9Ware is an upstart technology company which provides financial and logistics management solutions for the petroleum distribution industry in the US. Because 9Ware is a forerunner in adopting new technologies, it helped its biggest client automate and manage complex operational logistics and financial challenges posed by its expansions and growth.
This client is a major petroleum distributor which currently provides fuel to more than 200 gas stations in the mid-Atlantic region. Its daily operations involve purchasing gasoline and diesel fuel from major oil refiners such as Chevron and Shell, and distributing it to gas stations. Because energy prices can be very volatile, fuel prices are determined on a daily basis for next day supplies. 9Ware’s client was faced with several major challenges in pricing daily fuel prices correctly and timely. First, there are 100-plus different base rates, such as supplier’s rack rates and NYMEX energy futures prices, used in the pricing formulas, and getting those daily rates from different sources into the system is no simple task. Second, there is a relatively short time window from getting the daily closing prices used for the base rates to publishing delivered rates to customers the same evening. Third, since contracts are negotiated independently with each supplier and customer, every contract will have a different pricing formula for base rates, markups/markdowns, and freight stipulations. Consequently, the higher the number of suppliers and customers, the more fuel price calculations this client will need to manage everyday.
When 9Ware’s client acquired more than 150 gas stations in 2004, the rapid expansion put to test the limits of an old pricing process that was built on a Legacy system. The old process involved many time consuming and manual tasks, such as manually entering the base rates obtained from suppliers’ websites and other industry data providers, and manually generating pricing emails to send to customers.
To solve its client’s problem, 9Ware first built logic in the pricing applications to automatically pull base rates from various data providers. For supplier’s rack rates, 9Ware primarily sources the data from DTN Energy and OPIS. And for energy futures traded on NYMEX, 9Ware pulls the data from Xignite. Since price feeds from DTN and OPIS are bulk data and require proprietary systems, 9Ware needed to write extensive programming logic in order to integrate those feeds. On the other hand, the energy futures prices provided by Xignite were extremely easy for 9Ware to integrate.
With 9Ware solutions powered by Xignite, 9Ware’s client can now easily manage the entire process of calculating daily fuel prices accurately and publish them on time for customers to adjust the prices at the gas pumps before 12 midnight everyday.