Find Profits in Processes

Many dealers are doers. They know what needs to be done to provide equipment and service to customers, and they do it. An important step they often miss out on is evaluating how well they provide those things to customers. Doing so can lead to higher profits and better customer service.

The staff at Boones Creek Outdoor Power Equipment Center in Gray, TN, decided they needed to put forth the time and energy to evaluate their processes and implement changes that would bring them out on top. They needed to recover increasing operating costs and knew that raising prices wouldn’t fly with their customer base.

“We needed to increase our profits in a weak economy,” explains Dee Hampton. “We had to find a way to decrease our cost of doing business to achieve a higher profit margin. In this sluggish economy, we knew our customers couldn’t stand a price increase so we had to find a way to lower our cost of doing business.”

Implementation and research

To decrease costs and increase profits, owners Dee and her husband Jerald decided to implement time and motion studies. They continue to evaluate operations throughout the business, looking for ways to save on time and effort while increasing output.

“We do time and motion studies on all our operations,” says Hampton. “We constantly review our processes to ensure maximum efficiency.”

At the start of it all, they spent a lot of time evaluating similar businesses to see how they operated. From there they evaluated what they could and should apply to their own dealership.

“We learned by watching other dealers, our competitors, our distributors and the big box stores,” shares Hampton. “We watched to see how these other companies operated and what worked well for them. We learned something from each of them. Some things we knew wouldn’t work well for our industry, but other things did.”

From the big box stores, they took the cue to monitor inventory with computers, lessen transaction time with a signature capture system, buy in bulk and keep shelves stocked with merchandise. But they were careful to maintain the way they treat customers and provide service.

“We knew we wanted to continue to offer service after the sale and we didn’t want to treat the customer as a number,” says Hampton.

Service and parts

Obviously, the service department is a great place for a dealer to start when looking for improvement. A lot of time can get wasted in this area of the dealership, which is often the busiest. The Hamptons have gotten their turnaround time on repairs down to 24 hours.

“We did the study in the shop and service area as well as in the parts room,” says Hampton. “We needed to improve our time in both areas.”

In their parts department they added a Vidmar cabinet system with all parts assigned a specific parts drawer and bin number. The location of each part is tracked on the computer. The Hamptons are currently in the process of adding on to the dealership with additional warehouse space and a larger parts room. They have four Vidmar cabinets in the parts room now, but will have nine after the expansion is completion.

“This will allow us to inventory additional parts so the customer doesn’t have to wait for us to special order something,” says Hampton, who follows the big box’s lead on stocking a heavy inventory. “We also stock an additional Vidmar cabinet behind the parts counter in the showroom with fast-moving items. By keeping these items close to the counter, the salesclerk only has to turn around and get them instead of making the customer wait as they go into the parts room,” she adds.

They also designated an employee for delivering parts to the technician in the shop. It keeps the technician working and increases the shop’s output.

“Now, instead of a tech having to look up a part, track it down and go back to the shop, we have one specific parts person who takes the work order, looks up the parts, pulls them and takes everything back to the tech,” explains Hampton.

New handheld scanners limit the transaction time between the clerk and technician and the clerk and customer. A signature capture unit at the checkout saves them not only time, but also on the cost of paper.

It’s their increased net profit from these small changes that make a big difference and show them they are moving in the right direction. Improved efficiency has allowed them to be more profitable, and in the end, remain a servicing dealer.

“It has made us a more profitable dealer so we can continue to service our customers,” says Hampton. “We offered great service before, but this has allowed us to be able to continue to offer that great service.”

Employee input

When doing the time and motion studies, they also include staff in the process. Their participation is not only valuable to get a good read on what systems are and aren’t working, but also encourages staff to embrace the change.

“We asked ourselves, ‘How do you get people committed to change?’” Hampton relates. “Staff has to be involved, so we have involved them from day one. We always ask for their suggestions.”

For example, one of their technicians suggested a designated work area for two-cycle equipment with a work bench and tool box just for those products. Now, the technician doesn’t have to hunt for tools or make room to work around the mowers when he has to service a piece of equipment.

In the year ahead, the Hamptons plan to look for more ways to improve efficiency throughout the dealership and specifically in the showroom. Sometimes change can be hard, but they strongly suggest dealers consider it. Making small changes to your business can lead to big improvements in profit later on.

“Look around at your competitors to see how they operate,” says Hampton. “Open your eyes and ears and learn from everybody everywhere. Without change, you are going to end up right where you are now. Change is cheap. Not changing will cost you more in the long run.”