A male donkey or ass is called a jack, a female a jenny or jennet; a young donkey is a foal. Jack donkeys are often used to mate with female horses to produce mules; the biological “reciprocal” of a mule, from a stallion and jenny as its parents instead, is called a hinny: Donkey – Wikipedia
I open with this impolite sham to get the attention of those mates suffering from financial fibromyalgia. Too many are not producing the individual department net profit results needed to sustain the operation. Rather, a losing division is surviving because a neighboring branch is thriving and essentially paying the loser’s bills – hard to be proud of that amigo.
Yet, producing a reasonable net profit isn’t rocket science, or even earth science as far as that goes. It’s a combination of attaining target margin structures, employee productivity, market penetration, expense controls, and proper staffing. These results of these five vital ingredients make up a successful or not profit recipe, and to complicate it further just mucks the view. And this applies to any typical auto dealership department front and back – and even the rental/leasing ops.
Now, here’s the reality when the numbers are in the proverbial tank: The “management history” of a department determines how difficult and how long it will take to structure and successfully conduct the “fix”. Here are a couple actual bodyshop situations I have encountered.
Case One: After an analysis of the overall situation I discovered that two of eight technicians were not producing effectively, thus the eight cylinder bodyshop was running on six cylinders, creating a substantial production deficit of some 25%, which just happens to be the amount of target profit. Also, we had low compression on another cylinder because this cylinder missed a lot of strokes by being late constantly, as well as randomly not showing up (you know who I’m talking about).
We managed to rev up the troops by first replacing the malfunctioning cylinder with a high compression insert, then setting “minimum or else” standards for the remaining two, who suddenly became quite productive. The sacrificial piston had sent a powerful message. Beside a few other areas to shore up, this was not a difficult fix and good numbers were generated in a short period. (Sorry for the engine analogy – it just seemed to fit)
Case Two: Here, there was a history of marginal to poor management decisions, many determined as short-term fixes, which then created long-term negative consequences. Way over-paid metal techs versus the menial insurance rates, unanalyzed complex processes which caused the need for more support personnel than productive ones, little to no security of parts and supplies, a generous handout of stall space per producer at a monthly expense of over $8,000 per stall limiting the available staffing areas, little benefit to the company from the prepper position, overly well-paid and too comfy management, infighting and unhappy everyone, and to top it all off, a poorly designed facility for the application creating a multitude of other issues. Essentially, the facility would have to be twice-sized to just to pay for the well-paid support clique. Ugh.
Case Three: Yuengling Lager and beer goggles …. Wait, sorry that’s for another article.
Binging on change
Since we could not locate the reputed magic wand, this project took a year to completely reverse. This shop managed to denigrate all five of the vital ingredients in the profit recipe. The good news was that all was fixable, provided there was enough commitment from top management to the difficult decisions that were going to have to be made, and thankfully there was. But this type of improvement need is a series of the old adage: “Change is two steps forward and one step back”, which defines that change creates more potentially difficult situations to be dealt with effectively, and no one knows what those will be until the adjustment is made. Unfortunately, too many are defeated by the second round of pushbacks, after overcoming the first. This reality is probably the number one reason managers become comfortable maintainers, and uncomfortable changers. Think of the painless “That’s the way we have always done it” syndrome.
Attaining a reasonable profit is an essential task of every department manager. While profit may be a dirty word to some chumps, it’s used for everyone’s benefit starting with the government taxes. Without it these bozos couldn’t pay their bills without borrowing (oh, yeah that’s right, they do that now), there would be no new equipment, building adds and fixes, bonuses, raises, marketing funds, additional help, and the list goes on. Profit is attainable for just about any department provided the five vital ingredients of the recipe are managed correctly, peppered with some motivation and endurance. No one said it would be a “piece of cake”, like my now learned good friend Mainer Dan would say.
Here’s the reality of fixing any department. Start with a vision. The other day I was with a suffering client, and I asked the department manager to design the personnel makeup of the department starting with a completely clean sheet, including all staffing, locations, payplans, performance objectives, and budgets. He did and after a few massages of his info, this is now the vision that we are targeting.
So, the next steps are to analyze the five vitals to determine how we will progress. If it takes three months, six months, or an intense year, we will march forward until this vision is achieved. Without this detailed image, where would we be going? I guess anywhere would be acceptable, something I witness too much in the dealer world.
If you want to take a look at your service and/or body operation using the five vitals (not to be confused with vittles) send me a note to Ed@NetProfitGroup.com and put on the subject line “Push them vitals my way Pablo” and I’ll send you a nifty little Excel workbook to sift through. Who knows, you might cook up some delicious actions while you sip on your cool Yuengling.
Author: Ed Kovalchick
Ed Kovalchick is the CEO and founder of Net Profit Inc., Alabaster, AL, an international fixed operation consulting and training firm located in Alabaster AL. Mr. Kovalchick and his firm have assisted hundreds of dealers and manufacturers, and conducted workshops throughout the world for thousands of students since 1979. He has written columns for Dealer Magazine since its inception.