Systemic problems within organizations never go away by just being identified and talked about. Management and all the stakeholder have to move beyond words, discussions and mere introductions of new process initiatives to address the core issue.
One has to identify the core problem and set up self monitoring systems to actively perform contextual tasks in the background. These contextual tasks should provide management with actionable intelligence to effectively and purposely engage team members with specific instructions to meet standards.This active and purpose driven engagement should continue until a counter culture has developed or a new habit is ingrained within your organization to meet your change objectives.
The case in point:
A dealership that I had worked for presented me with a challenge for solving a chronic issue they faced on a monthly basis: Their Shop Supplies fee collection was well below the industry benchmark and their repeated efforts to address this revenue shortfall with Service Advisors was not bearing any fruitful results. The assumption was that Service Advisors were readily waiving the fees to either increase discounts or in rare cases were mitigating for an adverse customer related situation. Whatever the reasons, the dealership really needed this additional stream of income in face of increasing expense liabilities and decreasing consumer demand for automotive repair and maintenance services. Click Shop Supplies to find the definition.
The existing reporting systems were not intuitive enough to help mitigate this issue. They simply lacked the features that could identify the exact service transactions in which Shop Supplies fees were unjustly waived without providing a valid reason.
If you have ever visited or ran a service department for a franchised dealership in the middle of a huge metropolitan city, you know that the dizzying speed with which these business units operate and the multitudes of customer interactions that take place within a very short time span can cause a serious caffeine addiction for those who manage them. The management team just does not have the resources available to manually manage negative revenue exceptions, whatever they may be. Consequently dealerships end up incurring a substantial amount of potential profit loss each month.
After a careful analysis, we as a team established that any viable solution should at least consist of three important components:
- The solution should be ‘alert’ based and self-driven. In other words no activity should be required by management and the system should be smart enough to initiate all exception alerts via an email with details included.
- Transaction counts, in this case number of repair orders which were automatically identified with missing Shop Supplies charges needed to be viewed inside a grid report with drill down capabilities right down to the repair order details. This would immediately help management identify reasons for not charging Shop Supplies before an individual Service Advisor is forwarded a request to provide explanation.
- Report viewing as well as repair order details should be device neutral. In other words management should be able to access this intelligence using a browser, a tablet or a smartphone.
Luckily for us this was not a daunting task. The dealership under the leadership of a very capable and forward thinking General Manager had already tasked me to develop such a reporting solution albeit not for this specific purpose. We, as a matter of fact, had the solution up and running on the cloud for six months prior to facing this challenge request. We had successfully and very inexpensively utilized a third party cloud database application platform on which we built our very own Service Revenue Analysis application accessible via a simple browser. This cloud application platform was highly customize-able with the ability to tightly integrate with the Reynolds & Reynolds DMS system.
Our script imported all the invoiced repair orders from the DMS system on a nightly basis. Once the data was placed into our cloud application we had the capability to massage the data relationally, set alerts based on exception formulas and create on the fly unlimited number of Service report views and dashboards. These reports and dashboards consisted of interactive ad-hoc reports, gauges, charts, summary etc.
The users of the system also had the ability to easily create reports and dashboards per their own requirements. This introduced a very powerful element with which key stakeholder for the first time could devise proactive management strategies for the entire department based on fast developing and slow moving trends simultaneously.
This unprecedented insight generated a renewed interest and increased engagement in all of us. The entire team involved started to talk about how we could utilize this tool to its full potential by scaling it out to other departments. For the first time the dealership was able to bring their own Fixed Operations data to life and analyze it in a very multidimensional manner. We started to see relations and dependencies that we could not have imagined before. Also we were no longer captive to prepackaged and somewhat limited in scope reports that were provided to us by other vendors. It is not that we didn’t find some of their reports useful, we just believed that the best reports and analytics are the ones which are created by the end users themselves. Something to be said about the process of data discovery itself which brings to the table a spirit and pleasure of its own. In the back of our mind we knew that New & Used Car Sales, Parts Sales, and Finance would be next. Possibilities were endless, benefits many.
Specifically for the challenge of Shop Supplies fees collection at hand, our cloud application allowed us to create a condition based view for all repair orders. This condition was fairly simple. Include in this view all repair orders where there should be a Shop Supplies charge but the Shop Supplies field is equal to zero dollars.
Our system allowed us to then create a simple email alert out to the Service Manager and the General Manager based on this condition and included details of each repair order transaction that could be viewed inside the body of each email reducing number of clicks needed to get to the actionable intelligence.
The grid report view was also available as a dashboard that could be shared with anyone within or outside the dealership via a web link only by admin. Obviously this report was updated daily and automatically using our DMS integration piece, so the service manager was notified and provided details even before he arrived for work.
Upon reviewing this specific actionable intelligence, the Service Manager was simply able to forward these alerts on to each responsible Service Advisor who had waived the Shop Supplies charge in the first place with a stern message attached of course. This action made each Service Advisor self aware and realize that they could not get away with these dereliction and had no choice but to refrain from waiving Shop Supplies unless there was a good enough documented reason.
Results were amazing to say the least. We implemented the solution in September of 2012 and prior to that we were averaging right around $20,000.00 in Shop Supplies fees collection. With the new system in place we started to see our monthly collection amount exceed $30,000.00. It turns out all we needed was a system that simply alerted us of these exceptions and the active management initiative portion was just as simple as forwarding these alerts to the guilty party. I guess you could call it ‘preventive maintenance’, of course pun intended here.
This important task could simply be performed by any member of the management using any device as long as they had access to an email client, which definitely satisfied the last required component to make the effort ever so successful. This simple report continues to provide exceptional value to the dealership and has now organically expanded to include excessive Parts and Labor discount alerts per repair order, which have come to save the dealership additionally anywhere between $2500.00 to $5000.00 in gross profit each month.
How much additional profit can your dealership generate each month using simple reports with built in alerts?
P.S. If your dealership faces a similar challenge as outlined above, feel free to contact me. I would love to engage in a discussion to help in identifying the right solution for you and your organization.