In With the New, and Out With the Old - On The Numbers
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SECTION: On The Numbers

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In With the New, and Out With the Old


Article Date: 12-03-2007
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.

Give lean a closer look, because you may be able to do more with less.

Boy, time sure does fly. Here we are again looking at a year-end close and thinking about another new 12-month cycle. And there you are wondering about sales expectations, personnel costs, health insurance, tech procurement and/or retention, competitive products and dealers, market share, interest rates and the price of gasoline and utilities. A few months ago we discussed how small improvements on almost every major line item in your income statement can add up to big dollars. Of course, there are only so many hours in a day to deal with these issues, and thus you have to apply the old 80/20 principle to get the most bang for your buck. Let's assume you will do that as part of your annual budget process to get some of the benefits we discussed. But what about those additional items mentioned? Do they make sense? Can you "try" them in an efficient manner? Let's see if that is possible.

The Selling Process
Almost every business or equipment-related journal I read tells me that the old selling process we all know and love may need updating. We now have many generations involved in the buying process, all of whom respond differently to the sales process. Heck, I bet most of you purchased your last car using Internet help. I know I did, because the deal was complete before I walked into the showroom to sign the papers and pick up the car. All I know is there are customers who still prefer hard copies, and then we have those who prefer electronic data - and, in fact, expect it.

The point of all this is to have you examine your sales process to see what you can eliminate or cut back on, which then can be replaced electronically. Look at advertising. Look at your overall sales expenses. Look at what your sales people have to do to get a deal completed. Look at the time it takes to complete a sale. Look at how much driving time is spent to close a deal.

People in general, and especially younger people, do not read advertising material as older generations do. I also know many new buyers would love to do the deal over the Internet. And many are not really interested in seeing our sales person numerous times to get the deal closed. There are sales systems out there that will cut down the time it takes to close a sale and free up time for more prospecting. The system I saw suggested it could free up 70 hours a month per salesmen. If that is the case, maybe you don't need as many as you have.

Using Lean
I talk to more and more dealers who are starting to slowly implement a lean program. Some get help and some try on their own. Most start in the service or parts area, but I know of a few that started with the rental process. I guess you have to stop and think what you are trying to accomplish with this time you are going to invest in the process. In a nutshell, you are trying to eliminate unnecessary steps in the process and trying to transfer current, manual tasks to a computer. When you look at it this way, things get a little clearer and I bet you can think of a couple of lean improvements right now.

At one CFO conference I managed, a dealer I talked to said his company looked at it as getting rid of the "stupid stuff," and they set up a shared company Web site to get suggestions from employees."

Guess what, it works.

A more direct approach may be to ask your software vendor what you are not using in your system. They can tell you, and you will be surprised how many Excel spreadsheets you can get rid of by flipping a few switches.

There is little doubt you can use lean - or whatever you want to call it - to eliminate unnecessary work or transfer the work to your computer. What it gets you is fewer people and a more efficient operation. Looking for a place to start? See which department is generating the most Excel spreadsheets.

Technology Update
Systems change. Systems get updated. People change. People need continuous training. From my experience there is a tremendous opportunity here for a lot of dealers. They are not using their systems effectively. They do not have the latest version of the system. They do not provide continuous training on the system. As a result they are not maximizing the efficiency the system can provide. I don't want to be redundant here, but look for Excel spreadsheets and send a copy to your vendor to see what can be eliminated. Also, assess how long it takes you to close a month - if it's more than five days, find out why and use your computer to speed things up.

Go into next year with a more efficient, profitable company. Time spent reviewing these areas is well worth the effort.

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