In September 2013, I was visiting a friend who worked as a fleet operations manager at a large Midwestern manufacturing plant. He was in a particularly good mood that day. Earlier he’d been notified by accounting that due to one of his recent projects, company fuel cost had dropped $120,000 over the previous four months. What made that news particularly satisfying was the project was his brain child.
It all started about a year earlier when he was facing fuel cost that had crossed the $5 million a year threshold. He assumed this was due to growing business and rising fuel cost. Yet, with over 350 vehicles in the fleet he couldn’t explain, with any certainty, where fuel actually went. Most vehicles stayed on site and refueled from one of eight unattended fuel tanks around the plant.
He figured some fuel was being lost due to “shrinkage” but nothing to be overly concerned about. Shrinkage, in this case, is a business term used as a nice way of saying part of your inventory disappeared, without accusing someone of theft or stealing. He estimated the company would save between 3% and 5% by reducing shrinkage but this was just a SWAG.
The first step was to install a Fuel Management System on each of the eight tanks. This system would serve two main purposes – provide security for the fuel tanks so that only company vehicles could refuel and track which vehicle received fuel, how much, and when this occurred. This should reduce shrinkage and give them the detailed fuel accounting information they needed.
The Fuel Management System he chose used wireless RFID technology. Each vehicle was outfitted with an RFID tag that transmitted its identifying information as it approach the tank. A controller was installed on each tank that managed the fuel tanks dispensers and read RFID tags. If the vehicle information was validated, the dispenser was turned on before the operator got out of the vehicle.
Most people, whether they know it or not, are familiar with RFID technology. Retail stores have used them for 25 or more years. Tags are placed on items so if shoppers tried to leave without paying an alarm will go off. Recently, there have been significant advancements in RFID technology. Before, tags could only broadcast their signal a couple of feet. Now, the technology has advance to the point where RFID tags can broadcast up to 100 feet.
After the project was approved, he decided to run a test by installing the system on three tanks. He also decided to put RFID tags on all of the vehicles.
The trial ran for about four months before they evaluated the results. To their astonishment fuel cost had dropped by over $120,000 on just three tanks. Keep in mind these were very large tanks with six dispensers and lots of traffic. The savings wasn’t 3% to 5%, but closer to 20%. Projected over a full year this would amount to approximately $1 million in savings.
After the fact, the project seemed like a no brainer. For the fleet operations manager this project was not without trepidation. At the start it was not entirely clear what the results would be. The investment made sense but the manager was not technical and experimenting with relatively new technology seemed like an enormous risk.
In the case of this Fuel Management System, nothing really changed for the vehicle operator. They drove up to the tank, got out, filled their tanks, and drove off. Same as before. Only this time, the company knew when operators refueled, how much, and where. They began a charge back process and monitored high consumption vehicles.
For some businesses, fuel is a huge operational expense. No one can guarantee similar companies will save 20% on fuel cost if they install a Fuel Management System. What has become clear is that most companies significantly underestimated the amount of shrinkage and do not know with any specificity where their fuel is going. As it turns out shrinkage was a bigger problem than expected. Within the first month of installing the system, an employee was caught filling his own vehicle. The company suspects this news spread quickly throughout the plant and shrinkage was instantly eliminated.
Wireless and wireless sensor technologies, such as energy management, are starting to have a significant impact on business operations with abilities to monitor mobile objects or remote locations. Until recently, mobile assets such a vehicles, product inventory, and people were somewhat difficult to track, at least in real-time.
It’s almost impossible to keep up with all the new wireless sensor applications coming to market. Now GPS for tracking fleets of trucks is commonplace. RFID tags are being placed on inventory and tracked from the time they roll off the production line until they reach the customer. Hospitals are monitoring when staff members enter and leave a patients room, all in real-time.
The Fuel Management Systems with wireless components are now available from several companies. Each with their own add-on features. What’s clear is that wireless applications are providing business managers with information and control over operational events that were previously either impossible or very expensive to manage. Soon, virtually everything will be monitored, put into context, and if practical, controlled.