In A Strong Economy, A Focus On Efficiency Delivers
A strong economy with rising interest rates and falling unemployment is good news, but it also means that running a business is more expensive. While dealers are clearly seeing that vehicle inventory carrying costs and workers’ benefit costs are on the rise, the day-to-day demands of selling and servicing vehicles can make it challenging to evaluate other costs of doing business.
To counteract these and other rising expenses and achieve money-saving goals, dealers need to do two things to improve their bottom lines: Cultivate new revenue streams and increase efficiency — by cutting waste and enhancing productivity. In doing so, choosing the right vendors to serve your needs is the key to success and cultivating new revenue streams.
Adding Revenue Streams
Learning how to generate additional revenue with value-added services is a terrific way to buffer your dealership from the impact of rising costs. An effective, full-service vendor partner who looks out for your best interest will provide you with ideas to accomplish this, as well as the equipment and supplies to facilitate new revenue streams.
For instance, equipment such as Hunter Engineering’s “Quick Check Drive” Alignment inspection system features an array of 8 cameras and 32 laser sensors that quickly and accurately alert a service technician if a vehicle is out of alignment as soon as it enters the service bay. Dealers who have installed this equipment have been able to increase their alignment business, save on labor costs, and sell needed tires while preventing customers from having more costly repairs down the road. Another example are tools which can perform simple, but highly technical analyses such as measuring tire tread depth to save time and increase tire sales revenue. The system also has automatic vehicle identification as well as automatic body photos, eliminating fraudulent and costly damage claims.
Service departments can boost their sales during regularly scheduled maintenance services by securing technology which alerts service technicians of the deterioration of the vehicle’s oils and lubricants. Offering critical fluid exchange services using forensic, scientifically-backed technology shows the customer that their dealer is proactive when it comes to helping them extend the life of their vehicle.
These are just a sample of tools which a valuable vendor partner will bring to your attention to help your service department keep customers feeling taken care of while enhancing their ancillary revenue.
"Our dealership has a lot of moving pieces on any given operating day, and I need a partner who just knows what we require, without a lot of effort on my part."
-Bob Jones, Jones Auto Group
Curtailing Waste and Redundancy
While income-generating efforts are a crucial part of thriving when costs are rising, they are only half the equation. The other key component is cutting waste and redundancy to improve your operating efficiencies. A great way to start is to pare back the number of vendors with which you work. It’s crucial when doing this to seek out vendor partners who will give you the best prices — and stand behind them.
Research has shown that having an array of vendor partners increases redundancy and this can be expensive — as much as $2,400 per extraneous supplier which can easily help to save up to a quarter of a million dollars for a single dealership per year. Working with a bevy of different (possibly overlapping) vendors also costs you money by making it difficult or impossible to get a holistic view of your spending and your expenses, which means you could be overlooking opportunities for savings.
Improvements to your procurement management process also enhances efficiency, by reducing the amount of overhead you may be spending on additional storage space. A vendor with a focus on delivering you value, should be conducting regular needs assessments to maximize your cash flow — you won’t find yourself with valuable operating income “locked up” in the form of warehoused supplies.
Improving Productivity
But increasing efficiency isn’t just about cutting the fat, so to speak. It also involves boosting productivity. Even if your employees are the best in the business, the right vendor partnership can help them work smarter, not harder.
A dealership has to undertake a diverse array of administrative and managerial tasks such as procurement management and reporting. To the extent that you can “outsource” those by partnering with a full-service vendor, you will find that you can reduce the workload and demands on your employees’ time.
Another way to enhance productivity is to seek out a vendor who will be proactive on your behalf when it comes to finding the best prices on everything you buy. A vendor that provides comparison shopping services will save you from having to divert your own staff’s manpower to do so. You also need a supplier who you can collaborate with on regular audits to make sure there aren’t any opportunities for savings slipping through the cracks.
Flexible shipping to suit your needs is an additional way to improve productivity. Not only does this save you money by improving your procurement management, it also reduces employees’ downtime that results from waiting for essential supplies to arrive.
Conclusion
Although today’s challenging cost environment is likely to continue for the foreseeable future, savvy dealers who are proactive in enhancing efficiency, improving productivity, and increasing ancillary revenue can help bolster the bottom line. To be most effective, this means working with a full-service vendor who has the know-how and tools to help you achieve these goals.
Want to learn more? Visit www.wascoonline.com/why-wasco and then request a free analysis for your business.
