Detecting and
Reducing Loss
in Your Fueling
System
Contents
Defining fuel loss and
variance.............................................2
The importance of minimizing
losses and variance...........................4
Sources of variance...........................5
Establishing a baseline variance
measurement..................................11
Why outsource variance
analysis?..........................................23
1
What is
Fuel Variance?
A fuel variance is the difference
between the amount of fuel
available in a tank at any given time,
according to recorded deliveries
and sales, and the actual amount
of fuel available in the tank.
Fuel variances can be positive
or negative.
Why is it so important to
understand variances?
There are two overarching sources of variance:
physical fuel loss that happen during incidents
within a fueling system, or adjusted losses due
to poor or inaccurate data. Variances caused
by physical fuel loss are a loss of inventory which
can have a major impact on a retail fueler’s
profitability, and depending on the exact cause
could result in fines or notice of violation.
Alternatively, variances caused by accounting
errors can create additional liabilities and tax
implications for a business, all while masking
real fuel losses.
2
What does each
gallon lost really
cost you?
YOUR FUEL COST IS
$3/GALLON
YOUR AVG. MARGIN
IS 17.1¢/GALLON
IF THAT GALLON IS
LOST OR STOLEN...
IT WILL TAKE 17.5 GALLONS
TO RECOVER THE $3 LOST
The tighter your margins are, the more
each gallon lost costs your business!
3
$
The importance
of minimizing
variance
Identifying and minimizing
all sources of variance within a
fueling operation clarifies a
company’s inventory, compliance,
and financial status at any given
time, drives down its liabilities,
and eliminates waste.
actual
level
+/-
EXAMPLE
If you own and operate a fueling site,
how much can you save by lowering
your variance?
Let’s assume that you pay $3.00 a gal, and that
your site throughput averages 125,000 gals per
month. If your starting variance was just 1% of
sales and you were able to lower it to 0.5%, you
could save over $22,500 per year!
For a convenience store chain with 300
fueling sites, similar costs and average
store throughput, that same reduction in
variance could mean over 6.75 million
dollars in savings.
measured
level
4
What are
the primary
sources of
physical fuel
loss?
1.
DELIVERY
DISCREPANCY
Do you know — without a doubt — if all
the fuel in the delivery truck made its
way into your storage tank?
What is your process for confirming
bill-of-lading accuracy?
Deploying the right technology to
protect your fuel assets and ensure
you’re getting what you pay for is
crucial for reducing fuel loss from
delivery discrepancy.
5
What are
the primary
sources of
physical fuel
loss?
2.
METER DRIFT
You rely on your fuel meters to accurately
measure and charge for the amount
dispensed, but normal wear and tear
can impact these meters, prohibiting them
from performing accurately between
calibrations. With the growing number of
contaminants from today’s cleaner fuels,
recalibration and maintenance are needed
more frequently, compromising the accuracy
of your meters and likely giving customers
more or less fuel than they have paid for.
6
What are
the primary
sources of
physical fuel
loss?
3.
THEFT
From dispenser tampering to 600 gallons of
fuel missing from delivery trucks—theft eats
away at your profits. Thieves can be creative
and often find ways to siphon fuel straight
from underground storage tanks, bypass
dispenser meters, and drive off the forecourt
before paying.
7
What are
the primary
sources of
physical fuel
loss?
4.
EVAPORATION/
TEMPERATURE LOSS
Fuel expands or contracts depending
on temperature. This can occur both in
the delivery truck and the underground
storage tank. If it is cold outside, the fuel
could contract in the truck before delivery
occurs, causing a variance between the
actual delivery and the bill of lading.
Alternatively, if the outside temperature
is warmer than the temperature below
ground, a fuel delivery may contract inside
your tank, resulting in the appearance of
loss without any delivery discrepancy.
8
What are
the primary
sources of
physical fuel
loss?
5.
STORAGE TANK
LEAKS
Storage tank leaks are likely the most
straightforward source of fuel loss, but also
the most urgent. Aside from the hazardous
environmental and regulatory repercussions
of a storage tank leak, profits also take
a hit when a leak is present. Fortunately
there are a variety of solutions available
to detect and prevent storage tank leaks,
from automatic tank gauges to alarm
management services.
9
How do
adjusted
losses
accrue?
MEASUREMENT &
ACCOUNTING
ERRORS
At every custody transfer there is potential
for error in reporting the amount of
fuel delivered or received. Reconciling a
fuel site’s deliveries and sales is difficult,
especially when the bills of lading, delivery
confirmations, automatic tank gauges, and
point-of-sale equipment may all supply a
different record. Contributing to the issue
are tank charting and equipment errors
which can mask any actual fuel losses.
10
What steps
can you take
to establish
a baseline
understanding
of your
variance?
1. Confirm that the equipment
at your fuel site is maintained
and operating correctly
2. Ensure that you have
accurate tank charts for
your site
3. Implement a daily
reconciliation and variance
tracking method
11
Confirm that
your probes
and meters
are working
correctly
Make sure the
equipment onsite is
maintained and
providing accurate
information.
Before establishing a baseline, you
need to ensure that good data can be
captured from your probes and meters.
Without accurate information from the
equipment at your fuel site, your automatic
tank gauge is unable to appropriately
measure inventory levels, analyze onsite
conditions, and detect fuel loss events. If
you can not confirm that your equipment
is operating correctly then please talk to
your service contractor.
12
Next, establish
an accurate
tank chart
Whether you are measuring inventory
by dipping tanks or with an automatic
tank gauge, the stick or probe
measurements are only as good as
the tank chart that you reference
when calculating the inventory and
ullage. While tank charts themselves
do not cause a loss of fuel, an
inaccurate tank chart will affect
inventory data collected and
could contribute to masking
sources of real fuel loss.
There are many potential reasons that a
tank chart could be in error:
• The initial manufacturer tank chart
could be inaccurate
• The tank may have tilted since installation.
• There could be errors or changes to the initially
reported end shape, diameter, or length.
• Additional support structures added around the
tank may be affecting its shape.
80%
Up to 80% of reported site variances
are caused by inaccurate tank charts.
Masking Loss
Tank Chart
Delivery
Meter Drift
Theft
Actual Fuel Loss
Vapor
Leak
13
Generating a
tank chart
Tank manufacturers provide charts to match
the tank specifications at the time of installation,
and there are multiple online tank chart
generators should that one be lost. Unfortunately
the effectiveness of these charts relies on
knowing the tank dimensions and shape
exactly, understanding how the tank is oriented,
and making some prediction of the effect
installation and settling has had on its shape.
A more accurate way to generate a tank chart
is to use AccuChart on your Veeder-Root TLS
Automatic Tank Gauge or QuickChart through
Insite360 Advanced Variance Analysis service.
These applications track data sufficiency and
report back when there is a statistically significant
data set for creating an accurate tank chart.
The original tank chart shows a wide scatter of
variance measurements, but with AccuChart
the measurement error is eliminated across the
entire diameter of the tank.
14
Implementing
reconciliation and
variance tracking
Now that you’ve validated your
tank chart and equipment it’s time
to start collecting and analyzing
site data.
There are multiple ways to track inventories
and variance at the site and network level:
• Daily Reconciliation Spreadsheet or
other manual reconciliation application
• Business Inventory Reconciliation (BIR)
on your Automatic Tank Gauge
• BIR reports and exception based notifications
through Insite360 Visibility
• Insite360 Advanced Variance Analysis Service
15
Comparing
reconciliation
methods
Automated
Method
On-Demand
Reporting
Notification of
Exceptions &
Alarms
Remote Access
to Data
Weekly Analyst
Consultation
Quantification &
Categorization of
Tank Variances
Investigation of
Variance Causes
Site-Specific
Recommendations
-
-
-
-
-
-
-
-
At one
individual site
At one
individual site
-
-
-
-
BIR with
Insite360
Across a
network of sites
Across a
network of sites
-
-
-
-
Insite360
Advanced
Variance
Analysis
Across a
network of sites
Across a
network of sites
Daily
reconciliation
spreadsheet
BIR on ATG
16
Setting up a
daily reconciliation
spreadsheet
An easy method for tracking your daily inventory
and variance is the creation of a table within a
standard spreadsheet program.
Within this spreadsheet you will want to track:
• Opening inventory (ATG or Tank Dip)
• Amount delivered throughout the day
• Closing inventory (ATG or Tank Dip)
• Book sales
• Recorded POS sales
• Variance
• Orders placed
The calculation of these fields follow standard
formulas that can be programmed into the
spreadsheet:
Book Sales =
Open Inventory + Deliveries – Closing Inventory
Variance =
Book Sales – Recorded POS Sales
Using this information you can also calculate
a daily variance %:
Variance % =
Variance / Book Sales
17
Simplify
operations
with Business
Inventory
Reconciliation
(BIR)
Veeder-Root’s BIR is an automated
method for calculating a fuel variance
by using the information collected
through an automatic tank gauge.
This software package for Veeder-Root
ATGs tracks all the fuel that enters or
exits each of your underground tanks,
accounting for all delivery and dispensing
activity. It automatically collects metered
sales information from electronic and
mechanical dispensers and generates
accurate delivery and reconciliation
reports on a shift-by-shift basis.
18
How do I track
variance across an
entire network of
fuel sites?
Tracking your inventory and variance across a
network of sites is easy with Insite360 Visibility
software. For sites with BIR and Dispenser
Interface Modules installed, reporting and
analyzing the variance of an entire fuel network
surfaces fuel loss or leaks in real time.
Insite360 Visibility aggregates the variance
information for an entire fuel network.
This allows fuel operations managers to:
• Set email or text alerts for sudden fuel loss
events or unexplained variances across all
the sites in their network
• Create detailed reports and spot variance
trends at the site and network level
• Automate data collection and calculation
across their network
19
You have
taken steps
to understand
your variance,
now what?
So far we have confirmed equipment is
working correctly, calibrated our tank chart,
and established a variance tracking method.
At this point irregularities observed as you
continue to monitor variance should be
investigated once detected.
Some things to consider:
•
•
•
•
Is your compliance and leak testing up to date?
Did you have your meters calibrated?
How many people have access to dispenser panels?
Was the variance accumulated during quiet periods
when the store was closed?
• Are you able to eliminate employee theft
as a source?
• Have you investigated and reconciled all
recent deliveries?
20
Validating
deliveries
Validating a fuel delivery
ensures that you receive all
the fuel that you pay for and
eliminates the delivery as
source of variance.
It is difficult for fueling stations that are
dispensing during a fuel drop to validate
the amount of fuel received. This could
lead to scheduling deliveries during quiet
periods, or overnight, so that the delivery
is validated with the opening inventory.
As an alternative, fuel sites equipped with
Veeder-Root automatic tank gauges have
the option of using Business Inventory
Reconciliation to validate fuel deliveries
while fuel is being dispensed.
21
Veeder-Root ATGs with Business
Inventory Reconciliation accurately
calculate delivery reports, even if
the site remains active.
1.
Beginning Inventory:
1,377 gallons
Using BIR, you can keep your site running,
verify delivery amounts, and continuously
have accurate, adjusted inventory reports.
Insite360 Visibility captures this information
to help eliminate delivery variance across
your network.
2.
Simultaneously receive and dispense fuel:
(-) Fuel Dispensed:
117 gallons
(+) Fuel Delivered:
5,193 gallons
(+) Adjusted Delivery:
5,076gallons
3.
Ending Calculated
Inventory:
6,453 gallons
Adjusted delivery
report considers
dispensed product!
22
Why would
you outsource
variance analysis?
Professional analysts have expertise
in analyzing trends and identifying
phenomena across networks of all
sizes and, as a result, can recognize
more complex variance and
inventory patterns.
There are multiple steps to calculating and
managing the variance level at just one site.
In this document we have walked through a
process that includes: checking monitoring
equipment, calibrating tank charts, reconciling
deliveries, and then investigating sources of
physical fuel loss.
While this is manageable on one site
using your ATG, or on a fuel network using
Insite360 Visibility, it takes time and
expertise. By outsourcing variance analysis
for your company with Insite360 Advanced
Variance Analysis service you are tapping into
knowledgeable professionals who can guide
this process and limit your liabilities and fuel
inventory losses.
23
What is Insite360
Advanced Variance
Analysis Service?
Insite360 Advanced Variance Analysis is a
managed service that monitors fuel sites to
identify instances of fuel variance, determine
the sources of loss, and provides actionable
recommendations to reduce loss.
This solution provides advanced detection
and analytics to pinpoint true loss that could
be masked by data, reporting, and equipment
errors. Insite360 Advanced Variance Analysis
solutions reduce shrinkage and cost and
maximize fuel revenue.
24
How does Insite360
Advanced Variance
Analysis work?
We monitor your sites
and collect data across
your network 24/7
We process your
data in the cloud
Your Dedicated Account Analysts:
• Identify and respond to sudden
loss events
• Review data and identify patterns
• Provide an action plan with
specific recommendations
• Provide Value Summary breaking
down the make up and impact
of your variance
Users receive direct access
to their data in an easy to
interpret dashboard
25
How does Insite360
Advanced Variance
Analysis deliver
value?
1. Identify true loss of product
• Prevent future incidents and seek
recourse on any identified losses
2. Identify delivery shortages
• Reconcile 100% of deliveries and
seek recourse (credit/future rebate)
to make contracts whole
3. Reduce risk of fines and NOVs
• Take action on leak/compliance
risk sites before environmental
and regulatory impact
26
Ready to get
started?
To request more information about
Veeder-Root’s solutions, go to:
go.veeder.com/manage-variance
576047-247 Rev A