Replenishing the Fuel Supply Chain During COVID-19
When we head to the gas station, we rarely think twice about whether there will be fuel at the pump. Fuel supply management is never really a concern for consumers until there is a shortage or a pandemic, such as COVID-19. But for supply chain managers, the coordination and smart replenishment of fuel are monitored and managed very closely, and there are all sorts of external factors that can play into the logistics of fuel delivery.
Fuel Crises During Natural Disasters
In 2012, the gas shortages in the wake of Hurricane Sandy were a major crisis for the fuel supply chain in the Northeast. Similar issues arose during Hurricane Rita in Houston, Texas, in 2017. In the Pacific and Indian Oceans, typhoons usually hit countries such as Bangladesh, the Philippines, Myanmar, Laos, Vietnam, Japan, and India. One of the strongest cyclones on record made landfall on Madagascar in 2004, and Hurricane Lorenzo, one of the “strongest ever recorded,” hit parts of Europe—Germany, Portugal, and the U.K.—in 2019. These and other natural disasters have the potential to wreak havoc on the fuel supply chain and leave fuel shortages in their wake.
Today, the coronavirus brings a new host of issues to fuel replenishment and is a new form of natural disaster we all are contending with. According to the Travel Centers of America, which operates more than 260 truck stops in Canada and the United States, gasoline sales have dropped due to reduced automobile traffic on the road.
Fuel Demand During COVID-19
Due to coronavirus and the mandate to stay home, many analysts predict that the demand for fuel will be down as much as 20% in 2020. Other reports show demand returning mid-year in the July timeframe. In addition to the retail fuel industry, we need to consider adjustments and impacts taking place in other industries, such as aviation; travel restrictions continue, fewer people are traveling, less fuel is required, and revenue is taking a hit.
With the demand for fuel changing so quickly, how do organizations manage their fuel supply chain in the wake of a crisis, political upheaval, or natural disaster? It can be a complicated, costly, and resource-intensive endeavor if you don’t have the right technology partner and the proper resources.
Fuel Supply Chain Solutions
Retailers and wholesalers are turning to end-to-end solutions that provide visibility, scalability, and agility to simplify supply chain management. Supply chain management software designed for the fuel industry enables convenience retailers and petroleum outlets to improve the efficiency of their replenishment, buying, and administrative operations.
Organizations can purchase from the right source at the right time and reduce carrying cost, run-outs, and other performance metrics through demand forecasting. Automated forecasting, load creation, sourcing, reconciliation, and payables tools are also great features.
A cloud solution that allows organizations to ratchet up or ratchet down inventory is another consideration. This gives companies immediate visibility into the needs of their client sites. This insight is critical during times like this when a typical fuel delivery that might take place every other Tuesday is no longer necessary because of reduced traffic and fewer automobiles on the road.
Developing a flexible supply chain response in times of crisis and during the coronavirus outbreak is extremely challenging, given the scale of the crisis and the rate at which it is evolving. Scenario and risk planning with a strong partner is key to being prepared. We always recommend to our customers that they run different scenarios to assess any unforeseen issues to their fuel supply chain, whether it be preparing for a natural disaster, a war-time crisis, or a global pandemic.
These are the top FIVE issues that supply chain and logistics executives should focus on to stay agile during the COVID-19 crisis:
- Use a cloud-based solution: Cloud-based software will help a business stay real-time and deliver continuity across borders and time zones. It is easier to move employees to remote work with a solution that is already in the cloud. For example, when truck drivers have access to mobile apps, they can practice social distancing, while still making fuel deliveries and having access to information such as inventory or size of delivery.
- Don’t rely on history: Some tools that can alert organizations to changes in demand so they can quickly adjust their forecasts as gasoline demand declines (fewer people driving) or as diesel demands increase (more trucks on the road). Supply chain managers won’t be able to rely on the history of a customer to forecast their demand in times of crisis.
- Know before you go: Make sure that your solution provides you with real-time visibility so that you aren’t sending a driver to a terminal where product is not available or to a delivery site where product isn’t needed. A "know before you go" approach helps you identify suppliers and/or terminals that are out of product, and find alternatives to stay ahead of supply disruptions or outages. Keeping track of changes in demand at retail fuel sites can help prevent diesel tanks from running low and prevent overfills of gasoline.
- Scenario planning: The coronavirus story will undoubtedly add to the industry’s collective knowledge about dealing with large-scale supply chain disruptions, such as hurricanes and other disasters. Even at this relatively early stage of the outbreak, we can draw important lessons about managing crises of this nature that we can apply down the road into future risk and scenario planning.
- Work with an experienced partner: Find a trusted partner that knows and understands your business; a one-size-fits-all logistics solution may not be able to handle the unique needs of fuel haulers.
When it comes to disaster preparedness, we know that C-stores, gas stations, truck stops, and the distribution systems that support them are laser focused right now. With all the changes taking place today, instability can be very stressful and unsettling. Smart replenishment is critical to peace of mind, and that is what fuel logistics organizations need right now as they look toward coming out on the other side of this crisis.