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  An Interesting Statistic

  #  Cash Flow

  #  CIP Programme 

  #  Service Marketing

  #  2015


Boeing        Service

The Boeing 787 Dreamliner uses 18 million lines of software code to function ~ the modern vehicle now uses about 10 million lines . . . and increasing!!


Contributed by our Greece based Associate, Peter Kerridge, FIMI

It’s difficult to explain the benefits of understanding about CASH FLOW because most people just spend because they are there, whether they need the goods or not.

Supermarkets work on this basis by having, by their till, items that are not essential. So, while waiting to pay, you browse and buy sweets and the like which when added to your purchases, seem to make very little cash difference.

I once met a businessman who bought tyres whilst he was in Italy. He proudly showed me his stock of tyres (a warehouse full). I asked him why he had bought a particular tyre and he told me “the price was very low”. The tyres only fitted a particular vehicle whose annual sales – in his country – could be counted on one hand!!!

Tyres, I am told, lose their elasticity if held in stock for more than 6 years, so they were a waste of money because they were over 6 years old when he bought them; (date information is printed on the tyre at the time of manufacture).

Various perishable goods are often bought on the same basis and these, bought on a too large basis are eventually thrown away because they have deteriorated and become useless.

One of the advantages of buying food or other specific goods over the internet is that they only supply the goods you requested, hence no unnecessary purchases. Here, cash flow is essential and can be budgeted for.

In business, not only is it essential to plan ahead, it is also essential to work to a budget based on essentials, plus a small known reserve.

Many times in my business life, when I’ve analysed the stock of parts, I’ve discovered parts that haven’t moved for months or even years. When I ask why they were bought, the answer is because they were part of a discount deal by the manufacturer or importer!! At the same time, the Chief Accountant or CEO was requesting from their bank an increase in their OD and their OD charges had already increased!!

Banks generally are not business people; they are only there to supply funds to enable the business to operate. In general, their only concern is how much the business is banking. (You can bank €10,000 and withdraw €9500 the same day and they are happy; P&L is not in their DNA!

The simple answer, whether personal or in business, is to only buy what you need now; there is always tomorrow and most suppliers are open at least 6 days a week. In the vehicle business, they operate on a JIT (Just in Time) basis for this very reason. The dealer’s space can be kept to the minimum which in turn can help to reduce rents, etc., and guess what this does for the operating profit!!

The essential business of business is to not only offer but also to give a service second to none.

Today, with computers, stock is easily evaluated (both in cost and availability). By the way, this facility was available in the early eighties so it’s no secret that, providing the logistics are known, there should be no reason for over stocking or shortages of fast moving items.

Another important part or ingredient in any business is communication between departments. For example, when a customer is received into a service department, the receptionist should be aware if it is expected that the parts may not be a normally stocked item.

Here again, the communication between the Reception, Parts department and its suppliers must be good if not excellent. What’s the point of each bay being blocked, waiting for parts, costing $X per hour?

I know of one company who improved all of these and became the number one dealer in the country.

Common Sense

Cash Flow


Customer service

Customer Loyalty

All of the 5 items above, if achieved, will result in a profitable enterprise, provided that the business is in the right location.

This is not so much NEW TRICKS, as it is Old Tricks, re-used with common sense and up to date technology.

If you manage your cash flow correctly you should have enough cash for any unexpected emergencies. However, if not you may be in trouble through very, very bad management.


Continuous Improvement Process


High tech / computer problems are masking basic operation problems  


The CIP system was designed to highlight areas within any business where policies, procedures and current practices may benefit from modification resulting in significant cost savings, improved customer satisfaction and enhanced profit potential.

We have enhanced the system, used by major manufacturers, to make it even more effective and, in fact, we practice what we preach by also continuously improving the system itself!                  

We differ from many consultants in that we believe that a broad overview of an operation, whilst useful, seldom uncovers the many small areas of lower efficiency which, when added together, make a significant overall negative effect on profitability, CSI and reputation.

The CIP system, as the title suggests, presents clients’ senior management with a series of check lists so that line managers can monitor progress, evaluate improvements and continually amend the action plan in line with changing parameters. Over 100 companies of varying size and location have benefited from the system and, in the Fixed operations alone, the average annual increased turnover per after-sales department has exceeded £500,000 a year at minimal cost to the company.

By popular request we have listed below the top 50 problems still being experienced today. We would like to publish the solutions but these are being held for our 2020 news letter!!






Waiting at back counter


Fuelling of company cars


Waiting for job card


Duplicated trips to parts counter


Waiting for authorisation


Waiting for warranty job card


Under use of hoists


Technician used to collect parts


Lack of info on job-card


Waiting authorisation for extra work


Looking for the next car


Difficult access to workshop


Looking for special tools


Collecting protective trim covers


Checking availability of parts


Looking for rag/paper towel


Looking for special equipment


Moving immobilised vehicles


Road testing vehicles


Obtaining lubricants


Opening & closing workshop doors


Processing of documents


Waiting to clock on & off job cards


Lack of wash basins in workshop


Insufficient hoists


Looking for car keys


Workshop congestion


Processing parts required


Non availability of parts


Processing of warranty materials


Collecting consumables


Emptying of oil drainer


Car  park congestion


Poor management communications


Computer down  time


Processing PDI forms


Looking for foreman


Technician providing diagnosis


Waiting for engine tune equipment


Lack of telephone lines


Lack of motivation / discipline


Processing time records


Technicians used as car jockeys


Clocking on/off job


Technician giving assistance to colleague


Looking for hand tools


Obtaining technical information


Waiting for clean overalls


Wrong parts supplied


Waiting for rolling road


The system is so flexible it is effective in any industry where a production or supply chain is involved, where the

“Next person in a process is a customer”.

 The following EXAMPLES illustrates this PROCESS:

(Discovered during actual client studies. Not hypothetical situations exaggerated to prove a point!)

Example 1 – Dealership ‘A’ held two prestige franchises. It employed one highly qualified technician who was an ‘ace’ performer on diagnosing electronic faults on vehicles with sophisticated on-board computer systems. The average retail labour rate was about $120 per hour and there was a long waiting list of customer cars requiring attention. Unfortunately the position of Premises Maintenance was terminated. As a result, every month, this expert, trained automotive electrician had an additional duty – to check all electrics and light bulbs on the premises. This operation took about three hours. The Service Department electrician was ���on hand’ and was therefore considered to be free!! Of course he was not free. Thus three opportunities were being lost by the company –

1.             a labour income of $360 per month (3 hours x $120 per hour – task carried out monthly)

2.             the parts sales which would have been associated with that additional labour revenue (at least $300 per month)

3.             potentially lost loyal customers – difficult to quantify, but likely to be significant since long lead times were normal

Would it have been cheaper to contract out to a local domestic electrician? OF COURSE!!

Example 2 – Dealership ‘B’, located in a congested city area, had very restricted parking availability. As a result cars were parked two or three deep and, in some areas, just crammed in to use every available inch. When starting a job the technician had to first find the keys and the car requiring work, then note all the cars he needed to move to get to ‘his’ car and, finally, solicit the help of other technicians to move blocking cars out of the way. On one occasion CIP witnessed this operation take 9 technicians over half an hour – over 4 man hours wasted!

CIP devised a solution which, it was calculated, gave the operation a net revenue increase on labour alone of over $75,000 per annum – and since this represented incremental business (fixed overheads having already been covered by existing business) approximately 90% of that increased revenue went directly to the bottom line!

Example 3 - A discussion covering examples such as these took place with the Chief Executive Officer of a large dealer group. He suggested that he, himself, could have visited any of his outlets and found similar anomalies so why did he need to retain an Advisor (CIP) to assist him? Was this not akin to him changing light bulbs himself? He was ‘employed’ for his expertise in developing and monitoring overall group strategy and for his management skills. He should not need to survey in such detail each department in each outlet to ensure they were running at optimum efficiency. Could he have directed the relevant Department Managers to review their respective departments in this way? Of course, but how objective would they be – are they not too close to the business and thus likely to miss some potential problem areas because they have become so familiar with the existing situation? It is the ‘outside pair of eyes’ which see the greatest proportion of these waste areas and the CIP PROCESS which can evaluate them so that senior management can see the priorities required to implement the solutions recommended in order to improve the 'bottom line' figure as quickly as possible.

CIP estimates that the cost of the exercise is recovered within less than three months and from then on net profit increases rapidly and, importantly, Customer Satisfaction is also enhanced.

What is the common denominator in these three examples (and we could quote many more from our files but don’t wish to labour the point – by now you have the picture!)?

We would suggest that it is not incompetent or negligent management but current situations are due to practices which may have ‘developed’ to this stage over a period of time due to a variety of reasons, some of which might include:

1.             Down-sizing, resulting in jobs previously handled by an employee (who has been permanently down-sized!) being re-allocated to other personnel who were probably already busy. Often these functions are either above or below the capacity of the person now responsible – if they are above his ability they will not be competently handled (the Peter Principle!); if below, another, cheaper, solution might be available without necessarily replacing the previously responsible person.

2.             The ‘wood for trees’ syndrome – familiarity with existing practices may not allow management to recognise and quantify the cost to the business of these potential shortcomings. "We've always done it that way, so we accept it as it is!"

3.             Pressure of work. How often has an employee recommended to an already overworked manager that a job could be tackled more effectively only to be advised: "It only takes you a few moments, just get on with it!". After receiving this type of response two or three times the employee stops showing initiative and he, himself, adopts a less-than-caring attitude by example. BUT, does that task only take a few moments? How often is it performed per day and by how many people? A task that only takes two minutes longer by the existing method but is carried out on average twice a day by each of, say, ten productives, when multiplied up on an annual basis probably costs the company $7,000 in potential additional revenue if the retail labour rate is $60 per hour. Add to that the additional parts that would be sold as a result of that additional labour, reduced lead times and increased Customer Satisfaction and "just a few moments" adds up to a significant situation worthy of deeper investigation.

 Of course none of these examples, or other similar ones, could happen in your operation . . . or could they??

Of over 100 dealers and manufacturers surveyed, an average annual potential increased revenue through dealership service department alone (labour and parts sales) is in excess of $600,000. This covers a wide cross section of franchises, locations, individual Dealers and large Dealer Groups including outlets with as little as six working bays in the service department up to the largest multi-franchise operations and manufacturing facilities throughout the world.

So, perhaps there could be some opportunities for improvement in your operation. Would it be a ‘Waste of Time’ to review the situation?

Why not take a step back and review your operations, quantify any wasteful procedures and then calculate what they might be costing the company over a one year period in terms of lost revenue, lost customer loyalty and reduced Customer Satisfaction.

Or, better still, ask us to assess your company's situation and suggest whether it would be worth your while for us to carry out the PROCESS for you.

Is this ‘waste’ worth investigating?

It makes you wonder if it really is all a waste of time !!

For further information on this subject or for a preliminary feasibility review of your operation (free in the UK, at cost elsewhere) please contact CIP at

We are small and flexible enough for fees to be negotiated in a variety of ways to suit the client and which, depending on the nature of the contract, might include a proportion of the resultant increased client profit which can help remove some of a client’s doubts concerning the wisdom of employing consultants.




We have been impressed at the success rate of dealers obtaining additional business on cars checked in for specific service items. The technique which has been so successful is:

# walk round the vehicle with a video camera, pointing out additional defects which need rectification

# estimate the cost of fixing these additional items

# e-mail the video and estimate to the owner requesting his approval to carry out some or all of these additional repairs

This modern technique has the following advantages over walking the owner round the car:

# the dealer has time to thoroughly check the car rather than be under time pressure when the owner delivers the car

# the owner does not have to make an extra visit to the dealership

# the owner has time to consider each item

# the owner can consult with an unbiased friend if he does not understand anything

# once approved the additional work can be undertaken without further delays




We are currently following enquiries from Cyprus, Egypt, Iran, Morocco, Saudi Arabia and UAE regarding potential contracts in 2015. Thus if you feel you may be interested in our services we suggest you contact us without delay so we can discuss appropriate dates which would be mutually convenient

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