Before we start this article, I’d like for you to join us in an exercise. Write two things down on a piece of paper. First, write down the path a used truck takes through your dealership from bid to sale. Who touches it? What do they do when the “ball is in their court?” Second, make a guess at how long it takes a truck to pass from the point that you as a dealer take possession of the truck to the point that a truck is truly READY to be sold. You could put this vehicle in a prime spot on the lot and if a customer walked in tomorrow saying they wanted that exact truck you could hand him the keys and send them on their way. That second exercise is measuring what we at KEA Advisors refer to as your “Days to Front Line Ready” metric. One of the FIRST things that we talk to about a dealer when we talk about their used truck department performance is, “What is your average days to front line ready for the department?” Without even hearing your answer, I can make a good guess as to your dealership performance. If your average days to front line ready is between 14-21 days your dealership is probably making money used trucks. If your average days to front line ready is 21- 45 days you’re hovering around breaking even. If you’ve never thought about your days to front line ready, you’re probably losing money. My guess is you’re losing
a lot of money.
So how do you shorten your average days to front line ready? Same way you fix any process. Understand where your trucks are getting held up, understand where time is “leaking” out of your system and fix them! Without knowing your specific situation, here are three areas that we’d look if we were you:
1.
Unit check in and work order creation: At most dealerships, if a used truck is “checked in” at all upon receipt by the dealership it’s done by the salesperson. Sometimes that check in sheet is passed on to the used truck manager, sometimes it sits on the salesperson’s desk. Sometimes the used truck manager passes it on to the service department, sometimes it sits on their desk. Sometimes work begins right away after it gets passed to the service department, sometimes it sits on a desk. Pieces of paper floating around the dealership tend to hide for a while. Our best practice is that every used truck that comes on the lot in trade or purchase is at the very least looked over by your “lot guy” if not a technician. Open the work order for repairs right then and there, even if you aren’t ready to work on it yet. Your business system isn’t built to focus on used trucks moving through the dealership, but it IS built to follow service tickets.
Leverage your business system’s strength and use your WIP to keep track of used truck inventory.
2.
Standardization of used truck repairs: Most of you have operations codes built into your business system to help you increase billing speed and accuracy. What’s your operation code for a DOT inspection and standard reconditioning for a used truck? Don’t have any? How many times does your Service Manager need to email your Used Truck Manager to get his approval for general reconditioning of a used truck?
Every minute that is lost in that communication chain is another opportunity for another job to sneak in front of that truck and push your opportunity to sell this inventory back another day.
3.
Market signaling/ online presence: How many trucks are for sale on your lot right now? How many trucks are for sale on your website? If those numbers aren’t the same, why not?
In 2020 your customers look for trucks online first, if they can’t find your trucks it really doesn’t matter how fast you fixed them. They won’t sell!
Having trouble mapping your inventory’s path? Trying to understand how to use your business system to find bottlenecks? Unsure of where to even start? Give us a call and let’s talk. Want to learn more about used trucks in general? Join us for a free webinar on March 27
th!
