05 Jul Problems and Solutions – Nix the fixed ops frustrations that kill recon responsiveness
Writing this article are two former franchised dealership veterans. We’ve managed Fixed Operations, Reconditioning and Used Cars, and had controller oversight over single and group dealerships. We believe we’re qualified to address a few of the many common and unfortunate practices that drive Fixed Operations Managers nuts.
These practices, likewise, slow the speed of fresh inventory to the used car lot, which means lost gross and which adds friction and waste to reconditioning.
Similarly, these often-conflicting, confusing and silo- or kingdom-defending ways pester everyone involved and cost the entire store profits. Profits drive pay plans — let’s not forget!
The Fixed Operations executive, whether having oversight responsibilities over a single Service Department or over a group, runs a critical part of the business. These executives oversee potentially the most profitable part. They manage the most square footage outside of the lots and parking spaces, and they have responsibility for the greatest number of skilled employees. The pressure is always there for Fixed Ops to dance at others’ pace.
Successful Fixed Ops Managers have (or quickly grow) a thick skin. They’re highly protective of their domain and especially of their people. They juggle a-million-and-one things, from Service appointments to Service bay utilization to fixed-right-first-time standards to customer satisfaction. They’re ultimately responsible, too, for warranty claims and warranty audits, OSHA inspections, EPA regulations, and Parts, cores, Parts suppliers and sublets — and these days, safety recalls.
We’re out of breath just having to list all those duties. Our hearts and helping hands go out to every individual charged with Parts and Labor responsibility for a franchised dealership Service Department.
So let’s review a series of typical problems — and also look at potential solutions for each.
Problem: High energy, little reward. At most dealerships, the Fixed Ops Manager also has the responsibility, but sometimes not the authority, over the Reconditioning Department. For most, used car reconditioning gross is such a small part of the total departmental gross. Managing a Reconditioning Department takes considerable time and energy. Fixed Ops Managers make all this work, not because they’re compensated heavily for it, but because it relates to the GM or owner or to the store’s culture.
Solution: There’s a more methodical, measurable and trackable way to shorten the store’s recon cycle by several days — from a week or more — that can also streamline recon processes and put more accountability into the Fixed Ops Manager’s hands. Fixed Ops Managers who create more productive Reconditioning Operations are very profitable for their dealerships.
SUCCESSFUL FIXED OPS MANAGERS HAVE OR QUICKLY GROW A THICK SKIN. THEY ARE HIGHLY PROTECTIVE OF THEIR DOMAIN AND ESPECIALLY OF THEIR PEOPLE.
Establish repair cost buckets for various makes, models and conditions that the used car manager can pre-approve.
Problem: Blame. When anything goes wrong, it’s the Service Department’s fault. It’s a hard pill to swallow when blame is placed on the Fixed Ops team without justification.
Solution: Mobile 360-degree communications and accountability tools keep necessary information sharing and processes flowing to ensure that key individuals are in the know. That is an excellent way to stop the finger pointing.
Problem: Pricing battles. Variable Managers like to negotiate; it’s why they’re called “variable” managers. Fixed Ops Managers enjoy the order of set pricing and structure. Yet the job requires constant back-and-forth over pricing. Too often, getting things approved — a mechanical or cosmetic repair on an internal vehicle, for example — means a dragged-out delay. Techs suffer because the approval bantering between the Used Car Manager and Service Advisor burns time, so cars fall behind in their reconditioning. Then, mechanical and cosmetic improvements are rushed to get vehicles to the sales lot.
Solution: Reconditioning starts before you buy the car. Know what you’re buying and know its recon cost. Establish repair cost buckets for various makes, models and conditions that the Used Car Manager can pre-approve, so recon costs up to that “bucket” don’t require approval. This reduces friction and keeps recon flowing.
BETTER INVENTORY TURN FACILITATED BY FASTER AND MORE EFFICIENT RECONDITIONING CAN ENSURE THE RIGHT CARS AND TRUCKS, FROM LOCAL MARKETS, ARE IN ABUNDANCE FOR THE SELLING SEASON TO MAXIMIZE GROSS.
Problem: Recon roller coaster. If Variable experienced a negative wholesale month, the following month would be slow for Reconditioning. The Used Car Manager would deny work that should normally be done to recondition a vehicle to cut down on vehicle expense, and then line-ready a slew of half-reconditioned cars. Two months later (turnover), a new Used Car Manager arrives and pulls half the frontline cars and sends them back through Reconditioning to make them right.
Solution: Workflow-based reconditioning ebbs and flows to match market demands and eliminate this waste.
Problem: Communication. Communication among involved parties in a manual recon process is less than it should be. This creates problems. Without good communication among Fixed Ops, Used Cars, Recon and Variable, the head doesn’t know what the tail is doing. Facts useful or necessary to one or more member of the team is communicated to just one member only or to the Service Manager only. The Fixed Ops Manager must know where vehicles are, what’s been approved and what’s being done.
Solution: Improved vehicle and process tracking that automatically alerts those next in line about next steps to get the car more quickly to the sales lot keep communications channels open and people using them communicating.
Problem: The big buy. When trades are scarce, 4x4s from southern states get Used Cars’ eyeballs and so they truck those units in. When they hit, they’re already 15 to 20 days old. You scramble to get this $2 million investment to the front line. You pull line Techs and body people from everyday work to get these vehicles through, yet when they’re done and work dried up, dedicated Techs are left with few flat rate hours. The big buy is stressful on Used Car Techs and stressful on the Used Car Manager.
Solution: Better inventory turn facilitated by faster and more efficient reconditioning can ensure the right cars and trucks, from local markets, are in abundance for the selling season to maximize gross.
Problem: The denied work comeback. It’s common for a Used Car Manager to dismiss work that people can’t see: batteries, alignments, mismatched tires or odor removal, for instance. The female buyer, however, will typically notice these overlooked details, especially when they’re items that might leave them stranded or give them a headache. Unpleasant smells, having to jump-start, a shudder while braking, strange vibrations and a vehicle that pulls hard to one direction are but a few avoidable deal killers. After the customer leaves, a very busy Service Advisor (who has already acknowledged these issues during inspection) faces a disappointed salesperson pointing blame at reconditioning for a job half done.
Solution: Work from a checklist that ensures no mechanical or cosmetic detail is ignored or overlooked. Don’t over-recondition, but tackle items which, if ignored, lose business and retention!
Anthony Greenhalgh (left) and Keith Brice are both Process Performance Managers for reconditioning workflow software company Rapid Recon. In their capacities, they engage daily with auto dealership executives and their key
management staff responsible for used cars, Fixed, and Reconditioning Operations to help them drive cost out of reconditioning and improved used car profitability.