory management specifics, Viola and Hopman presented visuals and data to explain how traditional tank charts operate, including pointing out their significant room for error. They then contrasted against the granular accuracy of innovative digital charts. 

“Everything within a traditional system is inherently designed to lose fuel, starting with temperature and evaporation,” said Viola. “One degree of temperature change has a 0.07% impact on volume. In a 10,000 gallon (37,854 litre) tank, that’s seven gallons (26.5 litres) in variance. On top of that, typically what we see between the delivery, the fuel in the transport side to the tank, there’s about a 10 degree difference. So, this could end up being 70 gallons (265 litres) of unaccounted for variance that you don’t know about.” 

Hopman then explained how ATG technology featuring real-time analytics and fractional measurements far surpasses outdated methods, avoiding such costly issues. 

“We’ve seen that over 50% of the ATGs within the market have four or less points programmed into them. This is typically the norm. The ATG is going to look at four set points in the tank chart, do some math, and based on those programmed areas, it’s going to interpolate. Outside of those points, it’s going to extrapolate or just estimate,” he explained. “A digital tank chart is a digital recreation of that manufacturer tank chart that utilizes advanced technology and algorithms to achieve upwards of forty to 50,000 inventory reading measurements. That polling frequency increase is going to drastically reduce variance upfront, allowing you to see the real root cause of your inventory variance, like leaks that are smaller than the ATG tolerance, theft, or meter drift.” 

You can watch a full on-demand recording of the webinar below: 

To learn how Titan Cloud can empower your business with the integrated technology needed to succeed, speak with one of our solutions consultants today.  

Nick Viola

Director, Solutions Consulting

Nick Viola brings more than a decade of experience to his role as Director, Solutions Consulting for Titan Cloud. He began his career in the U.S. Navy as a Nuclear Submarine Officer and team leader onboard the USS Pennsylvania before moving to the private sector. Since then, Nick has been helping companies achieve their business goals through data-driven technology and processes, in industries ranging from operations and manufacturing, to supply chain, logistics, fuel, and technology. Nick's wide-ranging background adds a wealth of expertise to the Titan Cloud team.