FUELSTREAM Newsletter Nr 43 - 7 Things you can do today to improve your site and bottom line, Training survey, Dipstick Dilemmas and more
7 Things you can do today to improve your site and your bottom line
It's that time of the year again when many business owners review the previous financial year and take stock of what's happened. More so than ever the results are not what's expected and the margins are under more pressure than ever.
We've compiled a list of 7 steps you can take, some small, some significant, which can improve your site and your bottom line:
Target Margins - one of the first things you can do is to create a list of all the categories in your shop and set target margins. Then train your back office on how to manage prices to achieve these target margins. Give them guidelines on what they're allowed to do when the margin of an item is too low or too high.
Recently we completed an investigation for a Dealer on her target margins and identified that she had been consistently missing the target by 0.5% - 0.9% every month. This was a cumulative loss of potential profit over the last year of R38'000.
Fuel Margin - You should be clear on the margin you are retaining on every liter according to your RAS schedule. One simple way to check if your bookkeeper is providing accurate reports is to calculate the "number of liters sold multiplied with your RAS margin". If this amount does not match your gross profit amount on fuel, something is wrong on your Management Accounts.
One of the Dealers in our Dealer training group made this calculation and discovered a discrepancy of 3 invoices over the last financial year that had been missed by the bookkeeper. This resulted in inaccurate purchases being reported and incorrect gross profits. Fortunately, the error was picked up before the Dealer submitted to SARS.
Top Sellers - Draw a report of your top selling items, take the top 50 and do a detailed investigation to check if you're selling those items optimally. Don;t assume that top sellers naturally receive the best attention. Check if you are ever out of stock, even for a few hours. Check that the shelf space is sufficient. Check that the product is in the best condition, including temperature. Check that price labels are clear and visible.
At a recent subcommittee meeting we discussed the scenario of a site in the Western Cape who had discovered that they were out of stock on top selling items more often than expected. They implemented a plan to check the top 50 items every day and was able to increase sales on those items significantly.
Check for Leaks - Do a visual inspection of all your tanks, pumps, vent pipes, filler points and manholes. Make sure that any possible leaks are investigated and repaired.
One of the items we encourage Dealers to check when we do Dealer training, is a visual inspection of equipment. It's very difficult to identify a consistent leak on your reconciliation as the losses are repetitive. One of the ways to pick this up is to check the equipment and note any signs of leaks. Do this for a few weeks to determine if the leak stops, increases or remains consistent over time.
Check for Variances - Take your fuel reconciliations for the last 3 years. Plot the monthly variances, per product on a spreadsheet and check the seasonal (winter vs summer) and annual (year 1 vs Year 2 vs Year 3) trends. Check if you pick up any increase or decrease and determine if you can explain it.
There is a lot of attention given to daily and monthly fuel reconciliations. it's just as critical to track your seasonal and annual trends. This can also be helpful to identify a new, recurring leak when comparing your current losses/gains with previous years.
Pre-sort Consumables - If you have a food offer, you have consumables such as pie packets, sugar sachets, serviettes, stirrers, lids, etc. These are often difficult to control as nobody wants to count and recount hundreds of individual items. This results in losses that can be controlled. Issue boxes of these items to the night shift cashiers/food handlers with instructions to pre-sort them into daily packs.
If you sell on average 50 cups of coffee per day you can pre-sort the sugar, cups, lids, stirrers, etc into packets of 50 or 100. Have these placed in plastic bags and put back into the box. Then you can issue a day or shift pack as needed. And when you count you can count the number of bags instead of individual items.
Decant Chemicals - If you have cleaning chemicals used in the shop or at the car wash these need to be controlled. Decant 20 liter containers into 1 liter bottles and issue these as needed e.g. 1 per day. You can buy 1 liter and smaller bottles at any of the Plasticland or Plastic Express stores in most shopping centers.
Note that most chemicals have an optimal dilution ratio. This can be helpful to determine the size of container to decant into. E.g. if you need 50ml of soap in a bucket of water, you can decant into 50ml containers, or 500ml with the instruction that it should be used for 10 buckets.
Remember what Peter Drucker said: "What gets measured, gets managed"
Help us decide if we should create a microlearning system for service station employees?
It will make it possible for you to train every employee, as many times as you wish, from any connected device and using short 3-6 minute sessions. It won't cost an arm and a leg, will be ridiculously easy to use and will be the easiest way for you train daily on hundreds of tasks.
When was the last time you checked your dipsticks personally? Here are a few things to consider:
Most of the oil companies require you to do manual dips each day as well as before & after each fuel delivery. This is in conjunction with your ATG readings (if you have ATG installed).
If you're using wooden dipsticks remember to dip for volume first and then for water. Dipping for volume is normally 5 seconds and for water 4 minutes. If you dip for water first, the fuel will be absorbed into the wood and the reading level will be higher than the actual volume in the tanks.
When you've added water finding paste to the dipstick, do not slide that side of the stick against the dip pipe as there may be water condensed inside the dip pipe, giving a false reading.
If you store your dipsticks on top of a gas cage or some other area that is shorter than the dip stick, the ends of the stick will bend down over time. If bent enough, the end of the stick may not land on the touch plate on the tank bottom, but next to it, giving an incorrect reading. It's best to install a PVC pipe on the side of the building, long enough to store the dipsticks safely.
You should never store wooden dipsticks in the dip pipe.
If a dipstick has worn off or been cut, you will have a consistently higher reading than the actual volume. If you're only using the manual dip readings, this will result in variances on your fuel reconciliation.
If a dipstick has been made longer by adding a piece or combining 2 broken sticks, you'll have a consistently lower reading than the actual volume.
Remember that you should use hydrocarbon resistant gloves when handling dipsticks.
VIDEOS: Safety & Security Check out the dozens of Safety & Security videos we've posted on our website. Use them to train your staff. Click below to view the videos:
Workplace Skills Plans and the impact on your BEE scorecard
The Workplace Skills Plan (WSP) / Annual Training Report (ATR) submission deadline is 30 April 2017. If you need help to submit or have questions about your WSP or ATR, contact Cornelia Fechter at 012 804 5066 or email her at email@example.com.
Note: Our service fees for 2017 remain unchanged from 2016
Should you wish to obtain a BEE certificate on the amended codes, you will need to submit your WSP / ATR documents to the relevant SETA. If not submitted your company cannot be rated on the Skills Development element on your BEE scorecard. Your company will lose points and will discounted by 1 level.
This is a best practice newsletter for the fuel industry.
We share ideas with Dealers, Oil Company personnel and anyone else interested in the fuel industry.