By Matthew Mossotti
Most every downstream petroleum expert agrees that profitably growing fuel wholesalers will continue the trend of acquiring the assets of other jobbers that are either growth-stagnant or shrinking. These growth-oriented wholesalers that survive in this economic climate can expect to enjoy higher margins for the next few years. The technical capacity of fuel jobbers to maximize profits in order to grow can be virtually summed up in a single industry buzz word – “automation.”
Properly deployed, software automation drives down bottom line costs and creates opportunity to raise top-line revenue in a variety of ways. Fuel wholesalers that effectively implement automation as an industry best-practice are making the most of the margin-rich environment. Practically speaking, some of the key macro areas of business which can be automated are credit management, best purchase scenarios at the rack, and customized reporting tools.
Customer Credit Management
Fuel Wholesalers can utilize software to automate credit management for both current customers and potential customers. Back office software, when fully utilized, can be an intuitive platform that operates like a living, breathing credit management system. Software can automatically evaluate the credit history of a potential customer and determine whether or not they will be likely to pay on time. Additionally, jobber software can automate alerts that go out to administrative personnel if an existing account is about to reach their credit warning, actual credit or credit overdrive level and if an invoice is overdue. This allows wholesalers to safeguard their cash while placing certain client accounts on hold or adjusting their credit ratings.
Internal Credit Management (cash on hand)
As companies grow the number of gallons they sell, they need to purchase more fuel at the rack. With banks reluctant to extend credit lines in a timely manner, jobbers are leveraging automation to increase their cash-on-hand. Electronic bill of lading (eBOL) is an especially useful tool that fundamentally extends jobbers’ credit by speeding up the time-to-cash by processing BOL’s within minutes of loading at the terminal. With manually managed BOLs, some common carriers are forced to wait as long as two or three days before a driver’s paperwork gets processed through manual back office operations, which significantly delays payment from their customers and ties up the jobber’s available credit for purchasing more fuel at the rack. Conversely, eBOL automation downloads the BOLs from suppliers, imports those BOLs and sends them straight to the customer.
Essentially, eBOL allows users to immediately bill their clients and record the purchase without user intervention. Jobbers can manage their supplier allocation and credit in real time and their customers receive 100 percent accurate invoices in a timely manner. By automating bills of lading, historically complex, slow and costly operational processes become simple, quick and inexpensive.
Best Purchase Scenarios at the Rack
The automation of best-purchase scenarios at the rack saves jobbers money every day by always generating the actual best purchase with one-hundred percent accuracy. Manually generated fuel purchase strategies are costly and error prone and often regress into purchasing habits that can easily miss unique money-saving opportunities which frequently present themselves outside of the normal purchasing pattern. Automating these purchasing strategies ensures that no opportunity is lost by us creatures of habit. Further, all personnel will eventually leave or retire, which means their intellectual capital is lost in their absence and training costs are created for their replacements. Jobbers that have moved to automating their best-purchase scenarios develop and store them within their back office software to create a system of intelligence that appreciates the intellectual capital of the software asset into perpetuity.
Real-Time Reporting and Customized Alerts
Automated reports and alerts are giving executives and managers the business information they need when they need it. Oftentimes critical information reaches decision-makers after the fact, when it can no longer be acted upon in a meaningful way. Real-time reports allow executives and managers to pre-automate which details they deem to be meaningful to the profitability of their operations and automating customized alerts lets them determine when they want that information to trigger an alert that they receive via text message or email. Like never before, jobbers are able to take advantage of opportunities that present themselves in brief windows and they can now manage their entire operations at the speed of real-time.
Automate or Go Extinct
Over the next few years where margins are expected to remain favorable, efficiency will differentiate the profitably growing fuel wholesalers from their shrinking or stagnating counterparts who are soon-to-be extinct. As automation continues to prove to be the most-effective best practice for achieving maximum efficiency its role for the survival of the fittest companies in downstream petroleum is becoming exponentially more indispensable – the rule of this epoch for jobbers is “automate or die.”
Matthew Mossotti is the Marketing Director of FireStream WorldWide. FireStream is a premiere software provider for fuel marketers, c-store chains, and lubricant distributors. With a focus on how technology is helping to shape the future of downstream petroleum, FireStream strives to offer thought-leadership and current business insight to companies within the industry (see firestream.com).
