It would have been hard to predict how fortuitous the meeting of Valero Energy Corp. and Follett Inc. would be after the North American Association of Food Equipment Manufacturers (NAFEM) conference in New Orleans a few years ago.
The relationship forged that day gave the San Antonio-based chain the tools to make its stores more efficient, but more importantly to aide its refineries hit by hurricanes Katrina and Rita.
Valero began evaluating its fountain situation after acquiring 1,800 stores from Ultramar Diamond Shamrock (UDS). While Valero’s primary business was refining, this purchase from UDS, which closed in 2002, was its major entry into convenience retailing.
“Follett was one of several ice maker and fountain companies that we evaluated for various needs in our retail network,” said Mark Cirinna, vice president of marketing supply chain. “The introduction of the Ice Pro led us to explore some new options.”
Valero stores have many needs for ice not just selling bagged ice, but for its fountain as well as ice downs. The company now has 980 company-owned retail stores, but its total network is 5,000 when including branded dealers and Canadian locations. The bulk of its locations are in the South, where it is no secret ice is a hot commodity. Stores sell large volumes of ice in the summer and have increased demands for other in-store ice usage.
“The Ice Pro fit the ice production needs of some of our stores. We still purchase bagged ice, but the machine reduces the labor for maintaining ice downs and we bag our own ice to supplement purchases,” Cirinna said. “We have a complex network of stores and each site had to be surveyed and individually project managed. Follett worked closely with us and the installations went very well.”
One of the cornerstones of Follett’s business is providing “value-added solutions” to its customers, according to Mike Rice, the company’s product marketing manager.
“Our company history has developed around helping customers solve problems,” Rice said. “We work with our customers to go through their operations and economics to highlight issues as they impact labor so they can control their own destiny. For Valero, we evaluated several hundred stores and found where the machines would fit and what stores were candidates due to volume.”
The Follett Ice Pro has been on the market-for a little more than three years and is designed to allow for automatic ice bagging in stores. And who would have guessed what a valuable item frozen water is, especially to the convenience class?
“As fuel costs increase, it becomes more costly to distribute and package ice,” Rice said. “A c-store operator could reduce costs by investing in manual bagging equipment, but it’s still a process to get the ice out of bins and into bags. There’s relatively low productivitymaybe a bag a minuteand lifting creates potential for worker injury.”
The Ice Pro is mounted on a bin that holds 1,000 lbs. of ice, which is then fed into a bagging system that can be time-or foot-pedal operated. So rather than completing one bag a minute, retailers can get six to 10 done in the same time.
“Analysis shows selling 200 bags of ice a week can pay for the Ice Pro in two years,” Rice said. “At higher volumes, retailers can get their money back in as little as one year and after that it’s just bottom line profit.”
Valero was able to keep its investment to a minimum by utilizing a lot of stores’ existingice making equipment and connecting it to the Ice Pro.
“The machines have eased the process of filling ice downs and managing operations. It’s made hand-bagging ice in stores more efficient,” Cirinna said. “The machines are reliable and today they are meeting our return projections for the project’s effort and investment.”
Question of Need
Valero had no idea how valuable the Follett Ice Pro would become to its operations until hurricanes Rita and Katrina blew their fury all over Louisiana, Texas and other Gulf region states. The company’s St. Charles refinery, located just outside New Orleans, was down for nine days while employees labored to get it back on track. A month after Katrina struck on August 29, Rita hit its Port Arthur refinery in Texas.
“The biggest requirements were water, food and ice for the manpower getting the refineries restarted and helping the surrounding communities,” Cirinna said. “We were trying to supply more than 2,000 people a day at our Port Arthur refinery alone, so we deployed Ice Pros to supplement other sources of supply and have onsite bagging capability. Follett responded rapidly with the equipment and we got a lot of support from their installers.
“Our employees did an amazing job restarting the refineries. There were many urgent demands that required creative solutions,” he added. “At times like that, the focus is on support for our employees, their families and their communities. It wasn’t a question of ROI, it was a question of need.”
