Valero 'Cascades' Toward Savings
Valero’s fleet administrator, Randy Burwell, has built his career on saving the refinery company money. His newest idea is no exception.
Because of the historically high resale rate for pickups, Valero began a “cascading” program, buying new Ford F-150 models, and cycling older vehicles into more strenuous duty such as work at refineries and tank farms.
Finding inspiration can be pretty rare. For Randy Burwell, lead buyer and fleet specialist for San Antonio-based Valero, inspiration has been a theme throughout his career.
For Valero, Burwell’s inspirations have been win-win propositions, netting the company millions of dollars over the fleet manager’s 14-year tenure at the organization. His latest idea, which he has dubbed “cascading,” is no exception.
Making a Simple Observation
According to Burwell, Valero has rarely purchased new light-duty trucks for its refinery operations, since this function inflicts heavy wear-and-tear on the vehicles. But, when he was looking to replace some of these trucks with a new batch of used models, he discovered it was more cost effective to purchase a brand-new, base truck model that cost $17,000 than spend $11,000 for a used vehicle.
The cause was simple economics — at the time, used trucks were fetching historically high resale prices even at the federal government’s General Services Administration (GSA) auctions where Valero acquired many of its used trucks in years past.
“It created a perfect storm, and it made the most sense to purchase a new truck,” Burwell recalled. “Now, all I had to do was convince management.”
Having a ‘Eureka’ Moment
Burwell scheduled his meeting with refinery management to pitch the idea of purchasing new trucks to replace the ones he was cycling out.
He had no idea how he was going to convince the refinery managers to sign off on this idea. So, he did what he always did. He put himself in the other guy’s shoes and in a “eureka”-like flash, “cascading” was born.
The idea was simple and a variation on his successful utilization program that moves vehicles to where they can be the most productive.
The difference with the cascading approach is that the newer trucks are gradually moved from light-duty situations in safety or other low-impact departments, with those vehicles moved to a medium-duty function in the environmental department, and the environmental department truck moved to heavy-duty service at the tank farm.
“The idea of the project has a simple goal,” Burwell explained. “Make the new truck last as long as possible. If the new truck begins service in a light-duty situation, then, after two to three years goes to medium service, and then to heavy service, it’ll maximize the life of the truck. Placing a new truck in medium and heavy service initially will shorten vehicle life.”
In fact, according to Burwell, this “cascading” of vehicles will double the working life of the new trucks from four to a maximum of eight years.
And, while Burwell knew that purchasing new vehicles would benefit the fleet, he also knew that he had to be able to show how it benefitted the company first and foremost.
“Successfully selling an idea requires a demonstration of its benefits,” Burwell said. “The selling points of cascading were extending the life of the trucks and that, with a new truck, there was less downtime, so you save time with drivers not having to take the trucks into the shop. I guess they just knew that I was trying to save money.”
Putting Cascading into Practice
The cascading program has been in effect for about a year, and Burwell credits the help of Jackie Harris, account consultant at PHH Arval, as key in putting the program into successful practice. PHH Arval is Valero’s fleet management company.
She helped Burwell determine how vehicles would be cycled in and out of Valero’s various refinery sites.
“She’s been my rep since 1999, and she’s like my staff. She did all of the one-on-one planning,” Burwell said. The plan has been successful with few, if any, hiccups.
The new trucks, primarily Ford F-150 ½- and ¾-ton pickups, have been utilized for work that will maximize their lifecycles. Older vehicles are living second and third lives at the refineries and tank farms, the latter, which contribute significant wear-and-tear on the vehicles. These trucks are typically being driven until they wear out and are then sold for scrap, according to Burwell.
The Valero fleet currently consists of about 300 sedans and 1,500 light-duty trucks.
Having a ‘Midas Touch’
Burwell attributes his focus on cost-saving ideas, which have included rightsizing the fleet, to his experience working in the car rental industry, which required a 93-percent uptime of vehicles and had extremely tight margins.
“I brought some of the concepts I learned in the rental industry with me to Valero,” he said. He also took to heart a lesson his father — who worked for Exxon — gave him. “He said, ‘you’ve got to produce’, ” Burwell recalled. “I’m always trying. I have a passion to make things happen.”
Burwell’s ideas always seem to have something of the “Midas Touch” about them. However, instead of turning objects into gold, Burwell has a knack for preserving the company’s “gold” by not spending it.
His other ideas during his tenure at Valero have included rightsizing the fleet from six-cylinder sedans to four-cylinder sedans, which has saved the company more than 6 cents per mile (CPM); reamortizing Valero’s lease agreements, which has saved the company $21,000 per month; transitioning the Valero fleet from a leased fleet to an owned fleet; and prioritizing the fleet’s commitment to safety.
Currently, he’s analyzing the in-house maintenance services at six Valero refineries to see how efficient they are.
More fundamentally, Burwell said that he always does his “due diligence” when purchasing trucks to make sure he is making the right choice.
Taking a Valero Snapshot
Valero’s refineries produce gasoline, diesel, jet fuel, asphalt, petrochemicals, lubricants, and other refined products.
San Antonio-headquartered Valero Energy Corporation was created in 1980. Named after the mission San Antonio de Valero, known by its popular nickname “the Alamo,” the company was the successor of LoVaca Gathering Company, a subsidiary of the Coastal States Gas Corporation.
Originally a natural-gas transportation business, Valero diversified in the mid-1980s when it purchased a 50-percent share of a Corpus Christi, Texas, oil refinery. In 2001, Valero completed its largest transaction when the company acquired Ultramar Diamond Shamrock.
Valero has 22,000 employees and maintains a refining throughput of 3 million barrels per day. According to the company, it ranks No. 12 on the current Fortune 500 list.
In 2009, the company expanded its energy interests again when it entered the ethanol business, producing 1.2 billion gallons per year at its 10 ethanol plants. The company also operates a 33-turbine wind farm near its McKee Refinery in Sunray, Texas.