Fuel Supplier Uses Optistream’s Contract and Pricing Modules to Increase Price Accuracy
The Challenge
This fuel supplier saw the need increase price accuracy by managing contract pricing data including published index pricing, postings, lower of index or posting formulas, and differentials based on locations and dates.
The Result
When this fuel supplier began to parallel C3 against their legacy system, numerous differences were identified between the two systems. Initially, this caused some alarm until it was quantified that C3 brought a new level of price accuracy to the entire business. Most differences were quantified as inaccuracy in the legacy system.
The Pricing Journey
As this fuel supplier began to leverage C3, the first step in the journey was to automate loading of as many prices as possible. With subscriptions to published pricing sources already in place, publications were simple to load through automated interfaces which generally run nightly after pricing is published.
Once all feasible automations were in place, remaining suppliers sent pricing via email. Processes and automations were built to also load this pricing automatically or through a scheduled process of an admin to enter pricing before end of day.
As this fuel supplier began contract entry, it was quickly discovered that many of the “one offs” in pricing were never documented or established in the legacy system. The differential at a certain location with a certain supplier lived in someone’s brain and it was manually added to orders in the legacy software.
Getting all of the “one offs” in pricing proved to be a tedious task. We all know that back office person in a fuel supply business that has all of the anomalies memorized and knows to add this to one order and that to another. One of the struggles during implementation was quantifying each of these “one offs” while that person continued running the legacy software.
It become difficult to quantify the finish line in the pricing journey. The manual processes and knowledge of the contracts where held by a small handful of people. With little documented, there was not an accurate way of knowing when all contracts were setup correctly in C3.
Key Takeaways
As the parallel process began, it identified just how many “one off” scenarios existed in the business across the supplier base. It also identified some of the inherent complexity that was built over time in contract structure. Moving this from the brains of a few people into the software involved considerable change in the business and in the methodology of those running the business.
Once this process began, it exposed a significant risk in the business. The intricate details of how contracts were priced and differentials were managed lived entirely within the brains of a very small number of people. Nothing was managed by the software and little had ever been documented. Moving these intricate and important details into C3’s contract management platform eliminated a significant risk and ultimately allowed the business to scale further post implementation.
The differences during the parallel process were numerous. These differences were identified in the end as inaccuracies in the old system and missing “one offs” in the contract setup process in C3. Once the “one offs” were identified, this fuel supplier finalized the parallel with a confidence in contract pricing that had never existed after being in the fuel supply business for many decades.
About Optistream
Optistream is a provider of SaaS based software solutions focused on the midstream wholesale and retail fuel sector. Our mission is leverage cutting edge technology to bring quantifiable solutions that maximize profit and minimize risk.
We bring 25+ years of experience in midstream fuel supply with a deep knowledge of commodity marketing, trading, and position management. We also bring a broad understanding of back office processes and ERP systems.