By way of introduction, I’m
Amber Kelzer
, Director of Business Intelligence for KEA Advisors. As I’m newer to the KEA team, I thought I’d share a little of my background. I’ve been with KEA Advisors since April of 2018, but for a decade prior to that, I was in Inventory and Throughput management with an emphasis on process improvement and data analysis. I managed the production and inventory operations of a Regional Distribution Center, similar to a PDC, that moved $3 billion in product annually with a 98% Inventory accuracy and 99% lead time accuracy on 24-hour replenishment. And I did it with the help of BIG Data. My passion lies in understanding areas of opportunity by leveraging data, and then tackling it with process improvement to turn data into
PROFIT
.
Since starting with KEA Advisors, I’ve had to opportunity to complete a full data analysis on many of our clients’ dealerships. The common denominator always comes back to the level of control on Total Absorption. This is the foundation of a dealership’s profitability. The most important thing you can do to strengthen profitability in your dealership is focus on the daily behaviors that impact Total Absorption, or in simpler terms, “Controlling what you can control.”
Here are the Total Absorption formulas, if you’d like to play along.
To calculate Total Absorption Percentage Rate:
(Used Truck Gross Profit + Fixed Ops Gross Profit) / (Total Dealership Expenses-Total New Truck Selling Expenses)
To calculate Total Absorption Dollars:
(Used Truck Gross Profit + Fixed Ops Gross Profit) - (Total Dealership Expenses-Total New Truck Selling Expenses)
Most of the time, if you’re underperforming in Total Absorption, it has to do with culture and leadership. Your strategy, tactics, and reporting identify where you should start with improving this metric. Strong leadership controls the inputs that impact the outcome of Total Absorption.
