Some of the typical questions I have heard Dealers ask themselves are: “How can I cut my Data Processing Expense?”, “What applications are right for my dealership?”, “How can I get more out of my DMS?”, “Who can do this for me if I can’t do myself?” If any of you have ever heard yourself ask any of these questions, you’re not alone and they are all on-going issues Automotive Dealers seem to face every day.
As an Automotive Dealer, whether you are a large or small group, in the public or private sector, one thing that remains consistent is the need to manage your Dealer Management Systems (DMS) more efficiently. As dealers sit and review expenses or look at how they can gain more gross per RO or per vehicle sales, it seems the likely culprit to blame for decreased gross is the computer systems. While the DMS may not always be the problem, it certainly is a topic that is consistent amongst dealers. It is very common place to view data processing expenses as a thorn. Something that never seems to “get better”. While we all feel that the control or power could be slipping away from the dealer – why not at least grab hold of what they can control? Maximizing what they have, cutting back on the excess meat or the unnecessary components that do not contribute to making a dealer profits higher or expenses lower. While there are many different ways to maximizing the DMS, I have listed what I believe to be the top 3 below:
- Expense Control – A review of your DMS bills on a consistent basis
- Application Review – Analyzing your applications and keeping only those that make sense for your organization.
- Standardization – Hardware / Software specs
Obviously, there are more ways to maximize, but these top 3 are a starting point and with a little focus and commitment, can help the dealer reduce costs and gain productivity.
Expense Control – Often, dealers tend to receive their DMS bills and it just looks like it is written in a foreign language. They are at times, not even consistent month to month, but just enough to make it confusing to attempt to review. What typically occurs is dealers negotiate with the DMS provider and enter into an agreement on costs and metrics. What doesn’t always occur, is on an ongoing basis, those costs and metrics remain the same month to month. Whether that is due to clerical or administrative issues, contract timing, delays, or simply inaccurate assessments of what the dealer negotiated. At times the variable, or non-static costs get muddied amid the invoice. Therefore, driving the costs up but making it difficult for the non-technical person to decipher. A large culprit of this example, is Credit Check which is something that can very quickly get out of hand if not controlled and reviewed monthly. Reasons for this could be a direct result of a setup issue, where by all bureaus are checked off to send with each credit bureau agency, when you only need one or two. It could also be a training issue with the dealer, the F&I employee will continue to send the same inquiry to multiple bureaus until that perfect beacon score to be bought is found. All this does is drive the per inquiry fee up unnecessarily. I recently worked with a dealer group that had this particular situation. The dealer wanted to know why their credit check expense was 15% of their total bill. After the assessment, we corrected setups, re-trained some employees and ultimately saved the dealer over 75k annually in just that one correction. This is just one example, if dealers are not looking closely at their DMS bills, they could be spending way more in Data Processing expense than necessary.
Application Review – As dealers negotiate with the DMS vendor upon contract renewal, many will just purchase a suite of applications they feel is standard to getting the point of sale accomplished. The point of sale could be purchasing a vehicle, selling service and parts or posting sales to accounting. While each are needed to make a dealership function, the process by which it occurs doesn’t always get translated to “what is best for my organization”. There are applications for the dealer that sound fantastic, but how long does it take for those applications to fall by the wayside if not properly installed or if the employees are not trained sufficiently in the product? There are also applications that have many add-ons or modular of the standard suites that are not always necessary.
By taking the time to review and understand each application and their potential components will help identify what makes sense in each dealer organization. It can help drive productivity and therefore increase the value-add back into the bottom line. An example of an application that seems to get overlooked, is Electronic Repair Order and Dispatching. Many dealers still today have human capital doing a job that could be automated, i.e. a “dispatcher” walking tickets to mechanics picking and choosing the jobs. By installing a product like this, a manual process becomes an automated one, there is opportunity to increase productivity and over a few short months potentially decreasing head count as well. By simply understanding your organization and knowing what applications are best for the dealership can continue to maximize the DMS.
Standardization – a topic that many dealers do not capitalize on but should, for efficiencies alone. Standardization can mean a lot of different things. Regardless of whether a dealer is a single point or multi point group, standardizing their process in hardware and software can gain a ROI that isn’t always measured in a tangible way. Therefore, not captured immediately, but over time the productivity and consistency that a dealership can gain by streamlining their processes are unimaginable. For example, doing a technology refresh on pc’s and printers will cut back on down time and increase productivity. Printers constantly breaking down, IT staff wasting productivity time on supporting an outdated pieces of equipment, or simply having all software applications consistent and up to date, will put productivity back into the bottom line.
Standardizing your software setups on the DMS can also aide in efficiencies. Especially within a multi group location. There are many aspects of standardization such as chart of accounts, journals, schedules, op-codes, F&I screen, that if done the right way, can give the dealership the power to be able to look at their stores data in a consistent precise way. In the example of a multi group store, dealers look at multiple OEM statements at the end of each month. By standardizing the data, this presents the ability to produce consolidated statements and reports. Regardless of what brand the dealer reviews, it is the same across all stores. This creates efficiencies allowing the dealer to manage the business by the numbers that are accurate and reported in the same fashion. For instance, vehicle sales are comprised of the same values regardless of what OEM statement locations they are held on or contracts in transit are aged and in line the same way through out all brands. This may not be a tangible item to assess, but the overall effect of having your DMS hardware and software consistent puts value add back without realizing it was ever lost.
Performing these 3 key factors will make dealers become successful in maximizing their Dealer Management Systems. Understanding however, some dealers may not know how to do themselves, it still can be achievable. Whether dealers work with existing IT staff, engage the DMS vendor or hire outside IT specialists, it is a start to help them understand what is best for their organization. Maximizing these 3 factors will accomplish that much more to the dealer’s efficiencies, productivity and bottom line in ways they didn’t have prior.