Let us illustrate this PROCESS, not with hypothetical situations exaggerated to prove a point, but with three true stories experienced during actual client studies.
Example 1 - Dealership A holds two prestige franchises. It employs one highly qualified technician who is an ace performer on diagnosing electronic faults on vehicles with sophisticated on-board computer systems. The average retail labour rate is about £60 ($120) per hour and there is a long waiting list of customers cars requiring attention - so much so that some previously loyal customers have been losing patience and taking their business elsewhere. Due to staff cut backs to reduce overheads, the position of Dealership Premises Maintenance man no longer exists. As a result, every month, this expert, trained automotive electrician has an additional duty - to check all light bulbs on the premises and replace them as required - this operation takes about three hours due to the poor accessibility of many of the light fittings. Obviously, to hire in an outside domestic electrician would cost money but since the Service Department electrician is on hand he was considered to be free!! Of course he is not free - he is losing three opportunities for the company -
Example 2 - Dealership B, located in a congested city area, has very restricted parking availability. As a result cars are parked two or three deep and, in some areas, just crammed in to use every available inch. When a technician is given a new repair order he has to first find the car requiring work, then note all the cars he needs to move to get to his car. He must then find the keys to all those cars (which may be on the service key board, or in a salesmans drawer, or . . .??!) and, finally, solicit the help of other technicians to move the offending blocking cars out of the way and then quickly back in again in order not to block the street, while he obtains his car. On one occasion CIP witnessed this operation take 9 technicians over half an hour - 5 man hours wasted. Could a solution (system) have been found to reduce this aggravation without increasing the available space and which would offer an overall saving to the dealership? Yes, CIP devised a solution which, it is calculated, gave the operation a net revenue increase on labour alone of over £50,000 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? Is this not akin to him changing light bulbs himself? He is employed for his expertise in developing and monitoring overall group strategy and for his management skills. He could not (or should not) afford the time to survey in such detail each department in each outlet to ensure they are 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 PROGRAMME 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 dont 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 be:
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 £5,400 in potential additional revenue if the retail labour rate is £40 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 £300,000 ($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 awaste 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 contactCIP at firstname.lastname@example.org
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