Merridale fuel management helps to deliver sustainable pricing

Coach hire is a competitive business, none more so than in South Wales where Thomas Coaches has been operating for over 40 years. The company came into being following the collapse of a local firm that had been contracted to provide transport services to support construction of the busy ‘Heads of the Valleys’ highway.

Walter Thomas took the opportunity to buy up the vehicles and take over the work as Thomas Coaches. He had trained as a commercial vehicle service engineer within the public service vehicle sector and had already acquired some experience in local bus operations.

Later he founded, a subsidiary company, Thomas of Rhondda, which was set up in 1996 with Walter’s wife Judith and their son Ian. This side of the business has invested in luxury coaches for long distance and continental travel, under contract to leading Welsh national tour operators.

The important benefit from the Merridale system is that we are able to manage our fuel requirements actively. We have absolute visibility of our stock status, which allows us to plan the timing for purchasing stock to secure the best prices.

In addition to hire contracts, Thomas also provides school transport and a number of local bus services. The firm operates a fleet of 18 luxury coaches and 40 buses, including high capacity seating for schools and smaller vehicles for local bus services. The business operates out of the former ‘National Welsh’ bus depot, located in Porth, which is18 miles north of Cardiff.

“We are proud of our record for service and reliability,” explains operations manager, David Thomas. “Having made the investment in vehicles, drivers and the engineering support needed to put them on the road safely, our job is to ensure that they deliver the return needed to cover our operating costs.

“Accurate costing is essential therefore. Sustainability is about profitability – earning sufficient margins to ensure we can afford not only to pay our drivers and engineering staff a fair wage, but also make the investment we need to secure our future development.

“To manage effectively we need good quality information for generating quotations. And that requires a total understanding of all the costs involved in getting a vehicle of the road. Our pricing is border-line. If a prospective customer claims that he can get a better offer elsewhere – then we are happy to concede the opportunity. Anyone who quotes below our price will be doing the work for no return, and that is simply not sustainable and they will go out of business, sooner or later.”

“Apart from wages our biggest on-cost is the fuel consumed by the vehicles.”

David Thomas continues: “The depot has a 55K litres capacity storage tank which is replenished monthly with one or two tanker deliveries of up to 36K litres. We are monitoring our stock continuously to ensure that it is used efficiently.  Our requirements fluctuate according to current work patterns. It will fall off during school holidays or when the touring coaches are abroad, since they will be fuelling up on the road.

“This stock represents a significant large slice of the company’s working capital and it needs careful management to ensure flexibility. In other words, holding just sufficient fuel for our immediate requirements and minimising the amount of stock locked away in the tanks of parked-up vehicles.

“We are using the Merridale fuel management system to track our fuel usage. The fuelling point is based on a Merridale commercial pump with integral monitoring. This collects the details of every fuelling transaction for downloading to the back office computer.

“Drivers obtain fuel by using a smart key which is allocated to each vehicle. While this authenticates the vehicle being fuelled, the transaction is further authorised by keying in the vehicle odo-meter reading. As an additional security measure the fuelling point is covered by the garage CCTV cameras.

“The fuelling data – vehicle, time and amount drawn is downloaded daily to the system database. After processing, this provides a detailed report of each vehicle’s mpg performance. This information enables us to track performance and highlight any anomalies such as service issues or driving style – such as excessive idling time.

“Since the software is also recording fuel usage, it provides a back-up to physical dips to check tank contents. We also use the system to flag up the minimum stock re-order point.

David Thomas concludes by saying: “The important benefit from the Merridale system is that we are able to manage our fuel requirements actively. We have absolute visibility of our stock status, which allows us to plan the timing for purchasing stock to secure the best prices. This gives us the commercial edge by enabling us to match our purchasing to revenue income and thereby balance the books.”