How Top-Level Managers can Effectively Lead Service and Parts Operations

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Shana Farmer
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1 How Top-Level Managers can Effectively Lead Service and Parts Operations With Jeff Sacks, Jeff Sacks & Associates Moderated by Mike Bowers, DealersEdge

2 Jeff Sacks, Jeff Sacks & Associates Jeff Sacks is considered one of the premier experts in dealership operations. His accounting and business finance degrees, coupled with his practical "in the seat" operational experience, have allowed him to offer his unique insights to automotive clients worldwide for over 30 years. Jeff immigrated to the United States in 1977 and has immersed himself in car dealership operations since then. After having worked for a variety of dealerships he founded Jeff Sacks & Associates, a consulting company dealing with the needs of his automotive clients. Jeff merged his practice and became a principal with Dixon Hughes PLLC (formerly Dixon Odom), a leading automotive CPA firm, in In 2005, NCM Associates, Inc. and Jeff Sacks finally merged after collaborating for many years on various joint initiatives, including the highly respected General Manager's Boot camp. In 2009, Jeff returned to his roots as operating President with Jeff Sacks & Associates in order to provide customized programs to his clients. Jeff has spoken before many organizations that have used him as a resource to improve dealership functionality as it relates to process improvements strategies, asset and expense controls, computer utilization, management information systems and other related topics. He has published many automotive specific articles and was the contributing editor to the Jeff Sacks Newsletter. Currently, Jeff shares his insights on and knowledge of the automotive industry in his bi-monthly Dealer Magazine article. Jeff Sacks & Associates - Toll free: (800) Fax: (858) JeffSacksAuto.com/blog/

3 For folks who were not brought up in Fixed Operations Presented by Jeff Sacks of Jeff Sacks Auto CONTACT INFORMATION : questions@jeffsacksauto.com or jsacks@jeffsacksauto.com

4 Game plan should be: Simple Not too technical Easy to manage and control

5 SIMPLE: Isolate those elements that drive performance Track those elements Fine tune, move on and upward

6 PRIMARY ELEMENTS SERVICE: 1. Focus on hours 2. Margins 3. Holding expenses in line

7 SECONDARY ELEMENTS SERVICE: 1. Customer retention 2. Throughput management

8 Objective: Produce 200 hours per tech per month Why?

9 Producing more labor hours will significantly lift department profitability

10 HOW TO GET THERE: Increase in RO count (while maintaining constant hours per RO) Same # of RO s, but at a higher hours of labor per RO average OR: A Combination of Both

11 QUESTIONS: What is the % change in the number of CP RO s for the most recent month vs. the same period last year? What is the % change in the number of CP RO s YTD vs. the same period last year? Why CP only?

12 Taking a step-by-step approach: Converting more sales customers into service customers

14 Convert sales customers to service customers Keep service customers returning

15 What is your dealership s service potential in hours? What is your projected CP sales this year in hours?

19 Tire Replacement Opportunity Data on this slide provided by Hyundai Motor America

20 HOURS PER REPAIR ORDER: Understand the shortcomings of relying primarily on this guide Manage the boundaries

21 Calculate how much additional gross your dealership will produce at 1.35 hrs per RO Is this acceptable?

22 HOURS PER REPAIR ORDER: Understand the shortcomings of relying primarily on this guide Manage the boundaries Things to do: Too much Too little One line RO s

23 Objective: How many hours per day per technician to achieve an objective of, say, 200 hours? Tracking mechanisms: DMS reporting and/or Excel spreadsheet by technician How about service advisor productivity?

24 Ratio of techs to service advisors 4.5 techs per service 11 hrs. per tech = 49.5 hrs. per serv. 10 hrs. per tech = 45 hrs. per serv. 9 hrs. per tech = 40.5 hrs. per serv. adv. 20 RO s per service 2 hrs. per RO = 40 hrs. per serv. 2.5 hrs. per RO = 50 hrs. per serv. adv.

25 Gross margin of 70% perhaps? Gross margin is selling price less cost of labor expressed as a % of selling price Selling Price $100 Cost $30 Gross Profit: $70 (or 70%)

27 Service Advisor Productivity Report Dig into: Service overrides SPG utilization Discounts

28 The above table also shows how you how to calculate the dealership s effective cost of labor. In this example, it is $19.29 per hour ($2, hrs).

29 Dispatching protocols: Computer set ups Over rides Timely reallocation of work Tech staffing mix vs. labor work mix Pay plans

31 Overcoming production bottlenecks WHY? Early morning Late afternoon Shop distractions

33 Overcoming production bottlenecks Early Morning Late Afternoon Shop Distractions

34 Inventory issues Obsolescence Turn Shortages

36 Parts Management Report Isolate parts no sales more than 9 months as a % of total inventory Main factor creating obsolescence Special order parts not picked up!!!!

37 Inventory turn of about 5 times per annum How to get there? Reduce obsolescence Eliminate aged inventory Create a flexible inventory

38 Reconcile physical with financial inventory monthly Adjust parts manager s pay plan

39 Start with the end in mind Know what questions to ask Structured management review process

40 General Manager Workshop Atlanta, GA Harrisburg, PA Inquiries

How to Manage the 8 Controllables of Dealership Service Profits!

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