Experience is the best teacher. One of the greatest benefits of the automotive industry is learning successful strategies from the veterans that have perfected those strategies.
Although the dealership empire is very vast around the world, it is still a tight-knit fraternity of professionals who are always willing to share their “best practices” with the rest of us.
Dave Watts, the Vice President and Director of Fixed Operations for Lexus of Richmond, Virginia, has learned a thing or two in his 33-year automotive career, and best of all, he was willing to pass along some of his successful and proven fixed ops processes.
Lexus of Richmond has 35 technicians and 7 service advisors and they average 125 cars per day on the service drive (about 18 per advisor per day).
They have a very impressive fixed absorption rate that has remained above 100% for several years, it is currently at 106%!
Watts and his service team are passionate about efficiency and what he calls “keeping the time bucket full.”
“Our dealership has three inventories: cars, parts and time,” Watts said. “Cars and parts will be there tomorrow, but when time is gone, it’s gone forever.”
Below are just a few of the successful processes Watts has implemented:
- Technician productivity and efficiency take top priority in their service department. When a technician is out of his service bay, he is not producing hours. Therefore, they have eliminated the back parts counter. Not only do they bring the parts out to the tech, they also un-box the parts and stage them in the order they will be installed. I’ve heard of delivering parts out to the tech, but the concept of un-boxing and staging parts is something I’ve never seen before…what a great idea!
- Parts personnel are paid on shop production and efficiency. Wow, you talk about a way to motivate parts people…the more the shop produces, the more money parts personnel make! In the automotive industry, we use money to influence behavior. Not only does this concept give the parts personnel a reason to move quickly, it also helps them realize what a vital role they play in overall fixed operations efficiency.
- Lexus of Richmond has a staff of five people dedicated to the single task of keeping the time bucket full by handling all the inbound and outbound phone calls. All the service appointments are set by this group…not the advisors. This team sends out email reminders, monthly coupon specials, and makes all follow-up calls. This frees up the advisors to do the job they were hired to do: sell service!
- Speaking of selling service, their main emphasis is maintenance, not repair. They average around $750,000 in fluid maintenance services annually. “Frankly, our customers don’t have many problems with their cars and they attribute that to the way we take care of them,” Watts explained. “The cost versus benefit is a scenario that is very favorable to the customers… it saves them money…and that keeps them coming back.”
- Watts likes to keep a group of tech center students on the pay roll. They earn an hourly wage, so it is cost effective; but more importantly, they gain valuable experience while producing great revenue for the dealership. As some of his veteran technicians get older, he uses them in the role of trainer, mentor and coach. The mature techs have the experience and the knowledge, while the tech students have strong backs and eager hearts. It’s a great synergy between the two groups.
- Every now and then, stuff happens—somebody gets upset or a miscommunication leads to customer dissatisfaction. Watts’ strategy is simple: “Customers are too hard to get these days, so we go to great lengths to resolve the issue.” He continues, “We can’t be sloppy with our customers, we must be professional and customer oriented.”
“Let me emphasize again that our entire service operation is based purely on time,” Watts said. “Time is not recoverable or renewable. We are always looking at how we can maximize the most profitable thing we have: technician time.”
Everyone is always looking for anything that gets in the technicians way so that they can get it out of the way…and hence, be more efficient.
Like so many Asian import dealerships, Lexus of Richmond follows the concept of “Kaizen.”
Kaizen is Japanese for “improvement” or “change for the better,” and refers to practices that focus upon continuous improvement of processes in manufacturing, engineering and business management. When used in a dealership application, kaizen refers to activities that continually improve all functions and involve all employees from the dealer principle to the lot porters. By improving standardized activities and processes, kaizen aims to eliminate waste.
In order to continually improve, Watts says every so often they conduct a process “checkup” to see if there is a way to compress the time spent on a task.
Watts concludes, “Everything is done to maximize service capacity without having to spend money on buildings and land!” (Can I get an “amen” from any dealers out there?)
My personal congratulations to Dave Watts, his management team, the parts personnel, technicians, advisors and support staff for a job well done. Thank you for sharing your experience with the rest of us!
If you are reading this and saying “Man, I wish my service department was that efficient,” then let me encourage you to begin implementing these processes in your dealership. If they can do it, you can do it! It works!
