One of the topics that comes up often when I write articles is “waste” within a dealership. Quite often, expenses are cut when times are challenging but often, waste is confused with expenditure.
A good definition of waste is: Any process, practice, investment or expense that does not add value to the customer or dealership. Waste is not always identifiable in the monthly accounts or monthly reporting as it often consists of lost opportunity and accepted normal business practice.
Here are some areas to consider:
Inefficient lead management results in lost sales and therefore lost GP. From a parts perspective, it can also lead to parts obsolescence.
Extended and complicated sales process can lead to deals being lost and staff inefficiencies within the dealership. Have a look at the time it takes from enquiry to the delivery of the vehicle or a spare part within your dealership. Most decent DMS or lead management systems will have the capability if used correctly.
Extended and complicated job management and costing process can add to increased overhead structures, tech idle time and poor cash flow. Look at your service invoicing and measure the time from the vehicle arriving at your dealership to the job being invoiced. Additionally, look at the bottlenecks that cause any delays.
Duplicated efforts are a waste of human resources and can affect staff satisfaction negatively. Look at areas where there are duplications such as capturing data twice, crediting invoices, repeated follow-ups etc.
Energy and water management are particularly important in South Africa. Look at how water and electricity are used and ensure that you have low energy solutions where possible. Additionally, staff need to be made aware of energy wastage.
Communication is probably an area where most businesses could improve. Do your staff all know the direction of the business and are there clear and efficient lines of communication in all directions and between departments? I find that much of the inefficiency is because of poor communication.
High staff turnover is almost always a significant contributor to waste. Employing and training staff are exceptionally costly from an expense perspective and in terms of efficiency, it often takes staff some time to be effective in their new roles.
These are examples of potential waste within the dealership and there are obviously many more. Remember, cutting waste has no negative impact on the business and in fact only delivers “positives”. You can’t have a better return than that.
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You can't build a reputation on what you are going to do.
Henry Ford
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