“Data” has been something of a buzzword in both the energy and technology sectors for at least several years now. The term means different things to different people. For some, it’s as simple as numbers in an Excel spreadsheet. For others, it’s about artificial intelligence and complex algorithms.
Neither definition is incorrect. At the same time, neither necessarily translates to success or failure in the energy industry. Here, the deciding factor in data entry and data management has always been the people in the driver seats and office chairs. That remains true today.
What has changed, however, is the quality of data available: exactly what it says to a fuel dealer or HVAC contractor and perhaps equally important, how directly it tells that story. As a product specialist with Cargas Systems, Saul Cohen works to connect fuel dealers and HVAC contractors with software tools that speak to their specific needs. As for the data Cargas Energy collects and manages, it speaks for itself and has plenty to say.
As many energy and HVAC companies pride themselves on being local businesses, it’s no surprise that location plays such a big part of those businesses. Whether it’s the distance between delivery driver and bulk storage, or service technician and broken furnace, location remains an everyday consideration, and not just as it applies to delivery and service routes. The amount of fuel used to reach a customer and the frequency with which they require service can help determine the value of that account. “This is why Cargas Energy has had integrated mapping, routing and geocoding from its inception in 2005,” Cohen says.
In rebuilding Cargas Energy’s Mobile Service app, Cohen explains, “One of the concepts we started with is that every Service Vehicle or Warehouse is an inventory location, and everything that comes in or out is a transaction that adds or subtracts from inventory.” Many companies that do a lot of service work partner with a parts provider for automatic reordering. For those types of businesses, a service app that automates inventory management is a no-brainer. However, those same data-driven concepts also make perfect sense in terms of fuel product inventory.
“For any loading that drivers do, Cargas Energy does an inventory transfer or purchase if it is directly from a vendor,” Cohen says. For example, if a delivery driver fuels up at his company’s terminal in Lancaster, PA, the software will “move” that fuel from the bulk storage inventory location to the delivery truck inventory location. “We know the cost of that fuel and the price that the customer pays, so you can see from a margin standpoint what you’re making with each delivery,” Cohen continues.
“Then we have a real-time inventory inquiry screen into any of those locations, so you get to see all of those FIFO layers, as well as an average or weighted cost to see the value of that inventory.” Cohen is referring to the “first-in, first-out” data management method, which also can be applied directly to inventory management, as is the case here. FIFO assumes that the first inventory, or fuel, into a dealer’s storage is the first out to the customer’s tank. This gets at the economic heartbeat of the industry.
The Long & Short Views
The ability to see inventory — in terms of both gallons and dollars — and then to watch that data change in real time is invaluable for any fuel dealer, but especially so for those who hedge and offer price protection (caps), contracts or budget plans. That’s because these kinds of data all speak directly to the hedger’s buying determinations.
“Not only do you see what you’re committed to from a customer-service standpoint,” Cohen says, “but also we have this concept of long/short visibility and a view into that data that shows you the contracts you bought from suppliers and where you stand with them.” This allows the dealer to instantly make the determination of going against either the rack price or the contract price.
Experienced stock traders will recognize the phrase “long/short” from their investment portfolios. It refers to buying “long” equities that are expected to appreciate in value over time in order to shore up against the depreciation of “short” equities that are sold when they decrease in value. It’s easy to imagine how this concept translates to the heating oil and propane markets, but not so easy to decide when and what to buy or sell … unless, of course, you can see all the numbers right in front of you and study their movements.
When data from contract commitments and bulk storage are fully integrated with data from the customer portal and back-office software, the result speaks for itself. Seamless data management streamlines inventory valuation as well as daily operations, making everyone’s job easier — from service technicians and delivery drivers to service and route managers to marketing teams, accountants and hedging consultants. It all adds up to what Cohen likes to call “financial visibility every day.”