Questions & Answers!!
This section may help to clarify some questions related to the type of operation of your business. It can serve to help you better understand how we proceed with our customers, better understand our resources and services, certain terms and / or specific or characteristic aspects of our industry, and to identify possible needs in your company.
01 What is an "Initial Assessment" and how will it help?
It's the right way to start a good development projects!
Its objective is to identify the factors and aspects, operational and / or cultural that currently impact, direct or indirectly the operating performance and at the same time, the operation profitability.
It also serves to identify areas or segments where there is space and opportunity to improve the results of its operation.
Finally, it will act as a reference "radiography" it will also serve to establish future relationships.
02 How long it can take an operational development project?
Months or years! The correct answer will depends on each business. Each company has its own characteristics, situations and needs. They are like different planets but in the same galaxy. Based on these particular differences, TSSPR cannot predetermine the time it will take a particular project. We have conducted projects has tamed only three months and others up to four years, most of them with excellent results regardless of the time taken.
The time will depend largely on the particular needs of your company!
But what is really important is not the time it will take the development; it's the time enjoys the final result!
03 What is a "business process reengineering"?
It is a simple and studied process in which various exchange resources are deployed in order to achieve a systematic, progressive and appropriate adjustment of the daily processes on a type of industry. The adopted adjustment should lead the operation to apply simple, easy and productive processes to achieve the desired goals.
04 What are "operational controls" and how they help us?
Operational controls are the resources that the management team will use to maintain optimal structure and processes, and thus achieve expected production and performance.
They are normaly based on:
Types of products represented
Organizational structure size
Movement or customer traffic
And many other factors......
With proper controls, an operation can achieve and maintain a level of production and optimum performance. Without them, the production, performance and even the future of the company could be at stake.
05 What is the Service "absorption rate"?
The Service Absorption Rate is the ability and capacity of a Parts and Service department to cover the fixed costs of the concessionaire. It’s said that if fixed operations (parts and service) are responsible for paying all still accounts dealership, then this department absorbed 100% of the costs.
So, what would be a good number?
A 100% would be spectacular!! But depending on some economic and regional factors, 65% to 75% could be an acceptable rate.
Do you know what the rate of absorption of your parts and service operation?
Download the calculation form (XLS) attached at the right side so that
can give you an idea of what is the contribution of your service department.
06 Do you sell more services to customers paying (PL) or, in Guarantees (WL)?
Service sales are derived from diverse types of payments. That is, according to who pays the service. Let's see:
If the regular customer pays the service, then it’s a PL (Pay Labor).
If you are a regular customer but with a service covered by warranty, then it’s a WL (Warranty Labor).
If the customer turns out to be the same dealer, or the dealer will pay for the service, then it’s an IL (Internal Labor)
A healthy and safe distribution of these sales at the end of each month should be very close to:
PL - 60 to 75%
WL - 23 to 38%
IL - 1 to 3%
The operations should focus their sales towards the most common daily factors and with direct access to authorization, the customers. Warranty services are generally more limited and their fluctuations should not jeopardize the result of the operation.*
* Note that the averages given above may vary as a result of events or exceptional conditions generated by each line of vehicles and their guarantees management.
07 What is a pricing structure with "Break Escalator"?
The price structure of a Parts and Service operation is one of the most important configurations for any operation. It is the one that establishes in advance the profit margins. The “flat” one we commonly know is:
Cost + XX% = List Price
List - XX% = Sales price
However, to bring your operation the maximum profit, that is not enough. It’s essential to have a more versatile structure. Ones where this configuration allows you to maximize your profit from each part by offering the best price to your customer. It’s known as a "Break Escalator" and we can configure it for you.
08 What is "Parts Obsolescence"?
The industry says that "obsolete" is the classification that is given to a part that has in your inventory more than 12 months without a sale. For us at TSSPR, 12 months result in a very long period for our times! Taking that in count, we suggest you include the portion that is on the way too, the non-moving parts in more than 9 months.
Then, if your cumulative obsolescence portion is more than 2% of the total cost, your operation requires prompt assistance.
When the costs of these parts exceed the operational standards suggested by the industry, they are usually the result of poor execution when performing part inventory controls.
How can we be sure that a part will be really sold?
We know this is not as easy as it’s said! However, we have managed to help operations to achieve "free obsolescence" levels and some others, with levels much lower than industry standards. But, especially, while their sales are doubled.
Likewise, we know that mismanagement of inventory controls results in enormous accumulations of parts, which could most likely end up in the trash, causing huge losses for any operation. Often, this situation leads you to erroneously limit purchases, as a control resource. But keep in mind, that this resource will also limit the purchase of good moving parts. Here are some of the guides that have helped us deal with this issue:
Do not put your operation in the hands of "Superheroes". The operation is very nuanced and complex to be handled only with manual controls that depend on humans only.
You will need a well-configured electronic system to manage your inventory.
Even if looks very similar, never adopt the control parameters of other operations. The inventory control parameters must be adapted and updated according to the needs and type of your operation.
Count with us to help you to properly set up your Parts and Service operation.
09 Do you really believe that just with the help of the manufacturer you will place your company at the highest level of efficiency and performance?
If the answer is No, you are right. In my more than 35 years in this industry I have not yet come across a concessionaire who has a good overall efficiency and performance rating that has not needed an external professional consulting service to climb the Top of Success.
Not at all, most of them have needed the help of several companies in addition to the resources of its manufacturer and operating system.
However, it is important to establish, that without the help of the manufacturer would not be achieved either.
Among the benefits we offer to our customers that never will get from your manufacturer are the following:
Design of work plans based on their social and commercial area culture.
Customer Service Models adapted to your customers.
Processes based on any type of customer, not just by warranty.
Processes adapted to its organizational structure.
Custom-made training for your operational logistics needs.
These and many other benefits are what TSSPR can offer you to bring your company to maximum efficiency and performance.
Don’t wait more! What you have not achieved today only represents an excessive cost to your company. Every day that passes You lose the opportunity to win a lot money.