I have just completed our Level II Parts and Service Management training here in Palm Springs and want to share with you some of the thinking of the senior management in equipment dealerships that attended. One of the management tools we get involved with is called the “Balanced Scorecard.” This is a very powerful tool from my perspective. If switches the focus of many in management from financial metrics to the ones that really count. That is “what does your customer want and need?”

I like to approach the scorecard from a slightly different perspective in that I put Finance last. Making money is rarely the reason that people are in business. Making money is a by product or the result of being in business. As a result of that I want the customer to be on the top of the list of importance.

The balanced scorecard covers four important aspects of business management.

• Customer
• What does the customer need or want from you?
• Internal
• What do we have to excel at to satisfy these customer needs?
• Innovation
• What technology and learning do we need to have to excel internally?
• Finance
• What do the stakeholders want?

My belief is that if we look after the first three the financial aspects will look after themselves.

Too often we assume what the customer wants or needs. I want to ask! Let them tell us what they want. In the Product Support Opportunities Handbook they told us.

In service they wanted:-

• Price
• Responsiveness
• Convenience
• Quality

I translate this into a simple needs statement:

1. The customer wants to know what the cost of the job will be before the work starts.
2. They want to know when it will be completed.
3. They want it done right the first time.

In Parts they wanted:-

• Availability
• Price
• Convenience
• Responsiveness

The needs statement here is also simple:

1. Have you got it?
2. How much is it?
3. How long do I have to wait to get it?

Sounds pretty simple doesn’t it.

Have the right part and the right price at the right place. These are my three “P’s.”

So what are those things that we need to excel at to satisfy the needs of the customer?

In service it comes down to simple things. We need to have excellence in the following items:

1. Inspections
2. Flat rating
3. Shop Floor Scheduling
4. Skilled labor
5. Product Training
6. Employee Development
7. Salary/Wage/Incentive Programs
8. Facilities and Tooling

In parts it is equally as straightforward.

1. Inventory Control
2. Freight and Logistics
3. Warehouse Management
4. Expediting
5. Skilled Personnel
6. Employee Development
7. Salary/Wage/Incentive Programs
8. Facilities and Tooling

You can clearly see that the final four items on the list are people and tools specific. These are areas that are generally necessary for any good business operation that is interested in customer satisfaction. They are also areas that become the bastion of “sacred cows”, or Paradigm Paralysis. We continue to operate in these areas in the way we have always done. We continue the status quo way past the point that is good.

In the first four points they are department specific. These points are the difference makers. You have heard my four rules in parts

1. Process all orders received today
2. Transship all emergency orders received today
3. Put up all stock orders received today
4. Find all parts not supplied today

And do this all before going home at the end of the day.

In service there are similar rules

1. Inspect all equipment before starting any work
2. Provide price and completion date to the customer before starting work
3. Call all customers three to five days after work is completed
4. Maintain a backlog that satisfies customer needs on responsiveness

When we do the sacred cows in our Level I Quest class or the Balanced Scorecard in Level II these areas keep coming up. We need to provide the employees with the proper tools. That is technology; systems; facilities, and training so that we allow them to succeed; this true whether it is the parts or service department that is being reviewed. We need to be able to unleash the excellence of the employees. This will be the subject of next month’s column.

For the moment understanding where we need to excel is a key element of our success. It involves every employee on the front line. Does everyone know where excellence is required? It sure would help if they did.