The fuel experts
AFS Group, a South African fuel management technology and services company, has seen phenomenal growth, particularly since the painful hikes in fuel costs a few years ago. Colin McKenzie explains to Gay Sutton how the company is pushing the boundaries of technology and service.
Controlling costs is one of the primary concerns of those who run any organisation, regardless of whether itÔÇÖs a profit-making enterprise or a government ministry. With the global economic downturn coming on top of cruel fuel price increases, itÔÇÖs small wonder that Cape Town-based fuel management firm AFS Group has experienced enormous growth. ÔÇ£Last year our turnover was 250 million Rand, and in this financial year we expect to exceed 400 million. So growth will be phenomenal, as it has been each year,ÔÇØ explains new business development manager Colin McKenzie.
The success of AFS in this economically important business is, however, linked to its ability to spot the value of new technology, to identify the unfulfilled needs of its customers and to develop the technology and capability to fill that gap.
The company had its beginnings in 1995 when CEO David Froman brought back to South Africa a revolutionary automated fuel purchasing technology that he had seen in operation in Israel the previous year. Expansion was initially slow but really began to take off after 1999, when Froman merged with a vehicle management technology and services company run by McKenzie, which had built a strong client base and a reputation for quality service. The resulting organisation expanded very quickly supplying fuel management products to South AfricaÔÇÖs extensive mining industry and then to various local and national government departments.
Today, AFS has a commanding position in South Africa and is expanding across the continent and beyond, eyeing opportunities for growth in Australia and the Americas. In the mining sector, it is the only supplier of fuel management technology to the extensive coalfields of South Africa; itÔÇÖs the single source supplier to Anglo-Platinum in Africa, and itÔÇÖs awaiting final approval for single source supplier status for Anglo-American across the entire African continent.
Expanding beyond the mining industry, the company manages the procurement of fuel for the Western Cape Government, for the Cape Town region and for a number of other municipalities. ÔÇ£We then also won what is probably the biggest automation contract in the Southern Hemisphere: to manage the locomotive fuel and all the fuel depots for the South African Railways,ÔÇØ McKenzie says.
The final piece of the jigsaw fell into place in 2006 with the successful commercialisation in Africa of the revolutionary eFuel technology that Froman had originally spotted in Israel. In partnership with Afric Oil, Caltex, Engen, Exel, Sasol, Total and Zenex, AFS has rolled the technology out across the forecourts of South Africa, and with this comprehensive national footprint, the eFuel service is being used by national transporters and haulers, government vehicles, local ambulances and many national institutions.
The eFuel technology completely automates the dispensing and payment processes for petrol, diesel and engine oils, removing the need for cash, credit cards and human interventionÔÇöin a stroke eliminating the opportunity for fraud or tampering. Participating vehicles are fitted with a small transmitting device that is located within the fuel filler pipe. When the pump nozzle is placed within the pipe, it detects the signals generated by the transmitter. These provide a range of information about the type of fuel required, the method of payment, and, where required, the quantities to be dispensed, data on mileage and so on. Once the fuel is dispensed, the relevant data is sent to the bank for payment and to AFS for fuel management analysis.
So successful has this been in South Africa that AFS has introduced the system into Namibia for government vehicles and transportation companies. Meanwhile, progress is being made in delivering it to Botswana and Lesotho, and there is interest in Mozambique and Swaziland.
AFSÔÇÖs original success, however, can be traced back to two crucial early developments. First, the company identified the fact that its customers needed more than just the technology. ÔÇ£We buy and install the latest fuel management technology, sourcing it from around the world. Each component then comes with its own software. But we realised that this left our clients high and dry, facing the task of analysing raw data,ÔÇØ McKenzie says. ÔÇ£And the bulk of the people we deal with are not fuel management experts; their core businesses are mining, farming, transport and so on.ÔÇØ
To provide a solution to this problem, in 2000 the company began developing its own in-house software, AIMS (AFS Information Management System), incorporating all the facets of fuel management. ÔÇ£The core of our business now is data management,ÔÇØ McKenzie says. The raw data is gathered together on a series of central serversÔÇöand there are parallel data systems and offsite backupsÔÇöwhere it is analysed and relevant reports and alerts are generated. ÔÇ£We also have a dedicated team who ensure the integrity of the data and send out an escalating series of alerts on any abnormalities that are found in comparison with the consumption, expected mileage and so on.ÔÇØ
The second development that has contributed to the companyÔÇÖs remarkable success is that it has taken responsibility for re-engineering and adapting the technology to survive in the harsh South African environment. ÔÇ£Africa is a really tough operating environment. Not only does the mining industry present a unique set of challenges with coal dust and magnetic iron ore dust, but if the technology is taken straight out of Europe or a first-world country, itÔÇÖs not going to work here,ÔÇØ McKenzie explains. ÔÇ£There is not the level of technical skills and the respect for equipment that you would find in a first-world country. So we re-engineer equipment and incorporate robust protection, housing it in purpose-built enclosures. We simplify the installation methodology and reduce the exposure of components to manipulation, damage or tampering.
ÔÇ£In fact, in recent years,ÔÇØ McKenzie continues, ÔÇ£weÔÇÖve removed a significant amount of equipment installed by our competitors in the mining sector. TheyÔÇÖre good at supplying the equipment but donÔÇÖt provide the education, knowledge and support. And thatÔÇÖs where we take it to the next level; we become the clientÔÇÖs long-term partner.ÔÇØ
Building on its knowledge and experience in the mining sector, AFS is looking to expand its operations throughout Africa and into Australia and South America. ÔÇ£But we have to make sure we can sustain our services if we are delivering it into a foreign country. We need to understand the environmental issues, the culture of the country and the operations. A lot of people have done this and failed,ÔÇØ McKenzie says. But the task that he has set himself is to do this and succeed: assessing the opportunities and the risks, and taking the company forward to become a truly global enterprise.
