California city outsources fuel procurement
Huntington Beach, Calif., has completed an initiative to outsource its fuel procurement process. As a result, the city expects to save between 12 and 15 percent on its total fuel acquisition costs.
Before the city decided to outsource its fuel procurement, each city division was buying gasoline, diesel fuel and lubricants independently from different suppliers. “We had a mess of paperwork on our hands,” says Rick Amadril, central service manager for Huntington Beach. “No department knew what the other departments were doing. We were also buying fuel whenever we were running low — not necessarily at the most economical time.”
To streamline and automate the fuel supply chain, the city contracted with locally based TeamFuel. In September 1999, the company installed modem-enabled sensors inside the city’s ground-based fuel tanks. Using the Internet, the company now monitors the amount of fuel in each tank, and it decides when to refuel them. Amadril and other city employees also can view the fuel levels and purchasing information on a password-protected Web site. The company bills the city for the cost of the fuel and adds a management fee.
In addition to keeping the city’s fuel tanks full, the company tracks the city’s fuel usage. In June 2000, the city installed a card-reader device that allows any city-owned vehicle to refuel at any city-owned station. “This new system removes one more logistical hassle from the daily routines of our city employees,” Amadril says.
As a result of the arrangement, all of the city’s fuel procurement paperwork has been consolidated, and all costs for fuel, lubricants and services are billed to a city credit card each month. The credit card allows the city up to 45 days to pay its bill. “With this new program, we are guaranteed the lowest possible price,” Amadril says. “It’s a non-core business function, so it just made sense to outsource it.”
