FIRST SEEN IN FUEL OIL NEWS | Early on in my career in the delivered fuels industry I managed an operation with around sixteen drivers and a dozen service technicians. Toward the end of every calendar year we would pull our tickets ahead of the degree day clock so that by the New Year we were 200 degrees days ahead of the clock. That’s how I was taught and that’s just the way it was done. The thought was to get ahead before the severe cold so we could ensure no runouts and have the capacity to pick up additional gallons and customers.
That made sense then and until recently, I thought that was a best practice that every fuel company should follow. I have since come across a new method that appears to be a much more efficient method which can save significant expenses for companies by reducing driver wages, reducing the number of trucks needed and also give companies excess capacity when there are opportunities to pick up new customers.
So why does someone involved in valuations and M&A advisory care so much about how fuel is delivered? There are a couple of reasons. First off, it’s good for our industry as we are facing a severe driver shortage. It’s a national concern and it hits home when energy marketers tell me that they just can’t find any qualified drivers. Another reason is because it helps my clients by making their businesses prosper and in turn, when it’s time for them to sell, we can obtain a better offer for them. A fairly new question I hear from prospective purchasers is; are the companies we are representing for sale fully staffed? In the past buyers were looking to eliminate positions and now they are looking for drivers and technicians to fill slots.
I was recently exposed to a program developed by Angus Energy called ADEPT. They have taken a different view on pulling ahead to have capacity. They have developed an algorithm (complex math formula) to calculate when deliveries should be made throughout the year to maximize delivery capacity. As an example, for certain accounts with high K-factors, the system may tell you to not deliver that account at a certain time as it would make it more difficult delivering a lower K in peak season.
I’m a number cruncher by nature and profession, so I asked for some details on how it worked. After I analyzed it, my big question was why someone had not thought of this years ago. It just made sense. I remember the long nights I spent in dispatch deciding which customers would get a delivery and which ones would not. I understood that I could hold off delivering a 12 K, even though we were in the neighborhood making other deliveries. I knew we had 1,200 tickets in the rack and a capacity to deliver 600. We had to pick who got fuel and who could wait.
The ADEPT program not only makes the calculations for you, it does it far in advance so you are not under the gun when the next polar vortex comes.
I want to be clear that I don’t work for Angus and I was not asked to write this article for them. I just felt so strongly that I had to share my unbiased opinion with the readers of this article with hopes that it will help a fellow industry company become a better more efficient business. Runouts and lack of delivery capacity can turn into black eyes for companies as well as our industry. It’s worth contacting Danny Silverman at Angus (firstname.lastname@example.org) to see if this program is right for your business.
First published in Fuel Oil News, January 2021 edition