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They Know When You Have Gas

Written By: A. Turner
Published On: October 10 2000

They Know When You Have Gas
A. Turner - October 10, 2000

Event Summary

On September 29, 2000, the Veeder-Root Company, a supplier of equipment and services for fuel management, and the American Petroleum Exchange, an e-marketplace for refined petroleum products, announced a Strategic Alliance. The agreement makes Veeder-Root's Fuel Management Service available on the American Petroleum Exchange's website (www.apexchange.com). The deal enables Exchange members, which include many of the nation's largest fuel purchasers, to have desktop access to "up-to-the-minute" inventory data on the petroleum in their storage tanks.

Veeder-Root's Fuel Management Service provides remote monitoring, automatic data collection and fuel inventory management. With this service, Exchange customers will be able to perform up-to-the-minute inventory checks before they make a decision to buy fuel on the Exchange. Once fuel is purchased, Veeder-Root will be able to confirm all deliveries by sending an electronic notification to the buyer. By creating a virtual inventory management tool over the Internet, the partnership between Veeder-Root and the Exchange will optimize customers' fuel purchases and streamline their delivery processes.

Market Impact

Estimates state the worldwide petroleum industry spends over $150 billion annually on intermediary, brokerage fees, logistics and associated services. Inventory control, supply chain management, business-to-business commerce and exchanges are all popular pursuits of ERP, SCM and e-commerce solution providers. The notion of a completely integrated "end to end" solution is the gold at the end of the rainbow for companies such as i2, IBM, SAP, Commerce One, and others. Each is working to improve supply chain efficiencies and streamline purchasing. The combination of current supply chain data and e-commerce is a powerful mix. If these exchanges are accepted on a large, product centric scale (i.e., petroleum) there's a good chance the solution will be applied and accepted in other vertical industries such as chemicals or commodities. Today, organizations such as Petrovantage, Petrocosm, and Chemdex are pursuing similar goals. (For more information see our article: E-Procurement Energizes . . . Energy.)

According to Veeder-Root's company data, several major oil companies, government agencies, commercial/industrial companies, and thousands of retail fueling station owners use Veeder-Root equipment and services to meet their environmental compliance and fuel management needs. Veeder-Root equipment monitors over 500,000 petroleum underground storage tanks (UST's) at retail stations around the world. This technology coupled with the American Petroleum Exchange, provides the petroleum industry an electronic supply chain management component and business-to-business e-commerce capabilities. To date, the Exchange has agreements with many of the largest fuel buyers in the United States who purchase over 15 billion gallons of fuel annually.

User Recommendations

Petroleum suppliers and wholesalers using Veeder-Roots Fuel Management Service may find this announcement extremely beneficial. For others considering Exchanges for the electronic sale and distribution of their products, the technology solution is worth watching. The benefits are obvious, however users need to be cognizant of the complexity of the transactions. While the solution may work for petroleum products it may be difficult to apply to heavily regulated products and commodities (e.g., pharmaceuticals). Naming conventions, contract sales, tax issues and international restrictions are only a few factors influencing the success of public exchanges. Users should also consider the value of a public exchange versus a private network or participation in both. Regardless of the factors, the delivery of current inventory data in conjunction with purchasing capabilities will certainly improve sales efficiencies.

 
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