National Petroleum News (NPN) has been the independent voice of the petroleum industry since 1909 as the opposition to Rockefeller’s Standard Oil. So, motor fuels marketing and retail is not just a sideline for us, it’s our core competency.
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MARKETING & SUPPLY BY KEITHREID Bolla Oil Corp. moves from 100 percent third party to in-house ALL-IN ON TRANSPORT Bolla Oil Corp. This ever-expanding operation is the result of 24 years of hard work by the compa- ny's owner, Harry Singh, and the quality people he has hired to help run his enterprise. At the core is a growing c-store operation featuring over 75 sites, typically upscale in format, serving the New York City metropolitan area. Its Bolla Market concept is seen as being more D similar to an Italian villa than a traditional c-store. The core of the company's retail mission statement: Our mission is to become the most successful, most recognizable, and most respected chain of gasoline stations and convenience stores in the region. We will strive to meet this objective while adhering to the highest standards of business conduct. The company additionally operates 19 auto repair shops, four car washes, a commercial real estate business, a c-store construction and renova- tion business and an industry management consul- tancy. In June it announced it was moving into the fuel transportation business. It's not uncommon for a marketer to use a com- mon carrier for at least some, if not all, of its fuel logistics. Conversely, some companies operate their fuel logistics partially or entirely in-house. Bolla made the decision to shift from exclusively using third-party common carriers for fuel deliveries to moving entirely in-house. While this represents a significant operational shift, and a capital invest- ment reported at $1.5 million, a variety of factors prompted that decision. WHY MAKE THE MOVE? Delivery management was one core driver. "With the gasoline market, the way it is, there are drastic changes within 24 hour periods," said Jay Singh, Bolla's vice president of operations. "Having control of the trans- 18 OCTOBER 2012 IVERSIFICATION CAN BE A DOUBLE-EDGED sword for petroleum marketers. If done successfully, it spreads out risk and expands profit opportunities. If done poorly, it wastes money and resources. One company that manages to do it right is port gives us a big leg up on being able to manage our inventories in terms of which way the price is shifting. Naturally, when the price is going up you try to store up as much as possible while the price is lower. And when the price is coming down, you try to run your inventory dry and take inventory as necessary. This is a lot more manageable if you are the dispatcher and the transport company. Otherwise, you have to work within the timeframe of your transport company." The company's sites also tend to be high vol- ume requiring a highly active delivery schedule. Running the transport in house allows for eco- nomical and customized loading and drops and the reduced likelihood of run outs. Another driver, and one that was hard to ignore, is the potential savings. "You pay about $.03-$.04 per gallon on trucking through a third-party," said Singh. "Total cost of operations considered, we're looking at a roughly 20 percent savings on trucking costs. And when you're talking 200 million gallons, that comes out to be about $2 million in savings." The company is currently focused on meeting its existing and future logistical needs and not on serving other dealers. However, Singh noted that if someone came to them with a need and the deal made sense, they would consider it. CHALLENGES As noted, Bolla made a complete transformation of its logistics with this move starting from the ground up in a short time frame. How short—approximately six months. Singh noted that the most challenging aspect was creating the infrastructure in house. Establishing the processes for purchasing—who's going to be looking at the pricing, who's going to be dispatching, what's the approval process and generally setting up the structure. The actual purchasing of the 20 trucks, the truck equipment and the software integration was fairly straightforward. From a technology standpoint, all of the drivers are iPad equipped and linked to central dispatch- ing software in the office that is managed by three people that are communicating between the drivers NPN Magazine n www.npnweb.com