COMPANY:
UPS FUEL SERVICES
OPERATION:
Distribution division responsible for providing fuel for global package delivery company operating over 100,000 vehicles
PROBLEM:
For a fleet as large as UPS, which has about 100,000 vehicles, monitoring fuel inventory levels and delivery schedules can be a logistical nightmare. Never mind the paperwork nightmare that comes with ensuring the proper amount of fuel was delivered at the right time, at the right price, with the correct amount billed and taxes paid. Clearly, automation was needed.
“What we were using beforehand was a large number of administrative employees and Excel spreadsheets,” says Tim Mosier, fuel group manager for UPS Fuel Services Inc. “We needed something different that could make it a seamless process.”
UPS Fuel Services purchases roughly 400 million gals. of fuel a year — approximately 70% of which is diesel, about 30% gasoline, and a small amount of compressed natural gas and liquefied natural gas as well. The company expects to spend over $1 billion this year on fuel, Mosier says.
At the same time, UPS has so many facilities that rolling out just any fuel management program was not going to be without its challenges.
SOLUTION:
Back in 2004, UPS turned to FuelQuest for a solution. The FuelQuest Fuel Management System (FMS) has proven to be exactly what the package delivery giant needed. It took until 2006 for the system to be fully implemented, Mosier says. UPS was one of the first clients to use FuelQuest's solution.
“It was a very time-consuming process to get started,” Mosier says, pointing out that UPS Fuel Services deployed the solution district by district across its vast network. But now, “this works very well for us.”
FMS is a complete system that provides an “end-to-end fuel supply chain” solution that ultimately will lower the cost of fuel management, FuelQuest says. The system allows managers to “capture their true fuel costs by understanding demand patterns, centralizing supply contracts, determining best price on the market, and reconciling invoicing and taxes.”
FuelQuest also offers modules that allow for service expansion, including inventory management, environmental compliance, and demand fulfillment.
What it has done for UPS is drive a number of efficiencies, from allowing UPS Fuel Services to reposition staff to improved accuracy on tax payments. Because UPS Fuel Services is classified as a fuel distributor, it must file monthly tax returns, about 140 per month, Mosier says. Using the Zytax software option, which takes data from FMS to populate tax returns, UPS is able to file on time and accurately, with minimal human involvement.
FMS monitors inventory levels and notifies a dispatcher, who is responsible for nearly 300 facilities, when a site is in need of a fuel delivery. The dispatcher will place the order and the system does the rest — from contacting the local carrier, to generating a bill of lading, to matching the resulting documentation to ensure that the proper amount of fuel was delivered and the corresponding charges applied correctly. If the system is able to match the information, an electronic payment is executed.
“The carrier will key in the bill of lading that tells [the system] how much fuel was dropped,” Mosier says. “There is a triple match before it pays an invoice.”
Because all this information was entered manually before, improved data accuracy has been a big benefit, Mosier says.
