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The
Judeo-Christian philosophy of seven good years followed by
seven lean years is much too pessimistic for me. I far prefer
the Asian view, which holds that after one lean year you have
seven good years.
As we
enjoy the arrival of 2002 I am encouraged by the progress
we've made in bringing focus and change into our dealerships.
In particular, I'm pleased that more dealership principals
are recognizing the increasing role product support must play
in the overall profitability of their companies. Most dealerships
for years have focused almost exclusively on moving iron.
After all, that's where the fun and sizzle is. Unfortunately,
in the new world in which we operate, there is not much return
on that investment.
Dealers
need to take a much more professional and proactive position
in the product support arena. We must improve the effectiveness
of everything that we do. We must make money. And, yes, we
must have fun doing it.
Effectiveness
will be viewed by many of you as a code word for fewer people.
Far from it, the sales-per-employee metric in dealerships
is alive and well. Yet, we must be more sensitive to the customer
service aspect of the business. This is truer today than ever
before.
Effectiveness
to me means checking out our inheritance and critically examining
all processes. What do I mean by all? Everything involved
with the customer interface, including but not limited to
parts sales orders, computer systems, employee skill sets,
business forms (including the number of copies going into
the garbage) and the phone system.
Being
effective at what we do also is a very motivating thing for
our employees. Consider such activities as parts sales ordering,
opening work orders, dispensing technical advice, expediting,
receiving and inspections. The people who do these jobs should
be involved in the process reviews.
While
you are at it, check out your computer systems. Your software
suppliers want to help you and your people do a better job.
But remember that you are the expert in dealer processes,
not your systems suppliers. They are only as good as we make
them in helping us do our jobs.
Making
money in parts and service is more important now than ever
before. I am not talking about changing your prices but, rather,
being more effective and managing the available assets in
a much more serious manner.
Parts
inventory levels in our industry traditionally have been high.
We always make the excuse that most of the parts activity
in the equipment world is on slow-moving parts, those selling
less than 10 to 12 times annually. That just won't cut it
anymore.
We should
not carry parts that do not meet our stocking criteria. I
would rather spend money on ensuring that the parts we need
to backorder are in our hands the next day. Compare the cost
of carrying slow-moving inventory, the no-sale, one-sale and
two-sale a year parts with the cost of inbound freight. The
high inventory cost loses every time. Check it out.
While
we are at it, isn't it time to measure work in process as
an inventory asset as well? Let's start measuring WIP turnover.
The minimum turnover on the WIP asset should be 26. Yes, that
means no more than two weeks of labor in work in process at
any point in time.
Being
successful at what you do is a large part of employee motivation.
No one deliberately sets out to do a bad job, so let's make
sure that we provide the right tools to our employees. Let's
train them well and consistently over their careers and provide
clear and specific job descriptions with measurable standards
of performance. Most important, review your people formally
once a year. AED offers a publication, the Product Support
Handbook, to help you with these tasks.
Finally,
we need to get serious about obtaining more of the available
work from our customers. We have a terribly low level of success
in getting the parts business. The labor business is even
more serious. Maintenance work? We hardly get any of it and
need to make a huge push in 2002.
Are we
up to the challenges of this new year? I believe we are.
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