This is the fourth post in the series on Reason to Implement Marine Fuel Management.
Enhancing fuel accounting and reporting probably seems obvious, but I think many may view this as a convenience only, rather than an opportunity to improve margins.
It’s true that MFM solutions (depending on which one you choose) can be a great convenience for both the vessel’s crew as well as shore based personnel in accounting and maintenance departments. In the last post I went into detail regarding the benefits for maintenance departments so I’ll focus this post on other aspects – but I will only have time to scratch the surface.
So lets start with an obvious benefit, automatically reporting fuel consumption can help shorten billing cycles. For many operators today, fuel is a pass-through item. Traditional methods of accounting for fuel for billing purposes are both labor intensive as well as inaccurate. For longer trips, manually sounding the tanks and reporting fuel consumption is probably the most common method. For shorter trips, such as those typical of harbor tugs, estimating fuel consumption may be more typical. Either way, this can result in inaccuracies, delays in invoicing, and disputes.
Even the most basic MFM can provide an immediate and accurate accounting of fuel consumed to do a job, automatically, whether that job covered a few hours or many days or weeks. The more sophisticated MFM solutions can tie the information to specific start and end times, GPS locations, and even allow the input of job numbers. The output can be in electronic formats for input to other systems, and in some cases, automatically transmitted to shore. These capabilities can facilitate more accurate and timely billing for work completed.
One customer that I worked with a few years back did harbor work and was using the information from their MFM system for next-day billing. This particular MFM system transmitted data to shore on a daily basis. The customer was able to extract fuel consumption information to provide an accurate accounting of fuel used from the time the tug left the dock until it completed the job; the company was then able to prepare an invoice that could be sent to customers on the day after the work was done. Not only did this help the company from a cash flow standpoint but it improved customer satisfaction because their customers had confidence that the invoicing was accurate.
Harbor tugs are not the only ones interested in this capability. Over the past couple of years I have worked with four different oil companies that were interested in better accounting for fuel consumption by offshore support vessels that they had chartered. Almost all OSV contracts are based on a day rate PLUS fuel. Because OSV operators don’t pay for fuel they have historically not been very interested in fuel management technologies or strategies.
The oil companies, however, have gotten more interested each year. They want to know how much fuel is actually being consumed. While the cost of fuel is not the most important thing to the oil companies, they still want the vessel operators to do everything possible to help control these costs. There are a couple of reasons for this.
First, the oil companies DO pay for the fuel and they want to make sure they can account for all the fuel they are being charged for, that consumption is within vessel specifications, and that the vessel is being operated efficiently when possible. A recent project for one of the largest OSV operators in the world at the request of the oil company that chartered their vessel, showed some interesting results. It showed that the vessel spec sheet did not match actual operations. The vessel was actually consuming significantly less fuel than the spec sheet indicated it would. It also identified an engine issue where one engine consumed nearly four times the amount of fuel as the other identical engine when the vessel was at idle - and this particular vessel spent many hours at idle. Having the MFM system on board gave the oil company confidence that it was being charged for actual fuel consumption and helped the OSV operator's maintenance department address the engine issues.
Second, the larger the oil company the more environmental pressure they are under. If they can accurately report and show that they are reducing fuel consumption where possible they can demonstrate a concerted effort to reduce pollution – every gallon of fuel saved represents 22.2 lbs. less carbon dioxide in the atmosphere. In the previous example, the main reason the oil company required the system on the vessel they chartered was to identify and report fuel reduction based on changes in operation and then calculate the tons of CO2 emissions which were reduced based on these strategies.
There are many other ways MFM enhances fuel accounting and reporting and many more examples I could share. The bottom line for this benefit, however, is the same as for the previous benefits.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Tuesday, August 24, 2010
Monday, August 16, 2010
Reasons for MFM: Identify Maintenance Trends and Issues
This is the third post in the series on Reasons To Implement Marine Fuel Management.
Another area where MFM solutions have proven to deliver positive results is associated with maintenance. In particular, MFM solutions can help identify potential maintenance issues before they become significant and costly problems or lead to catastrophic failures. They can also help companies with routine maintenance scheduling and budgeting.
For example, most engine manufacturers instruct users to perform engine maintenance at specified intervals based on hours of operation. With more information about how the engine is being operated these maintenance schedules can be optimized. Rather than simply considering the hours of operation, combining the engine’s cumulative RPMs and fuel consumption can allow maintenance schedules to be shortened or extended based on a more comprehensive view of the engines operating parameters.
Let’s say two identical engines are scheduled for top overhauls at 4000 hours. One of the two engines is on a vessel that operates 75% of the time under 80% load while the other spends considerably more time at idle in a standby mode and only spends about 45% of its operating hours under 80% load. If at 80% load the engines are operating around 800 RPM with fuel consumption at 140 GPH and the remainder of the time around 320 RPM with consumption at 20 GPH; there is a significant disparity in the number of RPMs and amount of fuel consumed by these two engines for the same number of operating hours.
In this scenario the second engine would have operated 1,200 (30%) fewer hours at 80% load, turned over 34 million (20%) fewer RPMs, and consumed over 144,000 gallons (32%) less fuel. What are the chances that both engines have the same amount of wear simply because they both accumulated 4000 hours of operation? MFM solutions provide an efficient and automatic way of capturing and reporting this information. By factoring into the equation engine RPMs and fuel consumption, maintenance departments have additional information to help them make important decisions. This gives them more control and flexibility over their time, budget, and resources.
So let’s extend the above scenario and assume that a company has two vessels and the engines on each have operated 4000 hours. If money is no object and logistics are not a problem, the ideal thing is to overhaul both. But, money is tight and logistics are an issue; the company only has the budget or time to do one of the two vessels.
With the MFM information on hours, rpm, and fuel consumption the maintenance department has significantly more performance information to help them prioritize their maintenance schedules and budget by overhauling the vessel that is most likely to have more engine wear. In fact, by monitoring this information on a regular basis – weekly, monthly, or even quarterly, maintenance departments can be more proactive and effective at planing maintenance budgets, schedules, and logistics.
Regular monitoring can also identify changes in performance that represent other problems that should be investigated. In addition to being an indication of engine wear, a gradual change in fuel consumption can also indicate other issues, such as; hull or prop fouling. By monitoring these recorded changes, maintenance departments can be alerted to trends that indicate degraded performance and decisions can be made to further investigate the situation. Sudden, but small changes in fuel consumption, that without MFM may go unnoticed, can indicate damage to the hull, prop, rudder, or other equipment that can lead to more significant problems and increased cost of operations if not identified and dealt with quickly.
There is little doubt that even when implementing the simplest MFM configuration, there are many ways an MFM solution can be used to provide relevant information that can help improve the overall effectiveness and efficiency of a maintenance department.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Another area where MFM solutions have proven to deliver positive results is associated with maintenance. In particular, MFM solutions can help identify potential maintenance issues before they become significant and costly problems or lead to catastrophic failures. They can also help companies with routine maintenance scheduling and budgeting.
For example, most engine manufacturers instruct users to perform engine maintenance at specified intervals based on hours of operation. With more information about how the engine is being operated these maintenance schedules can be optimized. Rather than simply considering the hours of operation, combining the engine’s cumulative RPMs and fuel consumption can allow maintenance schedules to be shortened or extended based on a more comprehensive view of the engines operating parameters.
Let’s say two identical engines are scheduled for top overhauls at 4000 hours. One of the two engines is on a vessel that operates 75% of the time under 80% load while the other spends considerably more time at idle in a standby mode and only spends about 45% of its operating hours under 80% load. If at 80% load the engines are operating around 800 RPM with fuel consumption at 140 GPH and the remainder of the time around 320 RPM with consumption at 20 GPH; there is a significant disparity in the number of RPMs and amount of fuel consumed by these two engines for the same number of operating hours.
In this scenario the second engine would have operated 1,200 (30%) fewer hours at 80% load, turned over 34 million (20%) fewer RPMs, and consumed over 144,000 gallons (32%) less fuel. What are the chances that both engines have the same amount of wear simply because they both accumulated 4000 hours of operation? MFM solutions provide an efficient and automatic way of capturing and reporting this information. By factoring into the equation engine RPMs and fuel consumption, maintenance departments have additional information to help them make important decisions. This gives them more control and flexibility over their time, budget, and resources.
So let’s extend the above scenario and assume that a company has two vessels and the engines on each have operated 4000 hours. If money is no object and logistics are not a problem, the ideal thing is to overhaul both. But, money is tight and logistics are an issue; the company only has the budget or time to do one of the two vessels.
With the MFM information on hours, rpm, and fuel consumption the maintenance department has significantly more performance information to help them prioritize their maintenance schedules and budget by overhauling the vessel that is most likely to have more engine wear. In fact, by monitoring this information on a regular basis – weekly, monthly, or even quarterly, maintenance departments can be more proactive and effective at planing maintenance budgets, schedules, and logistics.
Regular monitoring can also identify changes in performance that represent other problems that should be investigated. In addition to being an indication of engine wear, a gradual change in fuel consumption can also indicate other issues, such as; hull or prop fouling. By monitoring these recorded changes, maintenance departments can be alerted to trends that indicate degraded performance and decisions can be made to further investigate the situation. Sudden, but small changes in fuel consumption, that without MFM may go unnoticed, can indicate damage to the hull, prop, rudder, or other equipment that can lead to more significant problems and increased cost of operations if not identified and dealt with quickly.
There is little doubt that even when implementing the simplest MFM configuration, there are many ways an MFM solution can be used to provide relevant information that can help improve the overall effectiveness and efficiency of a maintenance department.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Monday, August 9, 2010
Reasons for MFM: Evaluate New Technology
This is the second in the series on Reasons to implement Marine Fuel Management
How often have you had someone call on your company representing a technology or product that they claimed could help you reduce fuel consumption by 2%, 5%, 10% - or more? One of the negative impressions that a vendor must overcome is that customers have heard promises like these for years from a variety of vendors of; fuel additives, lubricants, engine hardware, and even marine fuel management (MFM) systems. While the vendor (in fairness) may have seen such results at some point in time, under certain conditions, often the next customer is frustrated as claims go unrealized and expected savings can not demonstrated - for any of a number of reasons.
One of the reasons, however, may be that there is currently no accurate way of measuring fuel consumption on the vessel. In some cases the vendor’s claim of savings may be in the area of 2%-5%. While these are very realistic numbers for certain fuel additives, lubricants, and some engine hardware; often the savings cannot be verified because there is no accurate way to measure fuel consumption to verify the effectiveness of the technology. If you are manually accounting for fuel use there may be 2%-5% (or more) error in your measurement! A vendor whose technology delivers a potential benefit in this range may not be able to prove the savings because the method of measurement is inaccurate.
One of the values of an MFM solution is that customers can use the system to provide accurate verification that other technologies perform as advertised. An MFM system that is monitoring fuel consumption can provide accurate feedback to management teams and maintenance teams about the impact on fuel consumption of such things as; fuel injectors, fuel additives, lubricants, props, tow configurations, routes, various engine tuning parameters, and more.
A few years ago I worked with a customer that had a fuel management system installed on one of their vessels. They conducted a test to see if different injectors for their engines would result in a fuel savings as advertised by the vendor. They conducted a dead push at various RPM settings for 4 hours – ramping up from low RPM to high RPM. Then they changed injectors in one engine and repeated the process. The accurate fuel consumption data collected by the MFM system on board their tug allowed them to document a fuel savings of around 3%-4% with the new injectors installed.
They would not have been able to do this as fast nor as accurately – if at all – had they been relying on manual measurement from tank soundings. They would not have been able to watch the process in real-time nor would they have been able to chart the fuel consumption at various RPM settings to see if the savings was consistent across the range of RPM or different at different engine speeds. Nor would they have been able to export the minute-by-minute detailed data for further analysis in a spreadsheet.
Through the years I have talked to a variety of operators and vendors and heard stories about how they have tried various technologies but were unable to prove the savings. Some vendors have struggled with demonstrating a savings when there is so much error in the measurement process. Some customers have invested many thousands of dollars on technologies that failed to deliver for thier vessels. Having the ability to accurately monitor fuel consumption opens the door to proving the validity of various technologies and can help operating companies either keep from making risky investments in technologies that have not been proven on their vessels or allow them to make safe investments in technologies where savings have been demonstrated.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
How often have you had someone call on your company representing a technology or product that they claimed could help you reduce fuel consumption by 2%, 5%, 10% - or more? One of the negative impressions that a vendor must overcome is that customers have heard promises like these for years from a variety of vendors of; fuel additives, lubricants, engine hardware, and even marine fuel management (MFM) systems. While the vendor (in fairness) may have seen such results at some point in time, under certain conditions, often the next customer is frustrated as claims go unrealized and expected savings can not demonstrated - for any of a number of reasons.
One of the reasons, however, may be that there is currently no accurate way of measuring fuel consumption on the vessel. In some cases the vendor’s claim of savings may be in the area of 2%-5%. While these are very realistic numbers for certain fuel additives, lubricants, and some engine hardware; often the savings cannot be verified because there is no accurate way to measure fuel consumption to verify the effectiveness of the technology. If you are manually accounting for fuel use there may be 2%-5% (or more) error in your measurement! A vendor whose technology delivers a potential benefit in this range may not be able to prove the savings because the method of measurement is inaccurate.
One of the values of an MFM solution is that customers can use the system to provide accurate verification that other technologies perform as advertised. An MFM system that is monitoring fuel consumption can provide accurate feedback to management teams and maintenance teams about the impact on fuel consumption of such things as; fuel injectors, fuel additives, lubricants, props, tow configurations, routes, various engine tuning parameters, and more.
A few years ago I worked with a customer that had a fuel management system installed on one of their vessels. They conducted a test to see if different injectors for their engines would result in a fuel savings as advertised by the vendor. They conducted a dead push at various RPM settings for 4 hours – ramping up from low RPM to high RPM. Then they changed injectors in one engine and repeated the process. The accurate fuel consumption data collected by the MFM system on board their tug allowed them to document a fuel savings of around 3%-4% with the new injectors installed.
They would not have been able to do this as fast nor as accurately – if at all – had they been relying on manual measurement from tank soundings. They would not have been able to watch the process in real-time nor would they have been able to chart the fuel consumption at various RPM settings to see if the savings was consistent across the range of RPM or different at different engine speeds. Nor would they have been able to export the minute-by-minute detailed data for further analysis in a spreadsheet.
Through the years I have talked to a variety of operators and vendors and heard stories about how they have tried various technologies but were unable to prove the savings. Some vendors have struggled with demonstrating a savings when there is so much error in the measurement process. Some customers have invested many thousands of dollars on technologies that failed to deliver for thier vessels. Having the ability to accurately monitor fuel consumption opens the door to proving the validity of various technologies and can help operating companies either keep from making risky investments in technologies that have not been proven on their vessels or allow them to make safe investments in technologies where savings have been demonstrated.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Monday, August 2, 2010
Reasons for MFM: Improve Operations Management.
This is a continuation of my previous post and the first of six follow-on posts addressing in more detail the reasons to implement Marine Fuel Management.
Saying that Marine Fuel Management (MFM) systems can help improve operations management is a statement that most often evokes little response. There are two reasons for this; 1)there are very few MFM systems installed compared to the global fleet so there are not a lot of references or case studies for these systems, and 2) “operations management” is a very broad area. Without specifics as to HOW MFM improves operations management; it’s difficult to assign a value to this benefit.
The facts are that MFM can help; improve management oversight, meet a variety of reporting requirements, enhance maintenance practices, improve the accuracy and speed of billing, provide a differentiating benefit for sales/marketing, evaluate the fuel efficiency strategies… and more. In fact, all of the remaining points in this series actually fall under the broader operations management umbrella. The key is to understand what operations management functions in your organization could benefit from MFM and then properly align expectations.
An MFM system is an information repository where information about vessel operations relative to fuel use is captured and stored. Certain data can be presented to the captain and crew in real-time – giving them a decisions support tool that has true value, especially if fuel savings strategies are being implemented.
A commonly used quote “you can’t manage what you don’t measure” is right on the money for understanding how MFM can help operations management. For example; say your company has a goal to reduce fuel consumption by 5% as part of an overall plan to reduce emissions. Then obviously you must have a plan in place to measure fuel consumption or you can't 'prove' that you've achieved your objectives.
Many companies do this by sounding the tanks and/or tallying bunkering tickets. While this may give you a crude estimate of fuel consumption it really does not provide management with much useful information to determine if the strategies that were put in place to achieve the 5% reduction goal were effective. In this case, if the numbers have gone down, an incorrect assumption may be made that the strategies were effective when in actuality a combination of operating conditions, tonnage, weather, tides, and/or river levels are what contributed to the difference.
On the other hand, if you are using a MFM system to measure true fuel consumption and have that information as part of a data set that includes the time, date, location, speed, engine RPM and/or propeller pitch; you have the information necessary to determine a wide variety of KPIs that contribute to your goal.
Let’s say you decide to conduct an experiment – you want to know the impact on fuel consumption, vessel speed, and arrival time of reducing the RPM on your engines from 850 to 840 for the northbound leg of a trip. You instruct the captain to watch his RPM and to not go above 840 during normal cruise times. You sound the tanks before the trip and again after the trip accounting for one refueling stop. Let’s assume that at the end of the trip the calculated fuel reduction was 3.5% with negligible reduction in speed and no appreciable increase in time.
This sounds like you made progress toward your goal of 5%, however, there are several questions that remain unanswered because you don’t really have enough information to know what factors actually contributed to the reduction. You don’t even know for sure that the captain pulled the RPM back to 840 and if he did for how long. Because the means of measuring does not provide the detail necessary to evaluate the results of the experiment, management is unable to draw meaningful conclusions. Likewise, if the results indicated that no fuel was saved – could you logically come to the conclusion that the experiment failed?
What you measure is important but how you measure is just as important if you want it to yield information that can help you manage. Automated systems, that collect accurate timely data in a totally unbiased manner, provide management with a rich historical record that can be analyzed to produce meaningful information that can be used by management to improve operations.
This information can help identify best practices and then monitor their implementation. They can also be used as part of a continuous improvement plan providing on-going measurement of identified improvement areas and information that can help find other ares where improvement is possible.
Saying that Marine Fuel Management (MFM) systems can help improve operations management is a statement that most often evokes little response. There are two reasons for this; 1)there are very few MFM systems installed compared to the global fleet so there are not a lot of references or case studies for these systems, and 2) “operations management” is a very broad area. Without specifics as to HOW MFM improves operations management; it’s difficult to assign a value to this benefit.
The facts are that MFM can help; improve management oversight, meet a variety of reporting requirements, enhance maintenance practices, improve the accuracy and speed of billing, provide a differentiating benefit for sales/marketing, evaluate the fuel efficiency strategies… and more. In fact, all of the remaining points in this series actually fall under the broader operations management umbrella. The key is to understand what operations management functions in your organization could benefit from MFM and then properly align expectations.
An MFM system is an information repository where information about vessel operations relative to fuel use is captured and stored. Certain data can be presented to the captain and crew in real-time – giving them a decisions support tool that has true value, especially if fuel savings strategies are being implemented.
A commonly used quote “you can’t manage what you don’t measure” is right on the money for understanding how MFM can help operations management. For example; say your company has a goal to reduce fuel consumption by 5% as part of an overall plan to reduce emissions. Then obviously you must have a plan in place to measure fuel consumption or you can't 'prove' that you've achieved your objectives.
Many companies do this by sounding the tanks and/or tallying bunkering tickets. While this may give you a crude estimate of fuel consumption it really does not provide management with much useful information to determine if the strategies that were put in place to achieve the 5% reduction goal were effective. In this case, if the numbers have gone down, an incorrect assumption may be made that the strategies were effective when in actuality a combination of operating conditions, tonnage, weather, tides, and/or river levels are what contributed to the difference.
On the other hand, if you are using a MFM system to measure true fuel consumption and have that information as part of a data set that includes the time, date, location, speed, engine RPM and/or propeller pitch; you have the information necessary to determine a wide variety of KPIs that contribute to your goal.
Let’s say you decide to conduct an experiment – you want to know the impact on fuel consumption, vessel speed, and arrival time of reducing the RPM on your engines from 850 to 840 for the northbound leg of a trip. You instruct the captain to watch his RPM and to not go above 840 during normal cruise times. You sound the tanks before the trip and again after the trip accounting for one refueling stop. Let’s assume that at the end of the trip the calculated fuel reduction was 3.5% with negligible reduction in speed and no appreciable increase in time.
This sounds like you made progress toward your goal of 5%, however, there are several questions that remain unanswered because you don’t really have enough information to know what factors actually contributed to the reduction. You don’t even know for sure that the captain pulled the RPM back to 840 and if he did for how long. Because the means of measuring does not provide the detail necessary to evaluate the results of the experiment, management is unable to draw meaningful conclusions. Likewise, if the results indicated that no fuel was saved – could you logically come to the conclusion that the experiment failed?
What you measure is important but how you measure is just as important if you want it to yield information that can help you manage. Automated systems, that collect accurate timely data in a totally unbiased manner, provide management with a rich historical record that can be analyzed to produce meaningful information that can be used by management to improve operations.
This information can help identify best practices and then monitor their implementation. They can also be used as part of a continuous improvement plan providing on-going measurement of identified improvement areas and information that can help find other ares where improvement is possible.
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