Record fuel prices have caused plenty of headaches for retailers in recent months, so it’s easy for wet stock management to fall down the list of priorities.
But as oil prices continue to soar, experts are warning that retailers must keep an extra close eye on this area of their business. Ignoring an over-dispensing pump - even a seemingly minor problem - could end up costing you dear. And identifying a leak sooner rather than later is also more important than ever.
Tim Napper, European sales director of FuelQuest, says: "You don’t want to wait a month for someone to tell you that you have a leak, so you need to have a daily check as well. We have a team working 24/7, so if our analysts identify a discrepancy, the retailer can have the information in real time.
"Because the penalty and costs of something going wrong can be so high - especially for the independent sector - you don’t want a tank leaking for months. To be suddenly hit with a £20,000 or £30,000 fine isn’t very appetising. Retailers can get stung for the clean up costs. In fact, if you look at the past couple of years, there have been a lot of fines in the region of £20,000 handed out."
The Texas-based company has made the UK its main focus for expanding the European side of its software and services business, with its European headquarters in Manchester.
Napper adds that the company offers Statistical Inventory Reconciliation (SIR) on a monthly basis, as well as the daily data check to help retailers spot leaks or discrepancies that need looking at.
He says: "It could just be that the data is being recorded wrong, but there could also be a problem with the delivery, or maybe a potential leak. We monitor the situation and alert the retailer if something needs to be looked at urgently. It’s a huge advantage for sites to get up-to-date information. A real-time look at what the situation is enables the retailer to see if action needs to be taken."
Martin McTague, managing director of Edensure, says a typical UK site selling 4mlpa can expect to see 12,000 litres of fuel a year go unaccounted for.
He says: "You’ve got to be able to accurately measure the delivery going into the tank in the first place. In the case of a real leak, 12,000 litres could cause serious environmental problems. In reality, about two-thirds of fuel lost is lost in the delivery - it’s either carried away as vapour on the tanker or it shrinks in transit. Sometimes it’s mis-measured. The other third is usually given away to customers through over-dispensing pumps - that’s about 4,000 litres a year."
McTague says Edensure’s technology can identify which nozzles are giving away too much product. Once the loss reaches a certain threshold - for a typical site that would be about £200 of fuel given away over a six month period - the company would usually recommend the retailer get the problem fixed.
He says: "This usually costs about £100, so the retailer will make the money back pretty quickly."
But McTague says the more controversial issue is what the retailer does about the two-thirds lost in delivery. "It’s hard to measure fuel deliveries because people are still using the pumps during deliveries. Temperature can also affect the measurement so, when a real loss occurs, it’s harder to diagnose. The oil companies are not helping with this situation. That’s where we come in - to measure deliveries. It’s all done remotely, and the key is to use the gauges already on site - some aren’t calibrated properly or set up right.
"Unlike some of our competitors, we only deal with independents, so there’s no conflict of interest.
"At £130 a month for a typical site using Edensure’s ES3 system, it’s more expensive for retailers to use our system than some others, but we would argue there’s a payback because we cause less disruption on site and give more accurate information more quickly."
McTague also points out that it’s vital to have good wet stock management records if retailers are thinking of selling a site.
He explains: "Unless a retailer can show someone the losses over the past few years have not gone into the ground, they are going to struggle to get a decent price. People who buy and sell sites say that decent records can really help, and can increase the value of the property."
According to Napper, if a leak is identified the obligation is on the retailer to tell the local authority, which investigates through its fuel inspectors. "There isn’t really a central code of practice governing this in the UK, it’s largely down to the local authority - but one thing’s for sure - no publicity regarding a leak is good, plus it can turn out to be very expensive."
Napper adds that there are two sides to wet stock management. Corporate due diligence where you need to show you’re managing your wet stock effectively to protect your business reputation, and that you’re being proactive and have provisions in place should anything go wrong. And cost savings - how to run the wet stock side of your business so you’re not losing money, eg if a pump breaks down and is out of operation, you need an engineer to repair this quickly so you don’t lose business.
One of the services FuelQuest offers is alarm management for underground tank gauges. Napper says: "The gauges can be set so an alarm is triggered - this could be for a variety of reasons, such as low tank levels - and we can see remotely what is happening. Through a combination of our software and service team, we can determine if it’s a malfunctioning gauge, or do other checks because we know the tank levels and when the deliveries are due to arrive, and this helps us determine what is happening.
"This saves the retailer money because we can see which are false alarms and which can be resolved without an engineer on site. Every time you send an engineer to a site it costs about £100-£200. You can save a few hundred pounds per month per site because you can be more specific about what the problem is. Added to this, if pumps are running slow you could be losing margin on fuel sales, which could again mean a saving of a few hundred pounds a month per site.
"It’s important how this can feed into the wider supply envelope of getting fuel to site. Wet stock management is one part of the fuel supply chain, it’s one piece of a bigger picture. Across the whole supply chain, our customers are saving, on average, a penny per litre from using our software."
According to FuelQuest, retailers who use its system can expect to see a return on their investment in a matter of months. Napper adds: "Even if you only save a couple of call-outs per site per month, you’re already making money."
With record fuel prices, every litre is precious - and if a wet stock problem goes undetected for just a few days or weeks, it can build up into a major hole in your profits.
Many companies now recommend real-time monitoring for wet stock management. Fairbanks Environmental managing director, Bob Conlin, says: "To undertake wet stock reconciliation and analysis capable of early detection of leaks from tanks and pipework or detecting which pumps are causing a cash loss due to over-dispensing, a site operator needs to do much more than periodically review basic reconciliation reports showing daily and even cumulative variances."
Conlin explains that, while some retailers will make the time and have the expertise to carry out such complex data analysis, most will choose to rely on outside help from a remote SIR wet stock management company. He says this makes very good sense as it leaves the site operator free to concentrate on improving customer service and site profitability, adding that remote monitoring services are now very affordable and usually deliver cost savings which far outweigh the service fee.
He says: "When considering the outcomes of their DSEAR risk assessment, the site operator would assess suitable and sufficient control measures to manage the risk of a leak from the tanks or pipework and in these terms remote SIR is deemed to be a ’reasonably practicable’ method which can avoid the need to replace or reline tanks or carry out expensive periodic tank and pipework testing. It actually gives you continuous leak detection 365 days per year."
According to Fairbanks, the company is putting its ’ibank’ real time data acquisition module on sites around the UK and has the highest installed base of real-time wet stock analysis systems. It says one of the benefits of ibank is that loss investigations can be reduced from weeks to hours. This lets the site close off the offending tank, pipework or pump and do the repair very quickly. Conlin adds: "Fairbanks’ advantage over other real-time devices is its ability to interface with most tank gauges and POS systems without the need for expensive upgrades."
On a final note, Steve Watts, Torex UK sales director, warns that petroleum licences state that a retailer must keep accurate daily wet stock records - after all, pollution of groundwater is illegal.
He adds: "Wet stock management can help manage your outlet more efficiently, maximise profits, and comply with the law. Even losses of less than 1% can have a major, financial impact on retailers: wet stock losses equal lost sales."
=== Fairbanks and the Ivan system ===
Fairbanks says a key component of wet stock loss control is the accuracy of forecourt pump meters, and meter calibration has become a significant on-site activity.
Current methodology uses two x 20ltr calibrated steel measuring cans, which are filled, checked then transported across a usually ’live’ forecourt by trolley to the underground tank fill-points with the fuel returned into the tanks. Fairbanks staff make around 40,000 trips per year, handling over 1.5m litres of fuel.
The company wanted to cut the associated risks while improving accuracy of measurement and productivity - and it came up with a solution - ivan. The vehicle-mounted automated system is based on a Mercedes 511 vehicle and has front ’safe area’ compartments for the compressor and other equipment, a mid section containing the four-compartment fuel storage tank, and a rear section containing the measure vessel cradle and pneumatics.
Conlin says: "The four glass vessels ranging from five to 20 litres in size are calibrated and approved to UK NWML and European Metrological standards. The measure vessel cradle is lowered to the ground for use; then stowed again for transportation. Fuel from each pump is dispensed into the vessels, measured, then pumped into the on-board tank compartment allocated to that fuel grade. Each vessel is filled to a level within the range of the scale with no need to ’top up’ to an exact amount.
"A reading is then taken from both the vessel and the corresponding pump head and entered into the ’toughbook’ PC. Fairbanks’ proprietary software indicates the cost effectiveness of adjusting any over-dispensing meters. The process is repeated until all the nozzles on the dispenser have been tested. The vehicle then moves onto the next pump island.
"When calibration has been completed ivan is driven to the fill points whereupon a standard tanker delivery takes place. Ivan is equipped with a Stage 1b vapour recovery system that eliminates the release of vapours into the atmosphere while returning fuel to the site storage tanks as happens when using traditional measuring cans."
Conlin adds that the onboard printer gives the site operator written confirmation of fuel quantities dispensed then returned to the tanks.
He says: "Fairbanks has addressed a relatively high risk but necessary forecourt activity, and has developed a radically improved methodology. Using ivan, the task is significantly safer and at the same time achieves greater accuracy and efficiency making it more cost effective."
ivan benefits include:
* Vapours are expelled remotely from auditor, cutting the health risk through inhaling petroleum vapours.
* Spillage risk from overfilling the measure cans is reduced as ivan has spill containment.
* Collisions between trolley and moving vehicles - risking injury and spillage of fuel, fire and explosion - is eliminated as ivan stores and returns fuel in one operation.
* There is no need for more manual handling of (approx) 25kg cans, lifting cans and trolley in and out of audit vehicle, leaving open fill-points unattended while working at the pumps, or spillage while returning fuel to tanks using a funnel as ivan returns fuel in single-stage VR-1b delivery.
* The recording of readings (clipboard) is automated using ’toughbook’ PC.
* Stainless steel cans are subject to temperature change in both direct sunlight and cold ambient temperatures - the glass measure vessels are much less affected being sheltered from sunlight.
* No more ’topping up’ the measure can to dispense exact 20ltr quantities that can lead to a reduction in accuracy.
* Ivan drives to the first pump island and work starts (avoiding the time-consuming setting up of equipment before work starts).
* Time saved on transporting fuel from pump to fill-point.
* Disruption of the forecourt operation is reduced as ivan takes less time and there is no need for any trolleys to cross vehicle lanes.
=== Tips for wet stock management ===
* Good real-time data is essential - use this to get visibility of what is happening with your wet stock.
* Make equipment that you have invested in, like automatic tank gauges (ATGs), work hard for you.
* Be proactive - don’t find out about a problem once it’s too late.
* Actively manage data, alarms and alerts from the ATG. This gives you a real-time view of what’s happening across your business.
* Get your ATG alarms monitored and assessed to validate when a maintenance call out is really required and pinpoint the fault. This will reduce your maintenance contract costs significantly.
* Identify your 10 sites with the most wet stock alerts and alarms - focus on preventing the issues - it will save you hundreds of pounds.
* Establish a step-by-step response plan based on the severity of an event. This will produce prompt action that reduces the business and environmental impact in the event of a leak, or equipment failure.
* Establish simple but effective performance metrics reports - it will help target efforts for maximum cost savings and site integrity.
* Escalate open alarms to management through online alerts and emails to get issues resolved.
* Engage the support of a wet stock management service to analyse data and capture and assess alarms - it will identify leak or loss situations promptly as well as improve performance monitoring of site equipment, such as pumps - all serving to keep your customers coming back.
=== Case study: Jack loggins ===
Independent retailer Jack Loggins Ltd signed up for the Fairbanks ibank service after its chairman David Jacques heard about it at a BP local forum.
The company has three BP-branded sites with SIR wet stock monitoring service and annual site audits. David says Fairbanks captures real-time data directly from his Castelle Service Station site on the A60 between Mansfield and Worksop, and uses it for more detailed analysis helping pinpoint tank and line leaks much sooner - and at "incredibly low levels of loss".
The extra information also helps Fairbanks’ analysts identify over-dispensing meters, alarms and theft.
David adds: "Fairbanks installed an ibank at Castelle in the spring. The installation was straightforward and caused minimal disruption to the operation of the site. What amazed me most about this new service was that it was able to find a problem with the under pump valve of one of my nozzles very quickly. The Fairbanks analyst called to advise me that a line was draining back which could have indicated a line leak at a very low level. We arranged for the UPV to be fixed and the problem was resolved.
"As a result I am installing ibanks at my other sites. I found it unbelievable that something like this could be detected."