LP Gas, July 2014

Columnist VINNY MULLINEAUX Assess and address Having the right measurements can create a competitive advantage B y now youve heard this phrase or variations of it so much it may have lost some clout What gets measured gets managed However I would encourage you to resist the urge to roll your eyes the next time you hear it and instead assess where in your operation youre lacking insight As a good friend whos very successful at turning around distressed companies often says However beautiful the strategy you should occasionally look at the results But at what results should we be looking Whats most important to my operation and how do I quantify my findings Its always useful to examine the way other industries seek insight In our industry theres no shortage of numbers to measure were blessed with large volumes of measurable repeatable transactions Another industry that is numbersobsessed is baseball For the longest time the king of baseball metrics was batting average the number of hits divided by times at bat There is only one problem with batting average It doesnt adequately measure a hitters value The movie Moneyball which outlines the strategies of Oakland As General Manager Billy Beane is a good example of how measurement can even the playing field The As are a small market team with a fraction of the payroll of the Yankees Red Sox Dodgers and many other teams Every year though they are one of the better teams in baseball Its not because they have better talent its because they take a brutally honest look at their pieces and whats really important in winning games When you truly break things down to their basic form things come into focus For instance the games greatest hitter Babe Ruth ranks only 10th all time when measured by batting average But measure Ruth by the combination of on base percentage and slugging percentage and the Bambino appropriately ranks first by a large margin By relying on batting average the baseball community was using the wrong metric by which to weigh many decisions Batting average like many business metrics is an oversimplification used by humans to process large numbers It was a familiar statistic relied on for over 100 years in its industry to measure value But following some critical examination batting average has now been replaced by more robust metrics of value In our world key performance indicators or KPIs can be compared to slugging percentage By having access to KPIs managers can test and tweak strategies analyze the results refine their strategy and repeat Its important for each operation to get its best sense of what metrics are vital and a way of mining accurate and timely information Sometimes acknowledging the need for critical evaluation is the hardest step Saul Bellow who wrote To Jerusalem and Back is quoted as saying A great deal of intelligence can be invested in ignorance when the need for illusion is deep I urge you to tackle your business status quo head on and face the demons you know youve been avoiding within your operations Its not easy but there are places you can go for assistance Vendors should be able to help with this process Ultimately they are your partners and should have a world of experience in knowing how their product or service can impact your operation Benchmarking groups provide help too as do companies that help with analytics There will never be an end to areas in your operation that need attention It may seem like one big game of whacka mole but its imperative you stay on top of these challenges to be competitive In commoditized industries such as retail petroleum competitive advantages come from within Doing it faster better and less expensively matters a great deal because your competition is probably not standing still The first step to improving anything whether its personally or professionally is to know where you are currently Assess what your natural competitive advantages are and devise a strategy that plays to your strengths Likewise understand where your organization is lacking and create a plan that chips away at those areas In the words of famed statistician W Edwards Deming It is not enough to do your best you must know what to do and then do your best LPG Vinny Mullineaux is the CEO of Vertrax a provider of back office and mobile technology He can be reached at vmull@ vertrax com or 203 952 7666 Metrics wont make decisions for you but having more detailed information will sway you one way or another 52 LPGas July 2014 www LPGasmagazine com