Twenty Nickels
If you save twenty nickels, you’ve made a dollar
by
Raymond Matkowsky
www.datastats.com
email: rdm@datastats.com
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Issue 6-09 June 2009
Lubricating Your Profits?
Business owners and managers are always looking for ways to cut costs especially during a recession. However, cutting costs should not be a recession induced response. Savvy managers view it as an everyday activity. They also know that one big cut that will save the company millions of dollars is a myth. Don’t waste your time looking for it! You succeed in reducing costs by making small cuts that when grouped together total huge savings. As the name of this newsletter implies, “Twenty Nickels” equals a dollar.
Ripe For Savings
One such area that is probably ripe for savings is your fleet of vehicles. Maintaining just one vehicle is not only costly in direct expenses but also is time consuming. Generally, as a “rule of thumb”, time consumption can be a bigger cost than other factors. Take as an example a vehicle that is five years old or less. Most manufacturers now recommend an oil change every 5,000 miles. If you ask oil companies, they will say every 3,000 miles. A salesman can easily put on 50,000 or more miles a year. If you follow the manufacturer’s recommendations, that vehicle will need 10 oil changes during the year. What does that cost you?
Natural oil is about $3.00 a quart. The filter costs you about $5.00. So, if your car takes about 5 quarts, that’s about $20.00 or about $200.00 per year. That’s not too bad, but that is not the entire cost. If each oil change lays up the vehicle for four hours and it costs you $100.00 of sales per hour, then your true cost is $4,200 per year. If you have 10 vehicles, that is $42,000. No small piece of change.
Technological Improvement
Oil quality has improved over the years. In the 1960s the recommended change interval was 1000 miles. However, all lubricants still have weaknesses. The weakness of natural oils is they are composed of a mixture of hydrocarbons that are of different molecular weights and evaporation rates. As they age during use they lose their lubricating abilities. This effects the value of the lubricant and the life of your vehicle.
A vast improvement came with the development of synthetic oil. Synthetics were initially developed for high stress airplane engines. As a lubricant, they excel because the polymer chains are longer and more uniform. This results in less oil being lost to evaporation and engine stresses. They are so much better that synthetics were first advertised as way of going 25,000 miles between oil changes.
I have been using synthetic oils since 1976 and have 33 years of experience with their use. I would not however allow a vehicle to go 25,000 miles between changes and definitely follow the manufacturer’s schedule during the warranty period. The problem is not the oil but the oil filter. Many filters will plug up after 15,000 miles. But, I have successfully traveled 12,000 miles between changes and all of my vehicles have gone between 250,000 to over 400,000 miles before they were retired. Extending the useful life of equipment is a huge savings in replacement costs.
What Are Your Savings?
Let’s assume your vehicle goes 50,000 miles a year. We have already determined that by using natural based oils it would cost you about $4,200 per year. Now assume with synthetic oil you could go 12,000 miles between oil changes. Synthetic oil will run about $7.00 a quart. The oil filter is still about $5.00. It will cost you about $40.00 per change. However, you only need four changes per year. So, the total cost for materials would be about $160.00. Now being laid up for 16 hours a year versus 40 saves you $2,440 per vehicle. If you have 10 vehicles, that’s $24,400 per year. Plus, there may be other equipment you have that could also benefit from such a switch. If your company does its own servicing, you can also count on a large savings in labor.
These reductions in costs are worth looking into to see if it fits your situation!
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A Call For Reader Input
We at Data Stats would like to see this newsletter become a reader supported forum for help questions, answers, or general comments on anything appearing in this newsletter or Data Stats’ website. If you have a question, answer, or comment to contribute send them to me at newsletter@datastats.com. I will try to publish it here.
If you have an urgent question to ask, you don't have to wait for our newsletter to come out. We will try to find you a reader or one of our experts that may be able to help you. So, if you have a question, comment, or think that you can be of help, send us an email at once to: newsletter@datastats.com.
Also, in your email, please let us know if we have permission to share your email address with experts that may be able to exchange ideas with you directly.
Raymond D. Matkowsky
Copyright © 2009 Raymond D. Matkowsky
Data Stats
P.O Box 672
Old Bridge, New Jersey 08857-0672
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