April 6, 2017

Automation in Fuel Pricing: As Simple as an Out of Office?

Fuel Prices, 2017

By Ethan Walker, Solutions Consultant

Utter the word "automation" in a room full of people with diverse careers and histories. Some will shudder. Some will ignore. Some will start to get excited at the possibilities. Utter it in a room full of best-in-class fuel pricing analysts, and they're liable to start clapping. While automation is sometimes perceived as threatening, scary or "too difficult," it is absolutely essential from an overall efficiency standpoint. And at the end of the day, it equates to increased revenue, which analysts and executives alike happen to enjoy.

Some businesses choose to not automate certain processes, a choice that, in itself, is neither good nor bad. But it is safe to say that all businesses have gone down the automation path to some extent and are glad that they did (e.g., using the Out of Office message functionality — we'll come back to this).

When it comes to choosing whether or not automation is right for your fuel pricing efforts, there are five key questions worth exploring:

  • Should you automate just some of the processes or all?
  • Can a system, in certain circumstances, perform a job as well as or better than a human?
  • Does automation produce benefits?
  • Are there different levels of automation?
  • Are “baby steps” toward automation a good idea?

To get to the answers to these questions, examine what matters most to your business. Consider time spent on tasks, human resource allocation and how goal alignment can be achieved even when typical manual operators are out of the picture (e.g. in a meeting or on the weekend). You'll likely find that there are times when your resources are improperly allocated for pricing, such as when you're on vacation and can't respond to a pricing-related request on your phone.

With that in mind, you will have the clarity to accurately select which parts of the process you will and won't automate.

Kalibrate supports clients all over the world, all leveraging automation to a certain degree and seeing the benefits from it. Is fuel pricing automation as easy as turning on your “Out of Office” feature in Outlook? Not to begin with, but it can get to that point if you are ready to dial in on your objectives and act quickly and nimbly to meet them. Fuel pricing automation is like OOO functionality in that you decide what you want the system to do, and on what conditions that action is based and/or should be triggered, and you define a length of time in which you want that action to occur. Do those things again and again and fuel pricing automation becomes even simpler to achieve. Automation doesn't replace the pricing analyst in the overall equation; it simply allows the analyst more time to spend on key decisions that will add even more to the bottom line.

Out of Office Messages

In a post entitled, “The secret history of the Out of Office message and other fun facts about this workplace staple” Vanessa Ho states:

“Auto-replies are so universal that they’ve spawned their own legion of acronyms: OOO, OoO, OOTO and OOF. They all make sense — OOTO stands for “out of the office” – except for OOF. What does that “F” stand for?"

Turns out OOF is a quirk of Microsoft culture, dating back to the company’s pre-Exchange Xenix email system of the late ‘80s. “Oof” was the name of Xenix’s auto-reply feature and a command to call it up. Decades after Xenix transitioned into Exchange Server in 1993, people still say “oof,” which, like all good slang, has a malleable usefulness. It’s both a noun and adjective.”

This is just one example of a small piece of automation innovation from the late 1980s that has made all of our work lives easier today. Can you imagine the time it would take to personally let everyone know that you are out of the office when an email is sent?

The Calculator

Let's talk about what we can learn from another piece of common automation: the calculator.

Every one of us is glad calculators exist today. A young French mathematician named Blaise Pascal invented the first adding machine in 1642, a clever device driven by gears and capable of performing mechanical addition and subtraction. Using a calculator is a form of automation that demands the user have trust in a machine/computer.

We can choose to not use a calculator to add/subtract/divide/multiply, and this is fine because most of the time, you're working with small numbers. But if you have some larger numbers or more complicated operations, even if you get the expected result every time on pen and paper, it's going to take you a lot longer than it would have taken the calculator. We likely agree that a calculator is worth using because it allows us to get to our answer more quickly that if we did it manually.

Fuel pricing calculations are no different than any other. If you want optimized efficiency from indescribable complexity, a computer is the only option. And you can, and should, trust them. But while computers are key to automation success, a human being is key to achieving the automated process that satisfies organizational objectives. Computers don't have goals until we create those and encourage the endeavor. For a pricing system to contribute to fuel volume success, it needs both automation to achieve efficiency and human intelligence to meet its purpose.

Self-Driving Vehicles

In the Fall of 2016, the U.S. Department of Transportation adopted SAE International's Levels of Automation as it relates to self-driving vehicles. Going from a level 0 (no automation) to a level 5 (full automation) requires a lot of small steps. You can't just move from full human control over a process to full machine control; we humans enjoy understanding what to expect, and we perform better (and so does automation created by us) when we scale these processes over time, and not all at once. Best practice retailers typically find themselves in a sweet spot in either Level 3 or 4 — conditional to high automation — both of which still include the need for human involvement.

Level 5 — complete automation such that no human operation is necessary — isn't here in self-driving cars and it's not quite here in fuel pricing. Even if we reach this stage (which is possible), we won't have reached the point where humans are no longer involved at all. That will only happen when the initial ideas behind, input into and programming of the vehicle (or system) also belong to a level 5 automated process, and that is a long, long way away.

Taking Advantage of Automation in Fuels Pricing

There are many configurations of your “Out of Office” functionality to take advantage of, some of them probably more useful to you than others. But once you see the advantages of these additional features, you don’t go back. If you never learned how to add, subtract, multiply or divide, would a calculator ever really have meant that much to you? Are you willing to get into a level 5, fully automated, self-driving vehicle without first testing the waters of levels 1,2,3, and 4?

As you dive into automation, ask yourself the important questions, and use these analogies to guide you. Fuel pricing is ultimately an endeavor toward greater efficiency, better decisions and higher revenue. You want to be sure you can gain those outcomes via automation, and taking baby steps is an excellent way to start.

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