Small Idea, Big Change: Improving Bulk Fuel Utilization Saves up to $2M Annually
By Tess Ellender, Process Improvement Intern
August 7, 2019
The Less Retail the Better
While implementing a different process improvement to eliminate paper fuel receipts, Bill Hougland, Colorado’s State Fuel Coordinator, decided to look into how to improve the Colorado Department of Transportation (CDOT) state fuel purchasing procedure. The original fuel purchasing process for CDOT vehicles included filling up at either bulk fuel stations or retail gas stations. This resulted in higher fuel costs, due to retail gas station charging $0.30 - $0.50 per gallon more than bulk fuel stations, as well as the cost of gas to travel to and from the retail stations.
Fuel bank
In 2016, 58 bulk fuel tanks were located around the state of Colorado. Since then, the state has installed three more. CDOT uses around four million gallons of fuel each year, which Bill explained costs about $10 million. The additional bulk fuel tanks will save CDOT $1.2 million to $2 million during fiscal year 2019.
We can look at Mancos, CO as an example of why more fuel tanks are necessary. The town of Mancos has only one gas station, which poses a problem in the case of a power outage or fuel shortage. The installation of a bulk fuel tank ensures that CDOT’s maintenance staff will be able to consistently serve the traveling public. Another example is in Empire, CO. CDOT previously purchased 8,000 gallons of retail gas in Empire every month. The installation of a bulk fuel tank in that location saves CDOT up to $4,000 per month.
Bill says that his goal is to add one bulk fuel tank per quarter. Each of these tanks cost around $100,000, but this investment proves worthwhile due to the retail cost savings.
Automation Saves Time
The additional benefit of bulk fuel tanks is the elimination of manually-updated fuel logs. At each bulk tank, every driver would write information such as truck name, gallons, and odometer reading by hand. These logs were then uploaded to CDOT’s accounting program, SAP, by a local fuel coordinator. Each fuel coordinator then spent a minimum of two days each month uploading and tracking these bulk fuel transactions. Now, there are digital gauges in each bulk fuel tanks, so manual tracking is unnecessary. This reduction in manual odometer reporting saves approximately 1,000-2,000 hours each year, which saves CDOT upwards of $50,000 in soft costs.
To make things even easier Work Manager, a tablet program used to enter work orders into a real time automated system, will have a fuel app to capture fuel delivery, which improves accuracy and allows for better management of inventory and consumption.
The single switch to bulk fuel utilization can save CDOT millions of dollars a year in fuel costs, and thousands more in soft costs and time savings. In addition, the bulk fuel stations allow for the use of digital gauges, which makes the fueling process for CDOT employees easier and more accurate. If you want more information about the improvements to CDOT state fuel processes, please reach out to Bill Hougland, State Fuel Process Coordinator, at bill.hougland@state.co.us.