'HIGHER PROFITS 2001' for Independent Lubricant Manufacturers; New Report on Benchmarks and Best Practices by PetroTrends and Kline & Company

Apr 19, 2001, 01:00 ET from Kline & Company

    LITTLE FALLS, N.J., April 19 /PRNewswire/ -- PetroTrends and Kline &
 Company have announced a joint venture research study that puts the power of
 benchmarking and best practices in the hands of independent lubricant
 manufacturers.
     According to Thomas F. Glenn, president of PetroTrends, Inc., a Metuchen,
 NJ-based consulting firm, the research report, titled HIGHER PROFITS 2001 -
 INDEPENDENT LUBRICANT MANUFACTURERS, "provides independent lubricant
 manufacturers with the insights and information needed to objectively compare
 their financial and operational performance with that of other lubricant
 manufacturers of similar size and with similar product slates."
     This comparison, known as benchmarking, provides a means for independents
 to determine if such operating expenses as salaries and benefits, sales and
 marketing, and fleet/vehicle operation are in line with those of their
 competitors.  Beyond just operating expenses, the study also provides
 comparative insights into the cost of goods sold (basestocks, additives,
 packaging, and others) and a comprehensive set of financial performance
 measures, including gross margins, gross sales, accounting practices,
 technical service, and product development.
     According to Glenn, it is unfortunately all too common for an independent
 lubricant manufacturer to delay a rigorous and objective examination of
 financial and operational performance until a "problem" arises.  And a problem
 is typically not recognized until it has already made a substantially negative
 impact on the bottom line of the business.
     To illustrate this point, Glenn cites as an example an independent
 lubricant manufacturer with transportation costs at 4.5% of revenue.  Although
 this percentage is significantly higher than the norm for lubricant
 manufacturers of similar size and with a similar product mix, this company
 doesn't realize there is a problem because the transportation costs have not
 exceeded its management's pain point of 5.0%.
     The degree of the problem, although it has not yet been realized, is very
 significant when one considers that the average transportation costs for a
 company in this category amount to 3.0% of total revenue.  If an independent
 lubricant manufacturer has $10 million in sales, and its transportation cost
 is $500,000 (5.0%) instead of $300,000 (3.0%), this represents a $200,000
 reduction in bottom-line profit.
     Although it might be unusual for most independent lubricant manufacturers
 to have an unrealized problem of such magnitude, a surprisingly large number
 of lubricant manufacturers suffer from anemic profits due to poor performance
 in one area or another, according to William R. Downey, vice president of
 Kline & Company's Petroleum Practice.  "Although companies can survive 'profit
 anemia' when the economy is strong," Downey states, "cash draining from the
 cuts and abrasions of an inefficient operation, an overcompensated staff,
 noncompetitive spending on raw materials, or poor accounting practices can
 send the competition into a feeding frenzy when the economy is soft."  He
 adds, "Majors can be expected to join the feeding frenzy as a result of
 consolidation, compressed margins in automotive lubricants, and other business
 dynamics that are prompting majors to hunt farther outside their typical focus
 for business opportunities."
     HIGHER PROFITS 2001 - INDEPENDENT LUBRICANT MANUFACTURERS provides
 independent lubricant manufacturers with objective benchmarks of their
 financial and operational performance.  According to Downey, "These benchmarks
 can be used to fine-tune performance and prepare an independent lubricant
 manufacturer for the leaner, even more competitive business environment we are
 moving into."
     Although Glenn agrees that benchmarks are really a "report card" on
 financial and operational metrics and by themselves do not directly correlate
 to higher profits, he is quick to point out that "The study combines
 benchmarking with best practices, and this combination has a proven track
 record of success in providing the tools needed to achieve higher profits.
 Simply stated, benchmarks provide lubricant manufacturers with the metrics
 needed to objectively assess financial and operational performance and to
 identify gaps.  Best practices take it to the next level by providing a means
 to identify, adopt, and adapt the business practices of companies with
 exceptional performance."
     Another key to success in the report's ability to provide a path to higher
 profits is its attention to detail in development of "peer group comparisons."
 This development is based the project team's real-world experience in the
 lubricants industry and its clear understanding of the impact that product
 slates, geography, economies of scale, and other factors have on benchmarks
 and best practices.  According to Glenn, "It would be inappropriate to compare
 the technical service and product development costs as a percentage of sales
 for an independent that primarily makes metalworking fluids with one that is
 primarily engaged in manufacturing private-label engine oils.  Likewise, it
 would be equally inappropriate to compare the transportation cost of a
 lubricant manufacturer based in Brooklyn, New York, with one based in Council
 Bluffs, Iowa."
     HIGHER PROFITS 2001 - INDEPENDENT LUBRICANT MANUFACTURERS is one in a
 series of research studies based on the principles of benchmarking and best
 practices that have been compiled in a joint-venture effort between
 PetroTrends and Kline & Company.  Other reports in the series include:
 
     -- HIGHER PROFITS 2001 - FUEL MARKETERS
     -- HIGHER PROFITS 2001 - LUBRICANT DISTRIBUTORS
     -- HIGHER PROFITS 2001 - MAJOR LUBRICANT MANUFACTURERS
 
     This collaborative project draws on decades of industry-specific
 experience with major companies, independents, distributors, and jobbers to
 provide the highest-quality benchmarking and best practices report to
 independent lubricant manufacturers at an affordable price.
     To obtain a brochure for HIGHER PROFITS 2001 - INDEPENDENT LUBRICANT
 MANUFACTURERS or other reports in the Higher Profits series, please contact
 Tom Glenn at PetroTrends, Inc. at (732) 494-0405 or via e-mail at
 Tom_Glenn@petrotrends.com.
 
 

SOURCE Kline & Company
    LITTLE FALLS, N.J., April 19 /PRNewswire/ -- PetroTrends and Kline &
 Company have announced a joint venture research study that puts the power of
 benchmarking and best practices in the hands of independent lubricant
 manufacturers.
     According to Thomas F. Glenn, president of PetroTrends, Inc., a Metuchen,
 NJ-based consulting firm, the research report, titled HIGHER PROFITS 2001 -
 INDEPENDENT LUBRICANT MANUFACTURERS, "provides independent lubricant
 manufacturers with the insights and information needed to objectively compare
 their financial and operational performance with that of other lubricant
 manufacturers of similar size and with similar product slates."
     This comparison, known as benchmarking, provides a means for independents
 to determine if such operating expenses as salaries and benefits, sales and
 marketing, and fleet/vehicle operation are in line with those of their
 competitors.  Beyond just operating expenses, the study also provides
 comparative insights into the cost of goods sold (basestocks, additives,
 packaging, and others) and a comprehensive set of financial performance
 measures, including gross margins, gross sales, accounting practices,
 technical service, and product development.
     According to Glenn, it is unfortunately all too common for an independent
 lubricant manufacturer to delay a rigorous and objective examination of
 financial and operational performance until a "problem" arises.  And a problem
 is typically not recognized until it has already made a substantially negative
 impact on the bottom line of the business.
     To illustrate this point, Glenn cites as an example an independent
 lubricant manufacturer with transportation costs at 4.5% of revenue.  Although
 this percentage is significantly higher than the norm for lubricant
 manufacturers of similar size and with a similar product mix, this company
 doesn't realize there is a problem because the transportation costs have not
 exceeded its management's pain point of 5.0%.
     The degree of the problem, although it has not yet been realized, is very
 significant when one considers that the average transportation costs for a
 company in this category amount to 3.0% of total revenue.  If an independent
 lubricant manufacturer has $10 million in sales, and its transportation cost
 is $500,000 (5.0%) instead of $300,000 (3.0%), this represents a $200,000
 reduction in bottom-line profit.
     Although it might be unusual for most independent lubricant manufacturers
 to have an unrealized problem of such magnitude, a surprisingly large number
 of lubricant manufacturers suffer from anemic profits due to poor performance
 in one area or another, according to William R. Downey, vice president of
 Kline & Company's Petroleum Practice.  "Although companies can survive 'profit
 anemia' when the economy is strong," Downey states, "cash draining from the
 cuts and abrasions of an inefficient operation, an overcompensated staff,
 noncompetitive spending on raw materials, or poor accounting practices can
 send the competition into a feeding frenzy when the economy is soft."  He
 adds, "Majors can be expected to join the feeding frenzy as a result of
 consolidation, compressed margins in automotive lubricants, and other business
 dynamics that are prompting majors to hunt farther outside their typical focus
 for business opportunities."
     HIGHER PROFITS 2001 - INDEPENDENT LUBRICANT MANUFACTURERS provides
 independent lubricant manufacturers with objective benchmarks of their
 financial and operational performance.  According to Downey, "These benchmarks
 can be used to fine-tune performance and prepare an independent lubricant
 manufacturer for the leaner, even more competitive business environment we are
 moving into."
     Although Glenn agrees that benchmarks are really a "report card" on
 financial and operational metrics and by themselves do not directly correlate
 to higher profits, he is quick to point out that "The study combines
 benchmarking with best practices, and this combination has a proven track
 record of success in providing the tools needed to achieve higher profits.
 Simply stated, benchmarks provide lubricant manufacturers with the metrics
 needed to objectively assess financial and operational performance and to
 identify gaps.  Best practices take it to the next level by providing a means
 to identify, adopt, and adapt the business practices of companies with
 exceptional performance."
     Another key to success in the report's ability to provide a path to higher
 profits is its attention to detail in development of "peer group comparisons."
 This development is based the project team's real-world experience in the
 lubricants industry and its clear understanding of the impact that product
 slates, geography, economies of scale, and other factors have on benchmarks
 and best practices.  According to Glenn, "It would be inappropriate to compare
 the technical service and product development costs as a percentage of sales
 for an independent that primarily makes metalworking fluids with one that is
 primarily engaged in manufacturing private-label engine oils.  Likewise, it
 would be equally inappropriate to compare the transportation cost of a
 lubricant manufacturer based in Brooklyn, New York, with one based in Council
 Bluffs, Iowa."
     HIGHER PROFITS 2001 - INDEPENDENT LUBRICANT MANUFACTURERS is one in a
 series of research studies based on the principles of benchmarking and best
 practices that have been compiled in a joint-venture effort between
 PetroTrends and Kline & Company.  Other reports in the series include:
 
     -- HIGHER PROFITS 2001 - FUEL MARKETERS
     -- HIGHER PROFITS 2001 - LUBRICANT DISTRIBUTORS
     -- HIGHER PROFITS 2001 - MAJOR LUBRICANT MANUFACTURERS
 
     This collaborative project draws on decades of industry-specific
 experience with major companies, independents, distributors, and jobbers to
 provide the highest-quality benchmarking and best practices report to
 independent lubricant manufacturers at an affordable price.
     To obtain a brochure for HIGHER PROFITS 2001 - INDEPENDENT LUBRICANT
 MANUFACTURERS or other reports in the Higher Profits series, please contact
 Tom Glenn at PetroTrends, Inc. at (732) 494-0405 or via e-mail at
 Tom_Glenn@petrotrends.com.
 
 SOURCE  Kline & Company