Western Cape Business News

Send  Share  RSS  Twitter  13 Oct 2008

TRANSPORT: How to Best Manage Fuel Stocks


Recent Western Cape Business News

FUEL prices have reached record highs over the past year, posing challenges to transport operators in maintaining the bottom line since fuel is the biggest running cost for the industry. Passing increasing costs on to clients and customers can have a negative impact on competitiveness and earnings, and this has prompted companies to implement better control measures over their fuel consumption.

CargoWare, a division of JSE-listed transportation, supply chain and logistics service provider Cargo Carriers, has developed a fuel management software system aimed at providing solutions to the difficult task of effectively managing and measuring fuel stocks and consumption.

In most transport operations fuel is obtained internally through the use of tank installations on company property. However, due to the long distances travelled, fuel is also purchased en route resulting in various types of transaction methods being used. These include fuel and bank cards, petty cash and formal purchase orders. Each one of these transactions has their flaws - methods can be devised to bypass systems for monetary gain, while a paper driven system of managing fuel can leave it open to inaccuracies when reconciling stocks.

Fuel inventory control in company tank installations presents its own set of challenges largely due to its complicated design. Underground tanks are sometimes interlinked and fuel is ‘balanced’ between these tanks. There are usually a number of dispensing nozzles or pumps linked to single or multiple tanks, each having its own counter meters to ascertain volumes issued to different vehicles.

“We embarked on this project to design and develop a comprehensive fuel management system, not only to manage the complicated inventory control of fuel within our own tanks, but to also cater for external transactions. This enables us to get an all-inclusive consumption record for each vehicle, taking into account internal and external transactions. Our belief is that measuring every fuel fill-up and calculating a tank-by-tank fuel consumption figure for every time a vehicle fills-up, fuel consumption can be effectively managed,” says CargoWare general manager Charel Schickerling. Since Cargo Carriers implemented the system in March this year the company has been able to identify specific problem areas, including inventory controls where variances between dip readings and pump meter readings show exceptional discrepancies. Transactions cannot be posted if discrepancies are not balanced, with a reason for the discrepancy having to be entered, thus enabling the company to evaluate whether variations are within the norm. Warnings have been devised to minimise mistakes during the process of capturing transactions, to avoid faulty odometer readings or obvious methods to try and bypass the system, and each transaction is captured against the vehicle as well as the driver. This enables driver-fuel performance to be measured and managed regardless of which vehicle the driver uses.

High fuel consumption by a specific vehicle could be the result of several factors including, poor service history or quality of repairs, theft of fuel from the vehicle or from company fuel installations and poor driving skills. For this reason the system has been integrated into CargoWare’s On Key maintenance management system, providing access to a vehicle’s service and repair history and allowing the root cause of the problem to be easily identified.

The Fuel Management System also operates as a total stand-alone solution and is marketed, installed and supported by CargoWare.

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