How remote monitoring can reduce delivery expenses
As fuel delivery grows more competitive, marketers increasingly reach for technologies that can help eliminate waste and reduce costs. One solution that is rapidly gaining traction is remote monitoring of fuel tanks. Providers are reaching out to energy marketers, offering equipment and services that can help them track fuel supplies and do more for customers, such as monitoring oil burners for lockout conditions.
One provider that is working with hundreds of energy marketers is Independent Technologies, maker of the WESROC line of monitoring products for heating oil, propane and other energy products. Oil & Energy recently interviewed Hank Smith, Vice President, about the business opportunities that remote monitoring presents.
Oil & Energy: Please explain how a company can use tank monitoring to decrease the number of miles driven for delivery.
Hank Smith: The mathematics of delivering as much fuel as possible on every delivery without causing run-outs or pressure failures works directly into the mathematics of reducing the number of deliveries. There are certain costs that go with a delivery, whether one gallon or 1,000 gallons is delivered. If you deliver to a tank 10 different times and put in 50 gallons each time, or go to the same tank once and put 500 gallons in, you can easily see what costs are involved with the excess deliveries. With “keep-full” customers, it is amazing how many zero gallon deliveries there are across the fuel industry. Fewer deliveries means fewer miles, and less time, and less delivery truck fuel, and on and on and on. I have reviewed records for hundreds of thousands of non-monitored deliveries and monitored deliveries. On average, monitors have taken out seven to nine deliveries annually. That is an average, some are less, and busy tanks that are hard to predict usage can be much greater.
O&E: Please explain how tank monitoring can enable a company to increase its drop size and avoid unprofitable deliveries.
HS: With monitors, the goal is to deliver fuel just before the tank runs out! Realistically, making a delivery when most tank levels are 20 percent or less is very doable with monitors that are reliable and are checking the tank level frequently. In the case of WESROC, we check the tank level once a minute, and report reads to the host if certain preset criteria are reached.
O&E: Do you recommend that companies monitor all tanks or just a subset of their tank population? If a subset, what types of tanks should they monitor?
HS: I rarely recommend monitoring all the tanks. In cases where a company is a startup and has only one delivery truck, monitoring all tanks is a good idea. But, most of the time the monitors go on a subset of tanks with the broad classification “hard to predict usage.” For fuel oil, this can be commercial accounts that have sporadic usage, like resorts, rentals, multiple housing units, and large factories or warehouses. For propane, this is usually pool heaters, fire logs, generators, and commercial accounts similar to the fuel oil examples. Second homes or snowbird homes are good candidates to monitor fuel oil, propane or both. Diesels, gasoline, kerosene, lubricants and other liquids used at construction sites (highway, buildings, bridges, etc.) are good candidates for monitors. In fact, some of the greatest delivery savings I have seen have been on diesel tanks at commercial accounts with sporadic usage patterns. In one situation, one of our customers saved over 70 deliveries in a three-month period. The best criteria for what accounts to monitor is to look at delivery history and determine what accounts can reduce the most deliveries. Most customers start with their accounts that are also high users of fuel and those that are very important to the revenue stream.
O&E: Please explain how energy marketers can handle remote tank monitoring data depending on their back office software. Can tank monitoring data from WESROC feed directly from the transmitter into back-office software?
HS: All of the data is first sent to a WESROC server, and then massaged to be compatible with whatever back office a customer is using. We interface with a multitude of back office systems. When customers first start using WESROC, they often just used the WESROC routing capabilities; however, once they get a significant deployment, it is much easier to administer delivery scheduling by moving the tank level data into the customers own “back office” and generate delivery tickets there.
O&E: What are the operational “prerequisites,” including back office software, company size, etc., for using WESROC tank monitoring cost effectively?
HS: There are WESROC customers that only have 10 monitors and that is all they need. Then there are customers with thousands of monitors and they need many, many more. In general, the goal we set for helping customers is to let the existing back office routing system, if they have one, take care of the deliveries that are predictable. The unpredictable ones are handled by WESROC monitors. In short, there are no prerequisites that we set for the customer; we let them do that.
O&E: How can a company use the service of tank monitoring to improve customer relations and polish the company’s image?
HS: The obvious answer is to eliminate run-outs. But that is just one aspect. One of my favorite customer stories is a commercial account that uses propane for forklifts. The end customer refills the forklift cylinders from 2,000 gallons of onsite storage. The person who gets the “short straw” gets to refill all of the individual containers, which can be more than 100 at any given time. When he or she starts, they will work until done. Before WESROC was installed, there were numerous run outs, lots of overtime for delivery drivers, and lots of downtime for the person doing the filling. In some cases, the factory was shut down because forklifts had no fuel. Now WESROC sends a text to the delivery driver when they first start filling cylinders. The driver makes sure he has sufficient fuel on board (for a maximum fill of 1,600 gallons in this case) on the truck before he makes the 60-mile, one-way trip. The driver gets a tank low warning of 30 percent when he is about halfway there, a 15 percent tank critical alert when almost there, and drives onto the property just as the storage tanks are going empty. The end customer is always amazed by this, and is a customer for life!
Having big delivery trucks on some properties any more than necessary can be a problem. Anyone reading this has experience with driveways and access roads that become very hazardous during snow and ice storms. Running delivery trucks on to properties like resorts, amusement parks, restaurants, shopping malls and any place where lots of people and their autos are mixing with the delivery truck can be problematic. Fewer deliveries to meet the same fuel demands reduces the opportunity for mishaps.
O&E: Please talk about the choice of transmission mediums that WESROC offers to customers. What are the options, and what are the differences.
HS: WESROC offers cellular, phone line, satellite and Internet transmission methods. In the last two to three years, cellular options have become more popular than phone lines because in many areas the end customers are eliminating standard wired phone lines and using cell phones for their primary phone service. The decision on which product to use goes something like this:
- Is there a reliable phone line available, does the customer also want us to monitor indoor temperature, burner-lockout alarms and other alarms; and, can I get easy access into the home for the installation? If the answer is yes, then one of the three WESROC phone line monitors is used. If all are yes except there is no phone line available, then the WESROC Cellular Deluxe Base unit or the Satellite Base unit can be used.
- If the answer to #1 is no, then the WESROC “at-the-tank” products are used. These use either cellular or satellite. Cellular is currently the most popular because costs are slightly lower.
- The WESROC Internet product is generally used where there is a high concentration of tank reads in close proximity to each other; and/or instantaneous tank level readings are being sent to customer-owned software. We see these deployments in large tank farms and with some government agencies that have their own communications systems. As a general rule, setting these systems up is much more complicated than setting up the other WESROC monitors.
O&E: Related question: Please discus monitor performance in remote mountainous regions such as there are in New England and New York. How do you overcome transmission issues there?
HS: Our most concentrated deployment of WESROC monitors is in northeastern USA. WESROC is used a lot in the second home market, which many times involves mountains. Our cellular “at-the-tank” product has worked in almost all deployments in these areas. As a percentage of total deployments, 99 percent of the time cellular works. This is also a function of the fact that WESROC has contracts with multiple cellular providers, not just a single carrier. But, when there is no cell coverage, then either telephone line, satellite or Internet will work. Satellite is the last resort, but we will get a tank read one way or the other. We have some installs in Vermont that are totally off the grid, no power, no landline, no cell service. In several of these cases we do tank and home monitoring with the satellite base unit.
O&E: Please tell us about cylinder monitors. When did they come out? What do they do?
HS: The cylinder monitors are used to alert a propane supplier that replacement barbecue cylinders or forklift cylinders are needed. The first ones came out several years ago, using the deluxe phone base and alarm transmitter. In the last year we began offering a cellular version. These are popular again for hard-to-predict or out-of-the-way locations of cylinder users. The system provides an alert to the supplier when the number of cylinders remaining is down to a predetermined safety stock number.
O&E: Can tank monitoring help a company expand its marketing area? Please explain.
HS: Outstanding use of the product! There are WESROC customers that have been and are doing this now. If your service area has been a radius of 25 miles, what would it take to make it 50 miles? Knowing how much fuel new customers are using and when deliveries need to be made makes expansion easier, often without the need to add additional delivery trucks or remote storage plants. Most customers target specific geographic regions instead of using a shotgun approach when using monitors to expand territory.
O&E: Besides tank levels, what else can WESROC equipment monitor at a customer site?
HS: Indoor temperature monitoring is very popular with many of our customers, especially with fuel dealers that also do furnace and boiler service work. Next most popular is burner lockout alarms that occur when a furnace or boiler locks out and will not restart without someone resetting the burner. The same transmitter used for burner lockout can be used to monitor water on the basement floor, CO2 alarms, generator alarms and run time—or any device that can provide a dry contact, open or close, when the alarm occurs. Second homes and snowbird homes are excellent candidates for these services.
O&E: Can you express a vision of how an energy marketer might use monitoring services to do more for the customer and be more important to them?
HS: Most end customers are not as concerned about how much fuel is in their tank(s) as they are about what happens to their business or home if the device(s) that uses the fuel quit functioning. A second home heated with fuel oil can freeze up in the dead of winter whether or not the tank has gone empty, or the boiler or furnace has quit functioning, or the power to the home is out. Using monitoring to protect the home from a freeze-up for any reason is much more enticing to a homeowner than just keeping the tank full. A restaurant that runs the kitchen on propane isn’t worried about the tank level as much as what happens if they can’t cook meals for a full house of customers. A business that uses any type of fuel in the operation of the business is more concerned about what happens if the fuel isn’t available than what specific amount is in the tank. At WESROC we work hard at developing solutions that do the basic tank monitoring job but also offer other solutions to help our fuel dealer customers offer additional services that keep their customer’s needs met and offer potential additional revenue opportunities for the fuel dealer.
O&E: Please share your thoughts on charging customers for monitoring services.
HS: First and foremost is to keep in mind that tank monitors can pay for themselves in a very short period of time on those hard-to-predict accounts. In fact, almost all of our WESROC customers start deploying monitors on tanks that are hard to predict, high volume, and usually the best customers of the dealer—at no separate charge to the end customer. After that, there are situations where I believe charging for monitoring is appropriate: generator accounts, fire logs, pool heaters (that are not part of the first deployment), low volume residential customers that want monitors, and so forth. Once you add indoor temperature and burner lockout alarms, charging is appropriate.
How fuel dealers charge for monitoring is as varied as the fuel dealer population. Leasing is most common for monitored equipment. If a customer just wants a visual reading of the tank level on a base unit and no monitoring, selling the equipment to the customer is common. Making various levels of monitoring service available as part of annual service agreements is popular, especially when monitoring indoor temperatures and burner lockout alarms. Covering monitoring in the price of fuel another. Base monitoring fee on annual fuel volume; the higher the volume, the lower the fee for monitoring, including free. Many WESROC fuel dealer customers offer monitoring free to new customers. It really depends on the fuel dealer’s goals for reducing costs and expanding their business.
O&E: Can the monitor detect and send an alert if a fill is done by another company?
HS: WESROC reports all fills. We don’t have a product (yet) that knows who is filling the tank. Because WESROC has its own USA-based engineering group, it is possible with the current technology if enough fuel dealers would want this service! But, having a record of all fills by the monitor makes it easy for a fuel dealer to compare their actual fuel deliveries to the fills the WESROC monitor reported.