YOUR GM’s GREATEST OPPORTUNITY IN RECON

One of the last opportunities in the modern dealership to make money is the reconditioning department. Unfortunately, most general managers don’t appreciate this function’s role in a well-run used car operation. 

As we move into a market identified by slowing new car sales and used car departments awash with off-lease vehicles, reconditioning will play an increasingly important role in your dealership’s sustainability. When good times return, a highly tuned recon operation run by the numbers will:

  • Ensure pro table used car margins
  • Get vehicles frontline ready for less cost
  • Increase inventory turn 

Getting a dealership to this level of recon efficiency and profitability is a GM-level responsibility. General managers who understand how to move this important function into 2016 will get rid of ineffective whiteboards and spreadsheets. No recon manager I’ve talked to believes these tools do a good job in tracking recon processes and holding the crew responsible for getting all the details done on time.

The GM also has overall authority for the departments connected to the recon process — trades, auctions, service, parts, sublets and used car sales.

When asked about their recon cycle times, most recondition or service managers will say they’re at about five days. NADA says the goal is three. In reality, when we apply Time-to- Market (TTM) work ow so ware science to these dealers’ recon, they learn their cycle is not three days but more like seven to 12 days. 

So the GM has another responsibility: deciding to drive down the dealership’s recon cycle to a more pro table, and very attainable, five days or less. This can be a high mountain to climb, however, without best-in-class processes in place to automate, monitor and improve work ow through recon to retail.

By not knowing for certain what your true recon cycle time is, your “recon plan” leaks time and money. That leakage is wrecking your retail gross and inventory turn. 

...Read the full article on Autosuccessonline>


The Path to Recon Best Practices

On the road to more profitable used car operations, an increasing number of dealers are aligning their resources and processes to operate at best-practices level of reconditioning performance.Their recon operations, like yours, can cut cycle time by half,getting their inventory frontline ready in three to four days, adding a week of selling time and increasing inventory turns by a factor of one to three.

...Read the full article on Autosuccessonline>

 


TEST YOUR RECONDITIONING TIME

Dealers who have the most efficient recon operations consistently average three to five days from recon start to frontline. They also know where every car is at all times because every step has a clear owner/tech who is connected to it through their mobile phone.

The best example of how this works is how quickly a UCM can approve an itemized list in only a few minutes right from their mobile phone — any time, anywhere. When the UCM approval happens in a workflow system, it sets the pace for time-to-market.

Try this simple exercise: List what you believe your average real times are for:
• Inspection
• UCM approval
• Mechanical
• Body (30 percent) 
• Detail
• Photos

Add these up for your store, and do not use the best-case numbers, because they all count. If your number is six days or greater, then you are a perfect candidate for work ow. Before implementing workflow, dealers average 10 days or higher, and burn an extra week of prime selling time. And, if you are not measuring your time-to-market, it is likely that holding costs are cutting deep into your profitability.

...Read the full article on Autosuccessonline>


A Time-to-Market Culture Requires Data-Driven Recon Processes and People

In our first of three articles discussing how to drive time and cost wastes out of the reconditioning process, we took a look at how lean manufacturing workflow principles when applied to automotive reconditioning, improves outcomes.

That article outlined the fundamental processes for how to move from a traditional manual approach to a data-driven Time-to-Market workflow model. My article in this issue describes how two dealers instituted this model to drive down recon cycle days, reducing recon holding costs, and getting vehicles frontline ready faster.  

While the retail used car business model has evolved to a data-driven model for stocking, pricing and merchandising, reconditioning has not kept pace.  In other words, recon has for the most part, remained a process managed manually using spreadsheets, whiteboards or other means to track and manage the work to be performed on each car. 

That recon has remained so manually intensive is somewhat counterintuitive, as most of fixed operations has been a numbers-driven profit center for years. GM’s and Fixed Operations managers have generally considered recon a cost center and not as essential to business success as service and parts.



Using reconditioning workflow to solve many dealership headaches

Getting your cars through reconditioning and PDI is only the halfway mark to "sale complete" and ends when the "funded" deal is sent to accounting. Both recon/PDI and deal-flow are perfect candidates for workflow technology, but with different sets of rules and users. The need for speed and efficiency is ever more critical in deal-flow, because now your customer experience is at risk.

In recon, the stock number is the critical key, but when vehicles advance from recon/PDI to deal-flow, the deal number becomes the key. This allows for an alternate vehicle to be swapped into a working deal, which is needed if the desired car is sold to another customer before the deal is complete. The included chart shows how a workflow application allows this to happen and how the two are connected.

DePaula Chevrolet in Albany, New York, started using workflow to measure and manage their recon time-to-market 36 months ago, and now have their processes dialed to have their used cars, trades and auction purchases on the frontline in 48 hours. While recon was working like clockwork, their deal-flow was still being handled the old way, using logs and paper. Paul Lynch who heads the dealership's sales operations, decided to also configure a second workflow to manage deal-flow.

Read more on Autosuccessonline >


Lean Manufacturing Processes can Modernize reconditioning

Published inside Fixed Ops Magazine Jan/Feb 2016

An exercise to optimize the customer experience.

This is the first installment of a three-part series that addresses reconditioning Time-To-Market, or TTM — a key performance indicator for more successful used car operations.

Fixed Ops has the important role in getting Parts and Service optimized — that’s the first order of business in any efficient recon operation.
— Dennis McGinn

 


A message for General Managers & Dealership Principals

“What is the difference between managing Reconditioning time and Time-to-Market? The active involvement of the GM.  If you are still trying to hold people accountable for the reconditioning cycle instead of TTM then I have some great news.  

Recon is of course a vital part of getting cars to the front line ready but it is only a subset of the TTM.  At one time, GM’s were happy to have the UCM, Service Manager, Inventory Manager looking a spreadsheet for accountability and metrics.  But now, there are three strategic reasons for the GM and/or Dealer Principal to take an active role in TTM that make it easier to stay on top of the real metrics with less effort.  

  1. Holding cost is real and is quite easy to calculate.  We have found that even where the dealership thought they were doing a good job getting cars through recon, once they went to workflow and automated their processes metrics, the actual Time-to Market was substantially different that what they assumed. In fact,  so far with hundreds of systems installed,  we have found no exceptions and the difference in Gross rages from $200,000 to $800,000.  
  2. Inventory Turns – whether you have a Velocity strategy or a TTM strategy or both they are really about the same point. Getting cars to the front-line to increase selling days. 
  3. Recall liability is no longer something that the GM/DP can assume it being handled. There must be a policy in place and it must be monitored

In all these, the GM/DP should be able to set goals based on best practices recommendations and dealership specific TTM metrics.  We do know that when the GM is setting the targets and monitoring results, everyone's attention to accountability goes way up.

Steps to make this work:

  • Get a good look (live demos) at what others are doing who have made the move to TTM.

  • Work with RR to map your processes into a workflow that makes the most of best practices, your current staff, resource limitations, physical constraints and your vendors. 

  • A dealership specific workflow system is built with the flexibility and expectation that processes, people and responsibilities are going to change.

  • Training/Launch/30/and 60 day reviews

  • 120 day Performance Progress Report with the GM and RR Executive (daily TTM/Recall Report to GM Started) “


How to flow gross from recon to your bottom line

If you still run your recon department on "gut feel" and not metrics, you're losing money. Metrics -- hard performance data -- is the roadmap to moving hidden treasure in your recon department.

Manage recon by the facts and you'll flow significant gross to your bottom line. This article explains how.

How's Your Recon?

Every week, I talk to dozens of dealership managers. These conversations convince me that gut-feel management continues to rule recon. The solution is explaining how recon metrics influence gross.

When the used car manager measures results using retail gross dollars, and not true gross dollars, a false outcome is painted. True gross results when two key recon metrics are subtracted from retail gross, which are holding costs multiplied by each vehicle for each day.

Because many managers aren't clear about holding costs, they tell me their recon is running efficiently, when it's likely not. A large Midwest dealership believed it was managing a five-day recon cycle, which when metrics were applied showed them at 10 days.

Unfortunately, a 10-plus day recon is common, and doing nothing to shorten the cycle is a gross killer.

...Read more on autosuccessonline >


The role of the GM in managing Time-To-Market

While on a recent conference call with a dealer group president, he asked the following question: "What is the single most important factor in successfully managing time-to-market (TTM) in a dealership?" My answer was, "The commitment and active involvement of the general manager". At the time, this seemed to be stating the obvious, but the more I thought about why he was asking this question, the more it occurred to me that, from his perspective, it may not be all that obvious.

Historically, some GM's view recon as a scheduling task and leave it up to the service manager or the UCM to sort it out. This approach works for a while, but eventually the conflict between service and sales turns to finger pointing, and then the GM is forced to take a stand, launching yet another cycle of, "We need to fix recon."

More recently, GM's are seeking hard evidence from other dealers who have not only fixed their recon problems in the short term, but have also adapted to process changes over time. The evidence is quite clear that when the GM stays involved,  TTM numbers drastically improve, making a strong case to not delegate his responsibility.


...Read more on autosuccessonline >


Rapid Recon CEO Dennis McGinn - Shares 5 Tips for Reducing Used Car Time-to-Market

Industry Press release: Palo Alto, CA

The most productive reconditioning department runs like an assembly line, using defined processes, timed steps, and streamlined communications to produce more output, eliminate waste, and get buyers looking at cars online and on the lot five to 10 days sooner, notes Dennis McGinn, CEO of Rapid Recon time-to-market reconditioning workflow software. 

Cutting even five days from this process flows directly to gross, according to NCM Associates, who through its 20 Group clients and moderator experts cites average dealership daily holding cost at $32 per vehicle, based on franchise and market area, says Paul Faletti, Jr. president and CEO of NCM Associates. 

In other words, if a dealer’s average recon cycle is eight to 10 days, reducing it to a five-day cycle adds $96 to $160 in gross margin per vehicle retailed. 

Holding costs erode used car margins, so a faster time to market means more profitable used car operations,” McGinn says. 

He offered these five tips to help used car and fixed operations managers work together more productively and shorten time-to-market: 

Speed repair approvals: Improving communication between recon and the used car manager can reduce bottlenecks. Inability to get a work order approved by the used car manager can delay start of work from a few minutes to a few hours or more.

Set spend pre-approvals: Giving recon some level of authority to proceed with needed work without used car manager approval can keep work flowing uninterrupted. Consider assigning repair dollar “buckets” for vehicles of varying mileage – low, medium, high -- based on the mileage and repair averages of the vehicles you recon.

Structure phase times: Set a time frame for accomplishing specific types of work. Vary times based on the condition of the vehicle. Monitor times and hold staff accountable for adhering to them.

Compensate for vehicle completion time, not per vehicle: Focus compensation on a production-based measurement. A specified completion time window per vehicle will stimulate parties involved to work smarter and harder to move units through recon in fewer days. Consider spiffs for meeting goals; when considering spiffs, remember the larger picture – reducing holding costs, and turns that improve gross.

Equip for quality and manage by clock: Make no allowance for less quality work, but beware of tendencies to over-condition. The additional recon cost is rarely recouped and often contributes little to the vehicle’s sales-ability. Pay attention to visuals such as dings and dents, scuffed wheels, glass and other elements that attract buyers’ notice before any mechanical issues might. 

In any market, time to market is critical. Dealership managers ignore time’s impact on profitability at a high price to the dealership. 

Rapid Recon is the leading time-to-market reconditioning software for new and used car dealerships. Rapid Recon benchmarks and best practices help GMs, used car managers and service managers fine-tune their reconditioning practices to achieve faster time to market that helps retain vehicle gross. 


Why are you letting holding cost kill your gross?

Vehicle reconditioning is an essential process for every used car department. It not only gets vehicles ready for consumers’ eyeballs, but when it gets them frontline-ready fast, it can mean more gross on every sale.

Every used car manager knows this intuitively.  I’m not sure, though, they understand the arithmetic behind this concept of time-to-market. Time-to-market is a span of time from vehicle acquisition – from trade or auction – to its frontline-ready appearance online or on the lot.

I’ve talked to umpteen dealers, used car managers, and service managers about ways to streamline their recon processes. I help them identify bottlenecks and other delays that slow the flow of this work through Inspection, UCM Approval, Parts, Mechanical, Body, Detail and Photos.  

I always ask, what is an acceptable number of days for your time-to-market? Is it 15, 10, 5? If even three days could be shaved off their time-to-market, how might that impact gross? Can five days or more be eliminated? Where the right processes and right recon intelligence is being used, this can, and is, being accomplished with consistency. 

...Read more on autosuccessonline >


Move the sliders to show what your REAL holding costs are. Email the results.



Do you have a Time-to-Market culture?

Time-to-market (TTM) should be the single most important objective that defines your dealership’s culture. This objective should bind all recon resources together from the time vehicles are acquired to the time they hit the front-line. And, to institutionalize a true time-to- market culture, tools for real-time visibility need to be in place in order for a finger-pointing culture to be out of place. 

Having the proper tool to ensure a fully transparent and accountable workplace helps anyone who touches any vehicle do the job more reliably, without effort and with far less uncertainty. 

This long list can include lot attendants, techs, detailers, body shop, sublets, vendors, service management, parts, sales and sales management. However, the most important person in the TTM equation is the GM. He or she definitely sets the tone; the GM is where it all comes together. 

...Read more on autosuccessonline >


When is it time to revamp your workflow?

When is it the right time for your dealership to move to a workflow architecture to manage your recon process?  When the mandate is, “Recon needs to get fixed.”

Here are three principal reasons to support the change.

  1. Lack of accountability     
  2. Cars not getting to the frontline fast enough
  3. Other owner/GM’s from 20-Group meetings, NADA or from NCM20 training hopping onboard to a workflow system for their own recon operations    

The implementation of an automated workflow management system has been a proven game changer in hundreds of recon centers. With this type of system, you could see first hand your own time-to-market metrics. Simply, an automated workflow management system is a software tool used in business to decide when one step has been successfully completed before moving on to the next. There is complete visibility and accountability in real time from recon start to frontline ready. Workflow is the ideal tool in a recon environment, and a total win-win for techs and management. 

Change, however, usually meets with resistance. Prior to workflow, attempts to fix the recon process have been unsuccessful in many dealerships. As a result, a strong reluctance may still exist among some workers to change, even when they know their time-to-market numbers have been unsatisfactory. It comes as a pleasant surprise, when implementing a workflow system, how simple it is to use, and the system will quickly be up and running. With workflow, individuals can follow their own performance and see how it directly impacts the overall efficiency of entire recon process. Both managers and users see the same information. 

We know that better spreadsheets, shared Google docs, re-purposed scheduling apps or other static tools are just not up to the task in a recon environment. The individuals who most need to be accountable will not make the effort to record their work accurately. Unless the users have some direct input and regular visibility to what is being reported about their work, there is no trust in the system. Workflow brings trust into recon. It attaches ownership to one’s work and is documented in real time for all to see — there is a sense of pride and complete transparency. Accountability is not in question. 

 

Steps to take when “fixing recon” becomes a mandate include:

• Requesting a live demo of systems with similar volume and complexity 

• Talking to dealers who have made the move 

• Choosing an existing system to clone or designing your own where you need accountability 

• Training on the new system and then launching it 

• Requiring your software provider include 30, 60 and 90-day process performance reviews 

• Establishing your own baseline “Time to Market” metric after 30 days 

• Adjusting the processes as needed to meet your own “Time to Market” objectives 

 

...Read more on autosuccessonline >


Recon Best Practices for Fixed Operations

Ideally, every dealership should be able to manage recon at a four-to five-day level, independent of volume. Some exceptional stores are able to operate in a three-day range by keeping service at a four-hour average and detail/photos to an eight-hour average. To consistently and verifiably deliver these metrics, there must be an accurate measurement of all vehicles as they complete each step all along their way to the from line.

The two most important factor in any effective recon system are ease of use and balancing the workflow, starting with Fixed-operations, where most of your recon cost take place. If you get this right, a three-to four-day average is within reach.


RECONDITIONING WORKFLOW GOES MAINSTREAM

A typical reconditioning workflow installation has a minimum of three principal stakeholders: the used car manager, the fixed operations manager and the general manager. In the early days of reconditioning workflow, starting around 2010, the scenario was a bit different than today. At that time, the used car manager, in some cases, blamed service as a bottleneck that kept sales from hitting their weekly and monthly sales targets. In the last 24 months, we have seen a definite shift. While workflow initiations from the sales side are still significant, it is now the GM who accounts for more than half of initiatives to find a solution. In fact, a GM, or a group-level manager, is directly involved 90 percent of the time. 

Hardly a week goes by where I do not hear the phrase, “A system is only as good as the people who use it.”  

Simply put, reconditioning is finally receiving the appropriate managerial attention and respect that is warranted based on the value. It has risen to the same level of importance as any other part of the complex job of running a dealership. Underlying this is the fact that technology has evolved to the point where accountability, ease of use and verifiable proof are all direct benefits. 


How do you get Recon under control? Where do you start?

The simple answer is, "Start at the end and work back." But, to accomplish this feat, you need to connect all your processes with anyone who touches your cars -- including subs and vendors -- and then use the ingredients listed below.

First is is a matter of deciding that reconditioning performance is at least as important as any other part of your business; then, the rest is actually quite easy. Switching your processes over to a workflow management system is straightforward and extremely intuitive for all workers to used. Consider the following steps when you are ready to get started:

Adopt best practices based on metrics derived from many thousands of vehicles in order to drive measurement and management of recon.

...Read more on autosuccessonline >

 


Reconditioning - A new bastion of hope - The Future is now

Having met with dealers at NADA, I'm reminded of Dale Pollak's 2010 article "Reconditioning - The Last Bastion of Old School Management." While this is still generally true, there are finally straightforward solutions and verifiable success stories that have remedied this situation. However, getting reconditioning under control and keeping it there takes a lot more then an assault on "old school management."

With paid acceleration in used car sales, the market dictated it's time to abandon inefficient manual practices and transition to new.

Every dealership has a different culture and, with respect to reconditioning where the variables are in a continual state of flux, there are no canned solutions. Dealerships repeatedly try to use a spreadsheet, shared Google doc or even dry-erase board, but the limitations of using these manual tools for such a complicated set of processes is inadequate. It doesn't provide the most critical element within a reconditioning solution: accountability.

..Read the whole story on AutoSuccess online >>


DIALING-IN USED CAR TURNS

The automated software tools associated with Dial A and Dial C are data rich and have been responsible for a majority of dealers to forgo their own "gut feel" on which cars to acquire by converting to sophisticated inventory management solution from either vAuto, AAX or First Look. Unfortunately, there remains a systematic problem in many dealerships at Dial B.

Recon is too fasted paced and too key to depend on such a static tool like a manual spreadsheet.

If you are connecting A to C and still use a manual spreadsheet at Dial B, you are seriously handicapping your overall business and leaving somewhere around two full inventory turns buried in your recon process. This is a huge loss to your bottom line.

Fortunately, reconditioning no longer needs to be the weakest link. A workflow management software solution is now available with mobile and test for on-the-go UCM's it's in real time, Web based and easy for all workers to use.

...Read the whole story on AutoSucess online >>

Rapid Recon Dials in the USM data.png

Reconditioning by the numbers

Are you measuring your reconditioning time to market? If the answer is "no," then your actual all-inclusive number is probubly double what you would like everyone to believe it is. And even worse,you may not even know what your recon team alreadt knows about those numbers.

Every 2.5 days of recon time adds another inventory turn, and the starting average at the low end is typically 10 days when it should be five days.

My previous Autosuccess articles have focused on the importance of knowing where all your recon cars are at all times, whick is possible to  do with a new workflow technology and your mobile phone. Having this time-sensitive information made available right in the palm of your hands enables decision making to be done anywhere, anytime...

...Read the whole story on Autosucess online >>


General Manager Sets the Recon Workflow Standard

Workflow automation is an area of process improvement in which businesses benefit from high efficiency, better time management and a higher level of performance all around. Automation eliminates errors in routing, completion and delivery.  And, it creates an environment where the processes can be completed in a fraction of the time. Basically, work is done faster and smarter with workflow automation.

After your workflow processes are in place and warmed up, management performance will be a reality.  You will be tracking all cars through recon from start to finish and your time-to-market metrics will give you and your recon team real verifiable data.

Hundreds of recon teams across the US have enthusiastically embraced this real-time solution by switching to a workflow process system designed to meet the needs of each dealership or dealership group.  There is now sufficient data verifying that “standardizing” recon on a workflow tool, with user controlled and verifiable metrics is the correct way to establish accountability and drive recon performance.

If you are not convinced about the proof, give me a call - 866.268.3582 - and I will make sure you get the facts first-hand from live customers.  

...Read the whole story on Autosucess online >>