Increase Fixed Ops Profits with These Overlooked DMS Reports
by Michael Roppo, Director of Fixed Ops Training and Consulting, WithumSmith + Brown PC
Choose which of the following statements that best describes the way your fixed ops department uses the dealership management system (DMS):
We use the DMS to track numbers so we can review reports and see how we performed at the end of each day/week/month/quarter.
We use the DMS to gather and interpret data, so we can intentionally drive our business performance to the next level.
Most fixed ops directors and managers can agree with the first statement, but far fewer can agree with the second. Yet savvy managers who align their DMS best practices with Critical Performance Indicators (CPI’s) in order to accomplish a specific goal, will always outperform passive DMS users.
To achieve intentional CPI improvement, it’s important to interpret data rather than just view numbers. I often call the end-of-the-month financial statement the “too-late” statement, because it’s too late to change anything when you ignore what’s happening or don’t react to negative trends on a daily and weekly basis.
Following are examples of daily, weekly and monthly reports from which data can be used to improve dealership best practices.
Service Advisor Performance Report
Look at the overall daily total generated by each service advisor. This report shows you the amount of hours, effective labor rate, total dollars of parts and service sold, volume of repair orders (ROs), how many ROs with one line items, parts to labor ratio and more.
These numbers can tell you if a service advisor is routinely selling services for too high a price, which may drive customers to seek competitive bids, or too low a price, cutting into profits.
Service Advisor Exception Report
Next, take a look at the service advisor exception report. The exception report lists any codes that were violated, such as giving a customer indirect discounts or manually changing prices; both common violations when service advisors are just trying to make a deal.
These numbers can tell you if a particular service advisor is a good salesman or if they’re struggling with sales, and will also reveal who is “giving away the store.” If a pattern is apparent, this allows you to communicate with the individual armed with data rather than accusations.
The ability to identify weaknesses in specific areas allows service advisor performance to be linked with specific best practices that need to be changed, or training that may be necessary.
On a weekly basis, the profitability report allows you to identify areas where profitability is good; that is, aligned with or exceeding industry benchmarks. And of course, the numbers will tell you where you’re missing profit opportunities and your profits are lower than industry benchmarks.
Service Advisor Performance Report
On a weekly basis this report will further illuminate any patterns such as single line ROs, whether pricing is processed properly, whether advisors are doing timely billing as opposed to crunch billing, whether ROs are averaging 1.8 hours sold versus 2.0 hours average, and more.
Having established industry benchmarks and minimum goals for every position gives employees goals, allows them to track their performance and identifies specific areas to improve upon.
Let’s say for example, that the performance of a service advisor has consistently decreased for several weeks in a row. When you sit down with him and ask what happened, he may say “I don’t have enough time. I’ve been dealing with other issues.” Together, you can then find ways to give this service advisor more time.
On a monthly basis, review the following:
- Service Advisor Performance Report
- Inventory Control Management
These reports reveal numbers that make up the entire pot of profitability in fixed ops. Managers who actively analyze these reports, identify patterns and use the data to set new benchmarks and improve performance will consistently outperform more ‘passive’ managers who view numbers and blame trends on factors outside their control.
On average, only 18 to 25 percent of a DMS is used. Your DMS is a treasure trove of information that when unlocked, can help your service department improve best practices, streamline operations and achieve higher profits.
Michael Roppo will be presenting “The Power of Aligning DMS Best Practices and CPI Management” at Auto/Mate’s User Summit in September.