Eliminating Reconditioning Bottlenecks: Four Dealers, Four Approaches, And Four Successes

Reconditioning vehicles is a necessary step in used car sales, but it can also become a bottleneck at your dealership, restricting your available inventory and potentially losing you sales. The dealerships we're about to examine all had issues in their reconditioning efforts, but found solutions to streamline their inventory flow.

• Paragon Honda, the world's largest Honda dealer, recently installed a reconditioning workflow system that uses existing people and processes to provide transparency and accountability from purchase or trade to front-­‐line ready. "Reconditioning performance was always a guess," said Brian Benstock, vice president and general manager of Paragon. "With our new reconditioning workflow application, we now know our efficiency at every step, making possible to add process improvements and eliminate bottlenecks with measured impact. We were up and running in two days."

• Briggs Auto Group of Manhattan, Kansas, sells more than 700 cars each month, but still needed additional capacity while centralizing overlapping resources to control expenses. Russ Briggs the owner, decided to create the position of used car inventory manager to make this work. He has three, one each in Manhattan, Topeka and Lawrence. These new people are responsible for managing the three centralized used car reconditioning locations that support seven franchises and one used car center. One critical part of the success of this new position was installing a pay plan that was backed by verifiable data based on the average reconditioning cycle time of the two to four stores each used car inventory manager supports. After one year, all three centers are in place and performing well, and the largest in April reconditioned 223 cars in 5.6 days average, down 50 percent over the staring point.

• Fred Martin Superstore is the largest used car dealer in Ohio and reconditions more than 100 cars each week. Their business model is also based on inventory turns and as much automation as possible using a single click when each job is finished, including techs, detailers and subcontractors. Every Tuesday, they meet with the reconditioning team with data from their fully integrated workflow system to tune their processes for improved performance. After looking at what could have been better in the last week, they use the current week's buy plan and in-­‐transit times to allocate resources for the current week. Everyone involved in the recon process, including lot staff, have a portion of their compensation based on sales volume and recon cycle time.

• Bergstrom Cars has three stores in Devil's Lake, North Dakota, including Toyota, Chevrolet/Buick/GMC and Ford/Lincoln. All three stores were operating independently of each other. Frequently, one or two stores had cars backed up for days while another store had unused capacity in service, body work or detail. Owner Renard Bergstrom was looking for a way have his three stores share the workload through the inevitable peaks and valleys. He accomplished this using a 30-­‐step Web-­‐based workflow process using "waiting for service," "body" or "detail" steps for each store. The workflow display is color coded so that any car waiting more than one day alerts the managers, and can then be worked on by any store. "At first, there was some pushback because no one wants to give up work," Bergstrom said, "but now the system has been in for eight months and our backlogs rarely get skewed, bottlenecks have become a non-­‐issue and cooperation between stores had never been better."

• All four of these dealers have achieved a level of transparency and accountability that keeps productivity high, helping everyone on the reconditioning team, and has contributed one or more new inventory turns, making the economic benefits to the business substantial.

Dennis McGinn is the founder and CEO of Rapid Recon. He can be contacted at 650 322-­‐0600, or by email at dennismcginn@rapidrecon.com