W
e now operate in a world where the best
laid plans designed by very smart managers
are inevitably disrupted by price volatility,
weather, demanding customers, skyrocket-
ing costs and employee productivity issues
to name a small handful. Gone are the days
when retail prices changed six times per year, customers never
left, workflow perceived as fairly easy to manage and margins
were fat.
The retail fuel business today is defined by perpetual and
real time challenges that are invariably complex and extremely
frustrating. Making money seems harder than ever. Disciplines
such as optimization, business process innovation, IT solution
ecosystems and automated digital marketing seemed like silly
words used by pedantic consultants but now they are part of the
fabric of our industry day in and day out. Things are happening
faster, demanding equally fast accurate and decisive reactions.
So, what are dealers to do? They must design and produce
accurate and timely metrics that will inform long term strategies,
while at the same time inform short term tactics, continuously
adjusted for threats to strategic objectives on a daily basis. Well-
defined key performance indicators (aka KPI's) are the answer.
They will provide ongoing visibility into a company's overall
business performance, delivering measurements that are infor-
mative, sometimes reassuring and most definitely actionable.
KPIs can be your lifeblood, as our industry endures its ongoing
high-speed business environment changes.
How do I begin using KPI's? First, become educated in the
interplay between two categories of numbers: your "Plan" (think
budget) and your ongoing operational performance (what am
I doing and how am I affecting my plan?). The days of looking
over your shoulder into last week or last month to see how you
performed are quickly being replaced by how did I do yesterday
and how am I trending to my month-end goals? It's now all
about looking forward and establishing desired monthly goals
in your most impactful categories of revenue, cost and growth.
To this point, I strongly suggest that you plan well for four cat-
egories, at a minimum:
(1) Liquid product volumes and extended gross margins,
by product, down to the trade class and price agreement levels
(2) Service revenues broken down by contract, non-contract
and installations
(3) Payroll hours and dollars, both straight and overtime,
your greatest expense other than product
38 AUGUST 2015 | FUEL OIL NEWS | www.fueloilnews.com
BUSINESS OPERATIONS
Don't Fly by the
Seat of Your Pants
Properly manage KPIs for a smooth ride
BY ROBERT LEVINS
