Retailers that sell gasoline have long been challenged to maintain margins and reduce costs related to retains and run-outs and other operating expenses. It’s even more of a priority today, given the volatile fuel market and increased competitive pressures.
Cumberland Farms, the largest convenience store and gasoline retailer in the Northeast, has streamlined its fuel operations and optimized its fuel inventory by deploying FuelQuest Fuel Management System (FMS), an end-to-end fuel supply chain solution focused on reducing the cost of procuring, managing and accounting for bulk fuel.
“We wanted a solution to centralize our fleet scheduling for inventory-managed stores and dealers as part of our overall fuel strategy,” said Greg Scott, senior VP, terminal operations and petroleum distribution, Cumberland Farms, Framingham, Mass.
The Web-based solution allows Cumberland Farms’ dealers to place orders online, Scott explained, and automates replenishment planning for both low-volume and high-volume inventory-managed sites, increasing dispatcher efficiency.
“Previously, we used an in-house developed system, whereby store operators would call in and we would enter their inventory,” he added. “It was a manual system.”
The FMS system automates all aspects of the fuel-management process, providing Cumberland Farms with a complete platform to manage its fuel operations. With FMS in place, the chain has been able to optimize its fuel-holding strategy, improve its demand forecasting and maintain more accurate inventory. The company can now dispatch 300 to 350 loads per shift (there are two shifts per day).
“FMS allows our dealers to place orders online and automates replenishment planning for both low-volume and high-volume inventory-managed sites,” Scott added. “It increases our dispatcher efficiency, while reducing unplanned splits.”
Indeed, fewer retains (when a driver has to take back gas) and run-outs have been among the biggest benefits of the system, according to Scott, along with more accurate forecasting.
“The FuelQuest system is very dynamic, and it makes adjustments for things like weather emergencies,” he said.
Better inventory management is another key advantage.
“Historically, you have more inventory in the ground than you really need,” Scott explained. “But now we are able to adjust back to actual sales, which significantly reduces the amount of money we have in the ground.”
Scott said he expects the improved inventory management and more accurate dispatching of trucks, resulting in fewer miles driven, will provide Cumberland Farms with significant savings going forward.
“I expect a relatively high cost saving,” Scott said. “Initially, it will be based on time management, delivery accuracy, and the like, which are efficiency improvements.”
Most recently, the chain added to its overall fuel management strategy by purchasing FuelQuest’s ForeSite, a support tool that provides visibility into fuel inventories. It will allow Cumberland Farms real-time, map-based views of its fuel inventory in some 1,040 Cumberland sites across 11 states. ForeSite’s capabilities also include exception monitoring via early warning indicators of non-compliant inventory conditions.
“With ForeSite, we can quickly determine the health of our fuel network and identify trends and problem areas,” Scott said. “We can also drill down into detailed site, tank and fuel inventory information.”
REACTION: Field reaction to the automated fuel management system has been mostly positive.
“Our store managers like that they no longer have to go and manually stick tanks for inventory readings,” Scott said.
As with any technology, the initial deployment brought with it some frustration.
“There was some fine-tuning, which wasn’t surprising given all the details and data,” Scott said. “But FuelQuest has been right on top of everything.”
Turning to the Cloud
While 2011 may be half-over, there is still plenty of time to incorporate the right technologies to streamline retail operations by yearend. Chain Store Age spoke with Jay Yanko, managing principal of Verizon Retail & Distribution, about some top technologies for lowering costs and upping efficiencies.
How can a retailer decide which technologies will lower costs, maximize efficiency and create value?
It’s not an easy question. I can tell you that we’re seeing many retailers turning to the cloud. Even with ambiguity around an exact definition, the cloud is a key way for retailers to streamline their IT operations. Previously, the cloud was a symbol on a diagram, a way of representing the communication infrastructure between two systems that were not on the same local network. Today, it is a universal term used to describe billions upon billions of dollars of infrastructure — computers, routers, switches, copper, fiber — operating systems and applications that make up and operate the Internet.
How does the cloud help retailers?
Cloud allows for the centralization of operational systems and aggregation of metrics from disparate business processes. This creates a more efficient and costeffective deployment of systems and people, as physical and logical functions can be pushed up the technology stack. The cloud also allows instrumentation, such as sensors and other business intelligence tools, to gather information about and monitor lower-level operations and then make their outputs more visible to decision-makers. New technologies, centralization and services enabled by cloud allow for new business processes to be conceived, implemented, managed and monitored.
How else does the cloud help centralize the management?
First, the cloud means lower levels of integration with store-level systems because integration is intrinsic in the development and deployment of centralized systems. This reduces the effort required to connect to and gather store-level metrics and aggregate functions and provide better, timelier reporting. Centralized systems delivered as services also lend themselves to op-ex models. That becomes important as many retailers look for ways to shift their balance sheets. And lastly, centralization reduces the complexity of integration for systems and data as it is much easier to integrate a few systems based on services, rather than thousands of distributed systems.
Are there some key functional areas where retailers can take advantage of the cloud to centralize operations?
Absolutely. There are four main areas where retailers can centralize the management of IT operations: point of sale; task and workforce management; digital media management; and customer analytics.
To elaborate on digital media management, it is important to note that central management of content in the cloud minimizes work at the region or in-store. It also creates a consistent brand feel and awareness across stores.
For instance, retailers can tailor media experiences that are customized for the brand, season, time, weather, location and customer demographics. The issue, of course, is that this calls for high bandwidth. High-quality digital media is comprised of large files that need to be distributed to many locations for display. While bandwidth and timing of content delivery are concerns, they can be managed by scheduling delivery at low-network usage times and by only delivering updates and not complete refreshes.
Customer analytics allows for click stream in the real world. It provides the brick-and-mortar equivalent of click-stream data. When combined with click stream and central POS, this offers a complete view of consumers across all channels. Once again, video means high bandwidth, which can be overcome with systems that perform the analysis in the store and only aggregate the analytics information centrally. This increases the store footprint a bit but also provides on-site repository of video that can be repurposed for loss prevention.
Any final thoughts or recommendations for retailers?
All retail technologies out there certainly create challenges for retail IT professionals. The technologies we talked about today help cut through the noise. One thing to note is that all of these solutions are either consumer facing or a way to understand the consumer better, or a combination of both. Because at the end of the day, it’s all about the customer
Green Building Options
Blain’s Farm & Fleet knows all too well the misconception about conventional construction versus construction with a metal building system. In fact, the chain’s director of engineering, Neal VanLoo, recently was challenged by an architect when building a new store.
“The architect was against using a metal building system because he thought the design would be a square, fixed-dimension tin box,” VanLoo said. “We had to sit down and review the plans with him in order for him to realize the benefits of a metal building system.”
VanLoo said Blain’s Farm & Fleet exclusively uses metal buildings for new construction. (The Janesville, Wis.-based retailer made the change because of flexibility, economics, delivery and quality.) Its new 114,500-sq.-ft. store in Verona, Wis., is a good illustration: The building is a metal building system with a standing-seam metal roof. The walls are insulated precast concrete panels, split-face block, and horizontal and vertical architectural metal panels.
Sustainability is important to Blain’s Farm & Fleet, whose Verona store has high insulating values, skylights and clerestory windows. Its metal building system plays a key role in its green construction. Steel, the primary material in a metal building, is the most recycled and recyclable building material. Plus, the array of available choices for walls and ceilings means that insulating values can soar with a metal building.
“For those seeking LEED accreditation, steel can help achieve that goal,” explained Chuck Haslebacher, chairman of the Metal Building Manufacturers Association (MBMA). “The steel members of a metal building are engineered specifically for each building and then shipped to the construction site. Along with no wasted materials, this offers customization, a quick construction period, and the capability to erect a building year-round.”
Despite the benefits of metal buildings, there is a perception that a conventional building design is the most economical and permanent choice. Haslebacher disputed the notion and explained that with current steel-building solutions, owners and developers receive the building package from a single-source supplier.
“A metal building from a single source can offer a faster, consistent and more efficient construction life-cycle cost,” he said. “The products reach the job site faster, and engineering costs are typically lower than conventional engineering. And metal building systems are permanent structures lasting 60 years or more.”
They are also very versatile, according to Haslebacher.
“The versatility of a metal building system allows many other exterior materials to be used,” he explained. “The steel frame bears most of the building load, so the exterior finish can be brick, glass, masonry, EIFS, insulated steel wall panels or other options. With these materials, the distinctive look can be created to express a retail corporate image.”
A good example is the Ace Hardware in Boone, Iowa. The store is a metal building construction. The builder/steel erector R.H. Grabau Construction, Boone, used a combination of glass split-face block and special insulated embossed panels. The subtle colors were chosen to create a contrast with the Ace Hardware sign for aesthetic appeal, as well as long-term durability from the elements. A metal roof and wall system were also incorporated to create an energy-efficient package.
INTERIOR: On the interior, metal buildings provide easy adaptability, with the steel spans allowing for creative and interchangeable interior designs.
“When one tenant moves out and the new one wants a different layout, the wide-span configurations of a metal building allow spaces to be reshaped and remodeled,” Haslebacher said. “Also, the metal building provides flexibility for mechanical additions and interior electrical layout alternatives.”