1. Collaboration Breeds Success
BY PAULA HOLLYWOOD NOVEMBER 15, 2001 ARC INSIGHTS# 2001-051MH&MP
KEYWORDS:
Collaboration, Supply Chain, Optimization, Wireless, Field Devices, Web Hosted
SUMMARY:
Cenex Harvest States Cooperative (CHS) wanted to optimize fuel supply deliveries to its
member farms in rural America. After reviewing about 130 level measurement and in-
ventory control system suppliers, CHS came to the conclusion a product to meet their
needs did not exist. They made a decision to collaborate with two suppliers capable of
realizing their needs. The challenge for these two suppliers was to not only develop a
prototype, but also deliver 1,700 beta units in four months. Barton Instrument Systems
was the only supplier to respond successfully to the challenge with their TankScan Dis-
tributed Measurement System for Level that became the system of choice for CHS. This
case study illustrates the power of collaboration.
ANALYSIS:
The User Identifies Their Need
CHS Cooperatives is a fully integrated agricultural food cooperative comprised of farm-
ers, ranchers, and their local co-ops operating from the Great Lakes to the Pacific
Northwest and from the Canadian border to
Texas. Its products and services range from
grain marketing to food processing. In addi-
tion, it is the largest cooperative refiner in the
U.S., operating 1,200 miles of crude and prod-
uct pipelines and eight terminals to service the
agronomic needs of their members.
Recognizing that during the peak seasons of
spring and fall approximately 15 times more
fuels resided in user tanks than in their tank
farms, CHS came to the conclusion their re-
fined fuels supply chain was most inefficient.
They determined the ability to remotely moni-
tor site tanks would enable CHS to streamline
Fuels Supply Chain as Envisioned by CHS product delivery thereby increasing efficiency.
ENTERPRISE AND AUTOMATION STRATEGIES FOR INDUSTRY EXECUTIVES

2. ARC Insights, Page 2
It is not to say that inventory control/management systems did not exist. Such systems
are not new. The critical issue for CHS was a cost-effective solution. With product value
in the $500 range in most cases, a device costing three to four times that amount could
not be justified. Further CHS qualification dictated a web based system capable of oper-
ating over a wide area with a fair degree of accuracy as well as be user friendly to the
degree a non-technical person could install and operate it.
The Supplier Responds
Barton Instrument Systems is manufacturer of field devices and measurement informa-
tion systems for the process and bulk goods distribution industries. The company has
over 70 years experience in direct measurement devices for flow, level, and pressure ap-
plications as well as fully integrated measurement system solutions. Historically, Barton
specializes in devices for harsh environments principally in the oil & gas industry and
more recently in integration of field-generated measurements with host systems.
When this collaborative effort began in 1997, Barton was perceptive in recognizing the
increasing attention supply chain management (SCM) was receiving in the industrial
marketplace. A quick study of the market potential for a device as specified by CHS was
estimated to be in the ballpark of one million units. According to Barton marketing
manager, Mr. Joe Incontri, this gave his organization the incentive to proceed and it em-
barked on its quest for a solution.
It was known that a wireless device with telemetric capability would be necessary due to
the large geographic area of coverage required. CHS did not consider ultrasonic tech-
nology an option due measurement errors as a result of vapors present in fuel storage
tanks. Hydrostatic technology, commonly used for tank gauging applications, did not
meet the user friendliness requirement set by CHS. Barton concluded a totally new de-
vice would be required to meet the needs of their customer.
Barton investigated a recent Lawrence Livermore National Laboratory development
called Micropower Impulse Radar (MIR) for which fluid measurement was a targeted
commercial application. MIR is a low-power radar system utilizing very short electro-
magnetic pulses across a wide band of frequencies resulting in high resolution and
accurate indication. MIR has no moving parts as the pulses travel along a guide wire
unaffected by vapors that may be present in the tank. AA battery power meant the de-
vice was intrinsically safe and suitable for use with combustible fuels. Requiring only
readily available parts, cost of manufacture is relatively inexpensive. Testing indicated
accuracy to within 0.1% was attainable. MIR showed promise in meeting all the re-
quirements set forth by CHS. Barton entered into a licensing agreement with LLNL for
the technology and proceeded with design of a device suitable for outdoor use.
© 2001 • ARC Advisory Group • 3 Allied Drive • Dedham, MA 02026 USA • 781-471-1000 • ARCweb.com
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3. ARC Insights, Page 3
Concurrent with development of the level-
measuring device, the communication aspect
also needed to be addressed. In this regard,
Barton was able to draw on their experience
and adapted their existing gas distribution
system telemetry and software packages. The
resulting RF receiver/modem (controller) can
interface with up to six level sensors. It stores
received data that is transferred to the host
computer on a preset or as needed basis. The
software program is capable of controller con-
Barton Delivers the Cost Effective TankScan Solution figuration, report generation in selectable for-
mats, and alarm viewing/acknowledgement.
Another key element to the project was a web-hosted system to gather individual tank
data from the field. CHS contributed this to the project. At predetermined intervals,
terminals can be polled by the CHS central office in Minnesota to determine tank levels
for product delivery purposes. In addition, CHS launched a secure website allowing it
to monitor field operations and remotely troubleshoot installed systems.
The Results
According to Mr. Jeff Schindele of Cenex Harvest States, while this collaborative effort
was a win-win situation, it was not without its problems but states the tank level moni-
tor has been foolproof. Difficulties with the telemetry portion of the system have been
overcome and the goal of a more efficient supply chain has been achieved. TankScan has
eliminated a layer of distribution enabling CHS to deliver product directly from their
terminal in conjunction with a global positioning system used to identify delivery points.
While Schindele had difficulty placing a total value on savings, he estimates product
costs per gallon for members has dropped in the range of 30-50 percent. An unantici-
pated benefit of efficient supply chain management was an increase in CHS market share
as user farmers no longer looked to purchase fuel on the spot market. Also, CHS can
now invoice members based on fuel consumption similar to a utility rather than per de-
livery as they had in the past.
CHS has expanded the use of TankScan and has begun testing it on the home heating
tanks of their members. In case of a weather event, for example, or if the member is
away from home for a period of time, CHS can calculate fuel consumption rate and
schedule delivery accordingly. The benefit to the homeowner is never needing to order
fuel.
© 2001 • ARC Advisory Group • 3 Allied Drive • Dedham, MA 02026 USA • 781-471-1000 • ARCweb.com
USA • UK • Germany • Japan • India

4. ARC Insights, Page 4
TankScan Has Limitations
Sensor technology places some application limitations on TankScan. The sensor is gen-
erally not process worthy according to Barton’s Mr. Incontri, nor is it intended for
distribution terminal use. Because the sensor must contact the medium, it is not suitable
for agitated vessels in most cases. Sensor construction precludes its use in food and
pharmaceutical applications with CIP/SIP requirements. Low voltage battery power
limits sensor length and therefore restricts its use to vessels less than 20 feet in height.
Barton will continue to target the distribution end-user market at this time.
A dilemma for users is who purchases the system? In the case of CHS, the co-op pur-
chases the system and leases it to their farmer members. This arrangement is satisfactory
to all parties and is not an issue. This is not the case with another TankScan user, Cas-
trol, according to their Mr. Dan Cadigan. Recognizing the advantages of TankScan, the
company originally committed to 5,000 units over a two-year period. However, Castrol
distributes through a chain of independent wholesalers, often “Mom & Pop” type opera-
tions. In this case, the distributors are the supply chain link reaping the most benefit
from TankScan, but may not see the value and consequently are reluctant to purchase
systems on their own. With about 100 units installed, further purchases are pending as
Castrol seeks to justify their investment within their organization.
RECOMMENDATIONS:
• Suppliers must continually be on the lookout for new and better mousetraps. Col-
laborating with universities and research organizations on developments with
potential for commercialization can prove most beneficial. Technology licensing ar-
rangements with such organizations can augment in-house research and
development efforts.
• A user/supplier collaboration is a good way to test the collaborative waters for both
users and suppliers who are leery of such arrangements. CHS achieved its goal to
streamline its delivery system and continues to unearth other applications. Barton
added level measurement for distributed inventory applications to their suite of
supply chain automation products.
• Position in the supply chain can be critical to realizing ROI. In cases where the
manufacturer controls distribution, the ROI can be calculated relatively easily. If this
is not the case, as with Castrol, it becomes more complicated. The arrangement must
be agreed upon before undertaking such a project.
For further information, contact your account manager or the author at phollywood@arcweb.com.
Recommended circulation: All MAS-H & MAS-P clients.
© 2001 • ARC Advisory Group • 3 Allied Drive • Dedham, MA 02026 USA • 781-471-1000 • ARCweb.com
USA • UK • Germany • Japan • India