A Game-Changer for Managing Fuel Inventory

Convenience store and gas station operators typically receive fuel deliveries on a regular, calendar-based schedule (say, once a month). This sub-optimal practice causes cash flow to suffer, as the store carries excess inventory during slow periods, or loses sales if tanks run dry when demand peaks.

Ideally, operators would place fuel orders on an as-needed basis, in response to demand. But because operators lack real-time visibility into inventories and sales across different locations, a just-in-time approach is rarely an option. An operator or franchisee who manages multiple stations or convenience stores can’t pinpoint how much fuel is in each tank in a particular station at a particular time. Comparing levels of fuel storage tanks in different stations throughout a territory is similarly problematic.  

Lack of data also prevents real-time reconciliation between sales and inventory, which limits the ability to forecast demand to accommodate peaks and valleys in sales. While it’s certainly possible to collect and analyze data on multiple fuel tanks in different locations, it’s a labor- and time-intensive process that generally isn’t worth the investment.

Another problem is that fraudulent operators can skim fuel from tanks or trucks and add water to conceal the difference. An operator might siphon off 500 gallons from a 4,000-gallon shipment, and then top off the tank with 500 gallons of water. Or a station manager might sell gas off the books and then either dilute the remaining inventory or change the settings on his console so that the numbers match.

Internet of Things-Enabled Insight

Internet of Things (IoT) technology can help gasoline retailers address these longstanding problems.

By combining smart sensors and cloud-based analytics, today’s innovative fuel monitoring solutions can deliver real-time and remote visibility into fuel facilities, along with detailed analytics around the timing, location, distribution, product availability, and quality of supplies.

Data-collecting sensors deployed within a gas station’s underground fuel tanks measure the volume of existing inventories and new shipments, as well as the volume of water within a tank.

The sensors collect and transmit data to a controller that connects to a cloud-based analytical platform that processes data and allows operators to monitor fuel volumes and water levels in multiple tanks in multiple locations.

Real-Time Visibility

By gaining real-time visibility into inventory and advanced analytics, operators can improve supply management and, specifically, place orders for new deliveries in response to demand, thereby addressing the problems of inventory excesses (higher costs) and shortages (missed sales).

IoT platforms can also support dynamic trend analysis and demand forecasting, which can significantly improve inventory management by station, by product, or even by franchise.

Within a given station, operators can configure specific tanks to issue alerts when levels reach a predefined threshold.  This station-specific insight, moreover, can be scaled across multiple stations to support a centralized model of inventory management characterized by optimized ordering, streamlined documentation, and accurate reconciliation of deliveries against actual tank inventories. An additional benefit is reducing labor requirements and, more specifically, minimizing human exposure to toxic materials.

By flagging excessive water volumes, IoT-enabled solutions can also combat fraud. The tools can prevent the practice of recalibrating measurements to mask skimming by automating and documenting the reconciliation of deliveries and dispensed fuel against inventories. And by monitoring changes in fuel volumes in response to extreme temperatures, the technology can enhance accuracy and reconciliation between sales and inventory.

Pandemics & Cyberattacks

The capabilities of IoT-enabled fuel monitoring solutions are particularly relevant in the context of the COVID-19 pandemic and the recent breach of the Colonial Pipeline, which disrupted fuel shipments and created shortages in many areas.

When pandemic lockdowns caused demand for fuel (and prices) to plummet, efficient inventory management became increasingly imperative. Following the Colonial Pipeline breach, meanwhile, stations scrambling to get resupplied benefited from detailed insight into inventory, which enabled the ability to prioritize specific locations for orders.

While breakthroughs such as autonomous vehicles and smart medical implants dominate the headlines, IoT technology is increasingly demonstrating the ability to enhance efficiency and transform operations in more mundane fields — including running a gas station.

Patrick Verdugo serves as offer manager for IoT/OTT Solutions at Claro Enterprise Solutions (CES), a global IT services firm. Prior to joining CES, he spent 17 years at IBM, where his roles included worldwide solutions architect for the Watson IoT Platform.

Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.