Eyes in the Storm
In describing last winter’s string of heavy snowfalls, cold temperatures, and corresponding supply issues, some fuel dealers have referred to the one-two-three combination as a “perfect storm.” Others have called it a different kind of storm, of the expletive variety.
Weather and fuel availability weren’t the only variables with which dealers contended. In addition to an ongoing driver shortage, there were at-risk customers, like those will-call customers whose usage is nothing if not unpredictable, those who call in a panic at the first sight of snow, and those who are constantly shopping for a lower price and thus, have no qualms about calling “the other guys” at the earliest sign of a delay.
These business conditions provided an ideal proving ground for many emerging technologies, yet when all was said and done, one already-well-known technology may have re-emerged as the most proven effective tool for eliminating variables and bringing long-sought predictability and reassurance to each participant in the ever-complicated supply chain that is heating fuel distribution, delivery and end use.
We’re talking, of course, about tank monitors. Oil & Energy reached out to several leading and emergent tank monitoring companies to review the lessons of last winter. Two specific focuses were increasing operational efficiencies and the rise of consumer-facing tank-monitoring apps.
Waste Not, Want Not
By and large, automatic delivery customers fared much better than their will-call counterparts last season. No surprises there. However, one thing a hectic winter can expose is how automatic delivery schedules aren’t automatically accurate. Whether a company uses weather forecasts and degree days, K-Factors, predictive analytics, or some other combination of formulae to route and schedule deliveries, no system is perfect. Unless you can see exactly how much fuel is in every customer tank in the field, wasted trips are inevitable.
Boyd McGathey, chief operations officer at WESROC Monitoring Solutions, relays a common dealer scenario that sums up how wasted trips can compound to disastrous effect during high-pressure winters. “Typically, one thing we run into is dealers have put their customers on a pattern,” he says. “But then at some point there’s a service failure, so they adjust the schedule. Later there’s another, so they adjust it again, and eventually they’re hitting a tank 10 to 20 times too many per year. Then when the proverbial ‘you know what’ hits the fan, they’ve wasted stops and can’t get fuel to the customers who really need deliveries.”
On the other hand, McGathey says, WESROC has continued to observe how tank monitors have allowed companies to “focus on customers who really need deliveries and not make wasted trips.” Because of this, he sees the technology as “a great tool to know exactly how to deploy resources to maximize drop size and profit.” McGathey continues: “I think the biggest takeaway from this winter is that when it comes to those customers whose usage is erratic and unpredictable, the only way to handle them efficiently is through tank monitoring. It saves you stops, and more gallons per stop equals more profit per stop.”
As most fuel dealers surely recognize, protecting margin is of the utmost importance, especially as the costs of doing business continue to rise. “Whether you’re on the heating oil or propane side, you can’t control your fuel price, you can’t control the weather, trucks start at $130,000 and go all the way up to $190,000, and labor’s hard to find,” McGathey relates. “So, if you can eliminate 10 to 30 percent of stops, that might be a truck or three that you don’t even really need to roll.”
Arnold Stillman, chief executive officer of POEM Technology, explained how even seemingly small differences between target and actual drop size can lead to significant gaps in margins. “We’ve seen that most companies think they’re delivering 150 gallons per drop, but it’s more like 140 to145,” he says. “That’s about $7 less margin per delivery, which can be the difference between making a wash and making a profit. Monitoring not only cuts losses, but helps dealers target and achieve much higher drops, in the 200 gallon range.”
Danny Klein, director of marketing at POEM, agrees. “When we got into this business, we thought that stopping runouts and improving customer service were going to be the big draws for companies, because customer attrition is such a costly issue” he says. “We soon realized that the big win for dealers is operations efficiency — increasing drop size, decreasing the number of deliveries per customer per season, and decreasing costs. And according to the survey we’re conducting, dealers now list efficiency as their primary motivation to make the investment in tank monitoring technology.”
Phil Baratz is president of Angus Monitoring Service makers of the consumer-friendly GREMLIN® tank monitors, and GREMLIN tank-monitoring app. “The main driver for remote monitoring is to bring efficiency and optimization to deliveries in order to achieve the biggest goal of maximizing gallons delivered per hour, by simply avoiding both the ‘too small’ and the ‘too big’ (a.k.a. run-out) deliveries,” he says. “By achieving those goals, the delivery sizes were more predictable and uniform. In addition, the ‘know before you go’ capabilities allowed dealers to allay the fears of customers who called for deliveries that were simply not needed.”
That being said, Baratz cautions, “Monitors are not, by themselves, a solution, but merely part of a solution. Companies who used the data provided by remote monitors to manage and prioritize their dispatch and delivery processes fared far better than those who let the extreme weather lead to fear and panic.”
Shane Owens is CEO of Technology Assurance Labs, makers of the OWL® propane tank monitoring system. “From the data we have collected, dealers who have deployed tank monitors to the majority of their serviced tanks were able to decrease their runouts and emergency calls to almost zero,” he says. “There will always be unforeseen issues and missed deliveries, but the visibility provided by tank monitors allows our dealers to keep drivers and technicians focused on the most critical items and not waste time dealing with customers who may not have an immediate need but are scared of upcoming weather conditions.”
Smart Tanks Speak Volumes
After dealers decide to invest in tank monitoring technology, they’re confronted with several big questions: which and how many of their customers should have monitors installed on their tanks, and should these tank monitors be deployed as consumer-facing technological amenities, or only as an internal solution for boosting operational efficiency. In McGathey’s experience, dealers’ views on both points have evolved over the past few years, especially as tank-monitoring technology has become less expensive and more comprehensive.
In the past, a veteran dealer might look at the harsh conditions of a season like last winter and assume that under these circumstances, the customer who can actually see tank volume decreasing will be even more likely to panic and call prematurely. However, with a comprehensive smart phone app like WESROC’s MyTankApp, that is less of a concern, McGathey says.
“Now, the customer with MyTankApp at their fingertips can tell how many days until the tank is empty, along with each percentage filled. So, there’s no need for them to panic about running out. They can see right there how long they have. The other thing our app does is allow the customer to place an order with just one click, so there’s no need to clog up the phone lines to see when the delivery is scheduled.”
David Montgomery, customer relationship manager for Angus Monitoring Service, observes that on the whole, people using the GREMLIN app are less likely to call their fuel dealer, even in extreme weather. “Clarity of sufficient fuel through the monitors and apps would not have ceased equipment failure or the ‘I simply can’t get my house warm enough’ calls,” he acknowledges, “but they would have cut down on the total number of calls to customer service.”
“This past winter, especially late December and early January, saw phone lines burning up mostly due to fear of what might happen,” Baratz adds. Still, he says, “Companies with apps that are reporting tank levels to the consumers need to be proactive with their customers — via messaging through the apps or other communications protocols — to explain that (a) the company is getting the exact same information as the homeowner sees, and (b) that the tank levels and the ‘reserve’ allow for a certain number of very cold days before coming close to running out.”
Opening such dialogue provides fuel dealers the opportunity to generate consumer confidence and loyalty. Speaking to that point, Montgomery reiterates, “Companies with remote monitors are perceived by customers as being progressive and are in a position to operate with far more efficiency than those who are ‘guessing’ using K-Factors.”
Just as Internet-of-Things (IoT) technology penetrates more and more homes, driving consumer interest up and costs down — advances in wireless and cellular telemetry have made tank monitors more attractive and affordable for fuel dealers.
Stillman notes that POEM is in the process of switching its focus from Wi-Fi to cellular-based tank monitoring, for exactly that reason. “IoT is driving down costs of cellular radios such that the electronics are now cost-competitive with Wi-Fi, and with only minor modifications you have the guts of a full-fledged telemetry device,” he says. “However,” Stillman adds, “the residential individual-use customers we work with still use Wi-Fi monitors, which they can install themselves. Of those, we have a few customers who own vacation homes on Long Island’s eastern forks and use tank monitors to keep an eye on their property during the winter.”
Likewise, snowbird-customers who leave the Northeast for warmer climates during the winter might utilize consumer-facing tank-monitoring apps to stay abreast of what’s going on at their first homes.
As tank-monitoring devices and applications become more versatile, the question of deployment becomes increasingly multifaceted, to the point where familiar strategies like providing monitors to all generator customers, or all heating and hot water customers, might begin to look a bit outmoded.
“We’re starting to see a trend, as the devices become less expensive, where our customers are looking at outfitting every single tank they have in the field,” McGathey says. “However, from a best-practice standpoint, I always start with data-driven deployment analysis. We find those tanks that you’re over-servicing as well as those you’re under-servicing, and then we go from there.”
With multidimensional data sets available, the results are often surprising. As a result, POEM has seen and suggested a number of unorthodox uses for tank monitors. Stillman recalls: “We raise a lot of eyebrows when we suggest to companies that have a number of commercial accounts like hotels and warehouses, that they might use tank monitors to make sure those customers haven’t discovered a lower price somewhere else and gotten a fill from a competitor.”
“I’ve been surprised to see how much interest there is in installing them on will-call customer tanks,” Klein adds.
As WESROC, POEM, Bergquist, Angus, Technology Assurance Labs, and many other companies have come to realize, consumer-facing tank-monitoring apps offer an ideal tool for fuel dealers to turn their will-call customers into automatic delivery accounts. This not only makes dealing with a harsh winter much easier — it also helps lock down those younger customers who hold in their hands the future of the industry but might feel less loyal to a single delivery company and worse, could be at greater risk for a fuel conversion. As McGathey says, “The more we can do to make those customers stickier, the better.”