Fueling Customers' Energy Needs

Maverik's Power Move optimizes fuel pricing in a dynamic market

Facets of John Hillam's job can be so dynamic that at times, he admits he must "expect imperfection and move on from it."

Hillam is vice president of Power Move, a new department created by Maverik in the spring of 2011 that "takes a holistic approach to serving customers' fuel and energy needs." He reports to Mike Call, Maverik's chief adventure guide (president).

Power Move employs just shy of 100 people, most of whom are professional transport drivers that move fuel from supply locations to retail sites. There are 12 members located at Maverik's Salt Lake City headquarters whose job is to direct supply, distribution and fuel sales functions. Power Move operates under three subdivisions: Transportation, Fuel Supply and Commodity Management, and Fuel Sales and Marketing, with Hillam responsible for all of them.

On a typical day, Hillam will work from 8:30 a.m. to 6 p.m., but what happens each day during those hours can be dramatically different. "There are no to-do lists," he said. "Every day offers something that needs to be addressed that could not be foreseen in the prior day. Every day is a fresh entrepreneurial opportunity."

Typically upon arriving at Maverik, Hillam reviews prior-day transportation activity with Power Move's transportation team to see if any incidents occurred that require follow-up. "I ask the transportation dispatchers if they have any road conditions, equipment failures or driver health issues that would inhibit our ability to execute our distribution plan for the day," he said. "Then I'll go to the actual P&L Flash Report that reports prior-day activity with our transportation fleet and I'll look at detailed information to see if our trucks were utilized appropriately."

Key performance indicators that Hillam is particularly sensitive to include mileage per gallon, hours utilized and realized payload. Once Hillam reviews the transportation report, he creates a follow-up list and discusses assignments for the transportation team to tackle.

Around mid-morning — 10 a.m. Mountain Time — Hillam switches hats to review pertinent commodities markets. "That's when I run a market analysis report that shows all commodity spot markets where fuel products are traded," the vice president said. "I also look at the financial and currency markets, as they can be a harbinger for what commodities will do."

Assimilating the market conditions, Hillam tries to identify what he calls "basis arbitrages."

"Those are, for our intents and purposes, price differentials within Maverik regions that exceed the freight cost to transport fuel from a cheaper supply market to a more expensive supply market," he said. "That's the bread and butter of our operation and where we make our money. Maintenance of our robust trucking operation is what supports our ability to capture this opportunity."

The Maverik supply landscape is sufficiently dynamic so Hillam can buy fuel supply for the Utah region from Salt Lake City one day and the next day, he might predominantly purchase from Reno or Las Vegas in Nevada.

However, the commodities markets are no exact science, especially in the Rocky Mountains where supplier posted rack prices often fail to represent available supply — hence, Hillam's "expectation of imperfection."

"My job requires a personality that is opportunistic and enjoys the presentation of a profit opportunity," he noted. "It's really exciting for me when we can make a good fuel margin. But I don't think you can get too hung up on missing a half-penny-per-gallon opportunity that would take three days to figure out. You might be missing out on a larger opportunity in the meantime."

Maintenance of a competitive, yet fun office environment is the key to maintaining appropriate stress levels and avoiding burnout, he said, as the game never stops. "The transportation team members here are really dedicated people. They strive to be best-of-class and that is what we need them to be to maintain Maverik's strategic supply management going forward."

Once the commodity market research is complete, much of the Power Move vice president's afternoon is spent on sales related functions. "We look at prior-day fuel sales," noted Hillam. "We look at it by product and the margins we are getting. We also look at where we stand in the marketplace from a pricing perspective."

According to Hillam, he and his team are very sensitive to stores that show week-over-week or year-over-year sales decreases. "We try to dig in and spend time on the phone with the store director," he relayed. "We look to find out if there are any circumstances that are impeding our ability to sell fuel." For instance, is the price position sufficiently competitive? Are local traffic patterns affected by any construction condition? Is store execution on spot?

"Retail markets have unique personalities," Hillam said. "In general, we strive to be competitive. We try to hone in on all aspects of the sale of fuel. Maverik allows us to direct strategic capital expenditures relating to forecourt and fuel dispensing system upgrades. Our fuel sales team is leading some exciting new payment and loyalty program developments catered to current and would-be Maverik customers. We have a little ways to go here, but we are passionate about getting better in these areas real soon."

Hillam, a married father of three children, joined Maverik eight months before the formation of Power Move, in the capacity of fuel supply and logistics director. Previously, his career included jobs related to transportation, logistics, supply and commodity trading.