Save Time and Money With a Parts and Service Operations Manual - Product Support
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
Home         About Us         Media Kit         Subscribe         Previous Issues         Search Articles         Meet the Staff        AED Homepage

CED Menu

Arrow Home
Arrow About Us
Arrow Media Kit
Arrow Digital Subscription
Arrow Search Articles
Arrow Meet the Staff
Arrow Trade Press Info
Arrow AEDNews

Premium Sponsor:

SECTION: Product Support

Questions or feedback?
Contact Kim Phelan at (800) 388-0650 ext. 340.

Save Time and Money With a Parts and Service Operations Manual

By Steve Uible

Article Date: 12-01-2010
Copyright(C) 2010 Associated Equipment Distributors. All Rights Reserved.

Documenting consistent procedures for each branch to follow is not as daunting a task as you may fear, and resolving to just get started is probably the hardest part.

Back when many dealers were "mom 'n pop" operations there was no need for processes and systems. All we had to do was do what the boss told us to, and we all did that; keeping the boss happy was all that mattered. That was easy.

But then some dealers got bigger and they had more employees, and some of those employees reported to other employees who were managers, who then reported to the boss. So life got more complicated. Then some dealers got even bigger and started adding branch stores. That made it worse, because these other stores started doing things their own way; you know - forms, work orders, warranty claims, etc. Pretty soon there was little or no consistency between the stores. Now it has become a huge problem because some dealers are starting to get very large, and they still don't have standard processes.

We are very fortunate to work with dealers from the very small to the very large, representing different manufacturers and located all over the world. There are very few dealerships that have taken the time and made the commitment to write and follow an operations manual, also known as a Standard Operating Procedure book (SOP). And it is not just us, as consultants, telling them they need standardization. They saw how much they were spending on process mistakes in their business and how they could not get consistencies among their stores. It is hurting their bottom line through inefficiencies and lost income. But they are not the exception - most dealers still struggle with this problem, even some large dealer groups.

Recently we were leading a group of larger dealers at a three-day meeting. Each dealer brought in what they considered one of their best ideas to share with the group. There were many great ones that were creative and workable, so we thought the choice would be difficult in choosing the best one for the door prize. But it wasn't even close; the dealer who had put together an operations manual won the prize.

Here are just a few of the items we see that are handled differently by branches within the same company:
  • Monthly or internal work orders
  • Warranty claims
  • Mileage and travel charges
  • Shop supplies
  • Parts markups
  • Parts transfers
  • Standard job pricing
  • Open work order forms and processes
  • Customer labor allowance guidelines
  • Outside labor markups
  • Advertising and marketing programs
These are just a very few items that we see. I bet you could add many more if you don't have an operations manual. The lack of standardization makes the job of a product support manager - or aftermarket manager, or corporate parts or service manager - much more difficult than it needs to be. As he or she visits the stores, a consistent process makes it easier to evaluate and manage a department. Excel spreadsheets are a great way to look at an operation, but only if they are measuring apples-to-apples.

When you go to a centralized warranty processor, his job will be almost impossible if each store handles its work orders differently and the claim information is in different formats.

We have seen dealerships that have a centralized warranty manager who easily handles all the claims for 15 stores, but only because (s)he has trained the different stores to gather the pertinent information on the same form, and the technicians write up the warranty work they did all in the same format.

Uniform Orientation for New Employees
Another huge advantage of utilizing an operations manual is for training new employees, especially managers. New hires always have trouble learning how their new company does things. An operations manual will assist them in doing things right and not making costly mistakes. How should they post labor on a customer redo? What workorder code should they use on a work order that a customer is disputing for a labor allowance? Which department gets charged for it? In each of these cases and any others that the new hires are not sure of, they could have gone to the manual and known for certain the correct answer.

Another useful application for an SOP manual is when you add or open a new store. Honestly, this might be the most valuable use of all. Trying to get a new operation under your wing can be very difficult. After all, they probably had their own processes before you came along and it is easy to use the excuse of, "we always did it this way." But with an operations manual, the personnel will always be able to see how things are supposed to be done. It is like having a full-time trainer on your book shelf whenever you need him.

We work with a dealership that recently had to change its entire business system software. Now that is a monumental task that totally disrupts any dealer and requires much training, both before and after the conversion. It hurts your productivity until all employees and all departments are comfortable with the new system and are using the new shortcuts - but that takes time. This dealer had the foresight to write a systems operational manual for their parts and service departments, and that saved them much time and money during and after the conversion. The software company supplied them with a huge manual that was about six inches thick, but they boiled that down to a workable manual of the essentials, trained all their people, and left them a copy for future reference. It was a relatively smooth transition and we fully recommend it.

How many times have we had to fix a problem after someone made a mistake? It takes a lot longer to fix a mistake than if we could have done it right the first time. And that is true for existing employees and new hires alike.

Since so few dealers really do this well, you would think it must be a daunting task to be postponed for some other time. Or you may want to do it but just don't know how to get started. Actually, it is not as hard as one might imagine. Here is a way in which several dealers attacked the challenge and came up with a great SOP manual.

Start off with a large three-ring binder with a lot of divider pages.

Name them as follows:
  • Opening Work Orders
  • Closing Work Orders
  • Warranty Claims
  • General Ledger Accounts
  • Labor Classifications
  • Outside Labor and Materials
  • Work Order Codes
  • Parts Transfers
  • Special Tool Guidelines
  • Personnel Guidelines
  • Plus any others you will be needing
Then give the binder to each office employee to start taking notes of the processes they use in doing their job. When they are describing a process, have them print a screen shot of each step, especially on menu pages. That makes it much easier for others to follow in the future. They can then file their notes under the appropriate tab. You now have the beginnings of an operations manual. Continue this process until each person has had the opportunity to add their information and copies. This may take several months, but give each person a deadline to finish their part. Too many times, projects like this never seem to get done if we don't give a deadline.

Finally, a corporate manager should go through the binder and make sure the information and examples are accurate. You now have an operations manual! But remember that this is a living and breathing book. System changes, priorities and structure all will happen, and you have to make sure your SOP book is kept updated. If you don't record these changes, pretty soon there will be so many mistakes in your book that it will cease to be effective.

Although the examples I have given here are for the parts and service departments, there is absolutely no reason it can't be used for all departments including sales, rentals, accounting, finance, credit, etc.

Good luck with your new operations manual. The hardest part will probably be getting started. Come to think of it, there's a fortune cookie proverb that says the longest journey begins with a single step - no doubt the author had an operations manual in mind!

Steve Uible has a long career in product support management and is a partner in TIME Service Consulting LLC. He and his partner, George Wacaser offer consulting and training services for parts and service departments. They can be reached be reached through their website at
[ TOP ]