How About Those Resolutions? - Aftermarket
Construction Equipment Distribution magazine is published by the Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada. AED membership also includes equipment manufacturers and industry-service firms. CED magazine has been published continuously since 1920. Associated Equipment Distributors
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How About Those Resolutions?

Written By: Ron Slee

Article Date: 01-02-2006
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.

With a great year behind us, we need to work on the future.

As someone who is into lists, it's that time of year. Many of you have set objectives for the coming year. Many of you have ambitious plans. I'd like to think the following are on your list. Customer Satisfaction
The true measure of customer satisfaction is retention. How did you do last year? Was your customer retention higher or lower than in 2004? What did you do to impact that result? Those of you who were calculating retention for the first time - were you surprised by the results?

Now what are you going to do to improve it? Do you have the supervisor of the job call each customer after a shop job has been completed? Do you call after backorders have been found? Do you ask employees what you should be doing to make the customer more satisfied? Do you ask the employees what they need in training, tools and systems to allow them to serve the customer better? These are simple questions that have a serious bearing on the satisfaction of your customers.

Asset Management
More pressure will be placed on return on capital in the future. This is directly driven by asset turnover. Yet we are stuck in old paradigms on parts inventory turnover. Take a simple test.

How long does it take a stock order cycle to be completed? The cycle starts when there is a need for a part to be ordered on a stock order and ends when the part is back in stock and on the computer records.

So what is the cycle time? For most of you, it will be about one week. If that is the case, I submit to you that your parts inventory turnover shouldn't be less than 12 times in a year. What about the service department? Is there any reason a job shouldn't be invoiced within a week? I don't think so either. This means that a turnover for work in process of less than 26 is unacceptable. In fact, 52 is more in line.

Operational Effectiveness
AED's Product Support Best Practices Handbook published a few years ago pointed out many areas in which the parts, service and product support departments can improve.

Have you reviewed the suggested actions and implemented them? There is a lot to do here. Constantly taking cost out of process is a continuing challenge. How are you doing?

Sales and Market Coverage
Market share and customer perceptions are driven by how well we cover the market. We have talked about market coverage for years in the parts and service area, asking "Why don't we have as many product support sales reps as equipment sales reps?"

Unless the answer is that you are getting there, you don't have adequate customer coverage at the parts and service level. You might want to check out AED's Parts and Service Opportunities Handbook for some attention-getting survey data.

Market Penetration
How well we have succeeded in our jobs in parts and service is measured by market share. I know we don't have a precise tool to measure market share but suffice it to say, we can do a much better job.

In the Product Support
Opportunities Handbook survey, we were told that 44 percent of our customers had chosen other suppliers for maintenance and repair work. Market share is in decline. What are you doing about it?

I wish you all a safe, happy and prosperous 2006.

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Article Categories:  Product Support