Try these sure-fire way to cut costs, increase performance
While you and your personnel are concentrating the majority of your working day's efforts on making December a successful sales and profit month, you should make time to work on selected items that will improve the organization's performance in 2011.
Business conditions during the past three years have forced each of us to address “the big items” that impact our profitability. But often we get so wrapped up in other areas we have a tendency to overlook the low hanging fruit or certain smaller/less visible items that might reside under our radars.
Warren Buffet said: “I don't look to jump over 7-ft. bars; I look for 1-ft. bars that I can step over.”
Possibly many or most of you are doing the things I will mention here, but hopefully this article will provide a few thought starters that will lead to increased profitability.
Preferred Vendor List: This is a policy businesses have used for years and it remains as viable today as when it was first implemented. Instead of allowing your personnel to purchase similar products from multiple vendors, concentrate your purchases from selected and approved vendors.
In most cases, this will reduce internal and external costs. Plus, you are the one managing the relationship.
From your payables records, have someone create a list of products being purchased by your organization and from whom. Send a letter to each vendor advising them that your organization is creating a preferred-vendor process.
Tell them you will try to concentrate your purchases from their firm, but only if they can provide the level of service you require and the lowest price.
Once you have received the quotes from the potential vendors, you and your team should select the winning provider. Finally, create a document which provides the name of the winning vendors, their products and prices.
Internally, your personnel must respect this and they should not be allowed to use other vendors without management approval.
For those who have this process already in place, this is the month to contact the existing and potential vendors asking for their list of services and best prices for 2011.
Productive Personnel Productivity: Peer pressure is effective. Moreover, there are little if any associated cost. Nowhere is this silent process more effective than in the automotive business.
We post the monthly results and month-to-date sales and gross performance results for our retail variable personnel. But do we extend this process to our productive personnel in our fixed operations? Many dealers do, posting daily and monthly performance for service advisors, technicians and parts sales personnel. Dealerships that do this see productivity numbers increase.
The person responsible for keeping the board up to date is the one who finished lowest in the previous month.
Weekly/Monthly Luncheons: Many dealers schedule times during the month where they have lunch with a few employees.
A typical lunch would include a non-management representative from each department. Not only does this improve the morale in the organization and help personnel in different departments get to know one another better, it helps the dealer keep in touch with what's going on at his or her store.
MBWA: Also known as “management by walking around.” Being visible and getting to know employees better increases performance.
Many dealers daily walk around, visiting with the staff. I've always tried to do this. The results are amazing.
J. Willard Marriott said: “Little things make the big things possible.”
Finally, I wish you a great holiday season and thank you for the support you continually extend me.
Tony Noland is a veteran dealership consultant. He is at email@example.com
Questions or comments about this column?
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