Ask the Fuel Expert

How do you measure profit in your business? Do you calculate profit by analyzing every expense or do you just look at the bottom line? Both approaches are very important, particularly in the current economy where we are all trying to micro-manage each expense for the best possible return.

If you operate a fleet of vehicles, equipment or anything that consumes fuel you probably noticed over the years that this has become the largest expense to operate your business. As business operators who spend thousands of dollars each month on a commodity that is fluctuating day by day it is very frustrating to see your bottom line profits erode, particularly when an expense it out of control. Do you look at fuel as just an expense or do you have the tools to calculate a real return on your fuel investment? Until recently it was impossible to look at fuel as anything but an expense. Today you can feel some relief. When you can measure your fuel expense you can manage its profitability.

Every drop of fuel consumed can be tracked to deliver productivity and then calculated into profit.

Here’s how:

For most companies fuel expenses are calculated by date, fuel consumed and price. Then the big number goes into the books as part of operating expenses. That’s it. However thanks to fuel management technology you can dissect the cost of fuel and calculate a return on your investment. To start, you must adopt a new attitude and to deeper into how you look at fuel, and figure out exactly where it is going. You must determine where the most fuel is being used and which area of your fuel consumption is the most efficient and which is the most wasteful. Each piece of equipment you operate must be viewed as an individual contributor to your bottom line, rather than lumped together as one total.

Another adjustment you must make is to look at the total cost of refuelling, not just the cost of fuel. The cost of fuel is the price you pay at the pump. The cost of refuelling includes that plus what it takes to put the fuel into each vehicle or piece of equipment. It includes the cost of labour, the time spent refuelling and the waste and theft that occurs in the process. What about spills and the cost incurred to clean them up? That is part of your cost of refuelling too. All this sounds daunting, but there are fuel management systems available to help calculate and control all of this.

First you start by cutting the time spent refuelling. Many companies opt to have fuel delivered to their equipment while it is sitting idle. This saves fuel and labour costs. It also stops theft. Then you start to measure fuel consumption by tagging each piece of equipment with a digital chip for positive identification. Telematics technology is available to measure operating data, so you know exactly where each drop of fuel goes. This measures engine performance such as time spent idling, speeding, fast starts and engine maintenance service indicators.

Once all of this data is captured it can be delivered using GPS technology via email to your desk top. You can set operating thresholds for each type of machine and quickly see where the most fuel is being used, and where it is being used most efficiently. Once you have that information you can manage your people, and your fuel better. It is not impossible to cut fuel expenses by 15% or more based on the information you now available. Once you know where improvements are needed you can implement rigid operating procedures and then train your staff accordingly.

Today it is realistic and possible to demand a return on your fuel expenditures. The tools are available. When fuel is measured and managed it becomes an investment. The solution is using a proven fuel management system. It will help you cut waste, maximize productivity and improve your profits, guaranteed.