In 2004, after evaluating emissions and fuel costs, United Parcel Service (UPS) developed a powerful new system designed to save millions of dollars. Apparently the time spent sitting and waiting to make a left turn was creating significant delays, therefore wasting more time and fuel. After implementing a “right turns” process (left turns are made only by necessity) in 2006, UPS trucks, which drove 2.5 billion miles, estimated saving more than 28 million miles and three million gallons of fuel (not to mention environmental benefits). Now that’s what I call putting more money into the bottom line!
In the early 1900s, Ford automobiles were built one at a time, which created limited quantities and high prices. Henry Ford was determined to “build a motorcar for the great multitude,” but knew that the system couldn’t accommodate his goals. After searching for inspiration, the innovation for his breakthrough new system — the automobile assembly line — was found in a very unlikely place: a Chicago meat-packing plant. It was the meat-butchering process that inspired Ford to develop the automobile assembly line. Within six years of implementing the assembly line, the Ford Motor Company was able to reduce the price of their famous Model T by more than 50 percent, and increase production by 2,000 percent.
The impetus behind the development and refinement of systems in any business is to streamline operations, increase efficiencies and, thus, increase profits. A system is by definition a method or set of procedures for achieving a goal — a scheme of ideas or principles by which something is organized.
Although your dealership or department may not be as big as UPS or Ford, it is constantly in need of system development, system improvement and system quantification. Notice how both UPS and Ford were able to measure the results of their systems with data. The ability to measure the results of your systems is vital. For example, if your financial accounting system isn’t producing timely accurate financial statements, then the inspiration for system improvement and development may be lacking. Let’s take a look at the processes and systems that need to be tracked for optimum performance in your store:
Inventory Control: New Units, used units, P&A and service repair orders (complete, not cashiered) are all inventories that must be managed consistently with measurable systems or inevitably obsolescence will occur, costing the dealership tens of thousands of dollars.
Accounts Payable: Times are tough and cash is tight. Do you have a system that prioritizes and categorizes what bills are paid and ensures that all of your cash isn’t depleted when payroll and sales tax roll around?
Accounts Receivable: Contracts in transit, retail bonus, co-op, OEM incentives and rebates, staff member charge accounts, warranty reimbursement, P&A returns credits and more can add up quickly.
Traffic Counting: Your sales people say traffic is down, but how do you really know? Swing counters, when implemented properly, are powerful systems.
Sales Department: Do you have a structured sales process in place and a turn over system to insure all showroom opportunities are being maximized?
F&I: I’m astounded at the dealers that aren’t taking full advantage of the “most profitable square footage in the dealership.” Are you consistently presenting the menu-based F&I system?
P&A: I mentioned returns earlier, but if your P&A returns are just sitting on the shelf, or are sent back without doing a “returns to vendors,” then they will never show up on your AR report. What is your system for handling P&A returns to vendors?
Service: Technician productivity can be measured by comparing actual available work hours at the dealership to actual time clocked in on each job. Much time can be lost retrieving bikes, fetching parts and looking for paperwork. A strong schedule and dispatching system are a must.
Training: Powersports specific training is becoming much more readily available, thanks to technology. New hires can now be scheduled for online courses and tested while management can print reports to inspect what they expect. Certificates of recognition can be printed in real time and proudly displayed for staff member recognition and dealership credibility in the eyes of the customer. This is a training system, and although it may not be as dynamic as live seminars, it’s much more practical and cost-effective.
There isn’t one key system in the dealership that can save you 28 million miles and three million gallons of fuel, but now more than ever is the time to focus on blocking and tackling, and building a water-tight operation.