A while back I wrote about some ways operators save money by using oil converters. This was a hot topic at the most recent iFlex show as many operators asked about using converters in place of specialty oils or combined with them. For every advocate of converters, there is a naysayer! I am sure one could get into a pretty healthy debate with a big oil company representative over the merits of using oil converters as opposed to their heavily researched, widely advertised and highly profitable specialty oils. But what is best for the big oil company is not always best for the smaller operator! My goal here is to give some more insight into what oil converters actually are and ways that myself and others have successfully implemented them into our operations based on some feedback I have received from my previous article.
First, what exactly is an oil converter? Most oil converters contain a super concentrated form of a proprietary additive package that essentially “boosts” the additive content of the oil. This is then added to some sort of carrier oil. Most oil converters I have seen treat between four and six quarts of oil depending on the manufacturer. The important things to know as an operator are: 1) what is the base oil used 2) what is the makeup of the additive package and 3) how many quarts will the product convert.
So now that we know a bit about what the oil converter is, the next step is successfully implementing them into operations. Most operators I know have at least four different lines of oil with varying viscosities. This can lead to anywhere from 20-30 SKUs of motor oil. The goal with using converters is to reduce the amount of SKUs by 1/3. An operator can essentially eliminate every viscosity of high mileage oil by adding a high mileage oil converter to their inventory. That reduces the carrying costs of additional SKUs and in most cases reduces the overall cost of goods sold. How much an operator can save obviously depends on the price differential of their conventional oil and their high mileage oil.
DISCLAIMER: THIS IS FICTITIOUS PRICING BASED ON SUPER BULK USERS AND IS SUBSTANTIALLY LESS THAN RETAIL PRICE OR PACKAGED PRICING.
Let’s say, for example, an operator pays $7.50/gallon for conventional 5/20 and $10.50/gallon for high mileage 5/20. For a six quart service that’s a differential of $5.50. Now, if the operator instead used a converter with a cost of $2.89 along with that conventional oil, they’d save $1.61 per high mileage service! This translates to a savings of nearly $290 per store per month based on 30 CPD at 20% high mileage.
The same formula would hold true for a synthetic blend or synthetic blend high mileage. Another area converters can be used is to offer products that you normally wouldn’t carry. For example: utilizing a synthetic high mileage converter along with synthetic oil gives the operator a synthetic high mileage product. This gives added flexibility in adding different levels of service to the menu! One word of caution, though: make sure that you represent the product correctly. For example, if you are using a high mileage converter, you don’t offer a high mileage oil, you offer a high mileage package. This helps ensure you are representing the oil by its proper brand and then adding a converter to complete the “package”.
I will end quickly with a couple myth busters. Unfortunately, there is no oil converter that can change conventional oil into synthetic oil. There is also no converter that can convert standard oil into one of the “licensed” brands of oil. Many of us wish this was possible as it would further reduce our inventory costs, cost of goods and headaches, but that’s our reality! Feel free to contact me if you have any questions, comments or concerns. Thanks for reading!