How Scorecarding Tool Helps Oil Companies

An oil scorecarding tool is basically the same scorecard instrument used in most business organizations. As a standard implementation, each business entity should have a scientific, industry related and data monitored system in measuring the performance. Otherwise, there be will no other way to gauge or track the company’s progress. There are many approaches to implementing scorecards. In this article, you will learn about the different elements that are involved in a scorecard tool.Most performance indicators used in other industries have something to do with finance, marketing and profitability. Although this is also true in the oil refining industry, the primary focus is usually placed on the environmental issues. 1997 was the year when the Environmental Defense formulated specific but widely accepted criterions in rating oil producers based on their impact on the environmental safety. The EDF or the Environmental Defense Fund, as it is officially called, is a non profit environmental support organization responsible for creating eco-conscious market solutions. EDF efforts in human health, ocean safety, ecosystem restoration and global warming are visible worldwide.One way of measuring the impact of an oil producer to environment is through the amount of waste disposed and its manner of handling these wastes and efforts in reducing pollution. Specific indicators used by the scorecard tool are the amount of toxic and harmful byproducts exhausted into the water, land and air.  Waste materials like sulfur dioxide and chemical derivatives are also measured to see how environmentally conscious the oil company is.Through this implementation, oil producers are now obliged more than ever to comply with the standards set by the Environmental Defense Fund.  As a benefit of meeting the terms, the company will be given high rank by the EDF, joining other top oil producers in the world. The objectives then of the company are to exhaust the least pollution as possible, decrease the consumption of natural resources, develop renewable sources of energy and produce sufficient volume of petroleum products. The indicators and measuring standards update regularly; therefore, a company is advised to check on the latest EDF changes.The financial side of the oil business, of course, must not be left unnoticed. Marketing, salability and flexibility of the operation are just few of the many areas measured by the scorecard tool. In the marketing aspect, the scorecard measures how marketable the product is. Low score will be achieved if the there is little market to cater even if the oil quality is high. On the other hand, high score will be achieved if there is a significant demand for the product. Meanwhile, the oil company’s flexibility largely depends on its ability to cope with the changes of the government’s law and policies.  High score will be given, if the producer complies with the requirements of the country.Profitability is another area that should be measured. Measuring profitability however does not just rely on bigger bottom line figures. But it depends on how the company efficiently manages and utilizes its three major resources; machine, money and man. There should be a balance in the company expenses. The resources must be used in its full capacity and that maximum output should be obtained.It is clear, then, how the scorecarding tool helps the oil company. The benefit of being ranked amongst EDF’s top oil companies, being highly compliant and able to provide the demands of the market are more rewarding than having the most attractive bottom line.