In order to ensure higher profitability of their operations involving used cars, there is a rapidly increasing trend among the dealers to utilize all their processes and resources in a way that maximizes the performance of their reconditioning operation. By adhering to the industry best practices, it is possible for you to enhance your recon operations. This will improve your cycle time by 50%, get your inventory ready for the frontline within 3-4 days, provide you an additional selling time of one week, and significantly improves the inventory turns.

Reconditioning TTM or time-to-market refers to the speed at which your acquisitions move from the stage of auction or trade to that of being ready for retail. In most of the cases TTM is found to be around 3-4 days comprising of three steps
  • Utilize a properly designed system of workflow that matches with the existing processes to find out the baseline time –to-market.
  • Identification of the bottlenecks and their removal; plan on reducing your baseline by 50%.
  • Consistent achievement of a TTM range of three to four days by ensuring that all your process owners can access the workflow data in real time. This will make sure that all your vehicles reach each of the stages at the correct time.

Let us now deep dive into each of these stages as per the workflow of the TTM software. This software automates the different reconditioning steps as per the customizations made by the dealer and helps meet the desired time parameters. It also improves the flow of communications between the departments for used car, service, and reconditioning.

Identification of the baseline: While identifying your baseline, do expect the same to be higher compared to the team’s idea and your assumption. You can arrive at the true baseline by accurately measuring the actual time spent on each step for each of the cars.

To determine the accurate and current baseline, you may use a clock for the different stages such as inspection, UCM approval, mechanical, body, detail, and photos. You must consider implementing the reconditioning best practices, in case your total is more than or equal to six days. On an average, a dealer spends ten days or more before the workflow is implemented. This results in loss of selling time amounting to as much as a week. Without measuring the TTM, there is a high likelihood of your profitability getting eaten away by your holding cost.

Elimination of bottlenecks: Multiple opportunities will surface out once you start putting a clock on your process of reconditioning. Organization happens to be one of the earliest of bottlenecks to be revealed. TTM brings about accountability, without which, the crew will find it difficult to remain focused on the clock. This, in turn, will have a negative impact on productivity. Make sure that all the steps are completed within the limits of best practice.

Misplaced inventory can be an extremely critical bottleneck in this process. The QR code or VIN code functionality of the TTM software efficiently pulls all details relating to a vehicle upon its release from transport or finance. The same process can be repeated for the vehicles that await special parts out of the recondition process.

Detail and mechanical operations are considered to be two of the most critical steps in the workflow. Therefore, it is useful to start the application of the TTM practices with these steps. Before starting, you must decide on the level of operation required to achieve the TTM best practices. As per these practices, the combination of mechanical and detail must not be more than two days.

The body shop is another place that contributes another day to approximately thirty percent of the cars. Try to build some of your reconditioning best practices into the functioning of the body shop so that the cycle time is increased.

To start marketing your vehicles online, you may immediately work out a workflow for the inventory photography.

It is also important to set standards for the way your used vehicle managers respond to repair approvals. Try to figure out how your overall workflow can accommodate functions like subletting that is done off-site. Finally, set stringent parameters for the work done.

One of the crucial bottlenecks can be removed by subletting of the functions such as detailing of the wheels and tire, painting, and dent repair. In-house sublets can also be a good idea for these functions. Some of the dealers prefer not to start the final detailing of their vehicles until they are on the frontline. However, this process may not work for the dealers of the high-end brands because their customers are extremely conscious about a vehicle’s visual attributes. The other dealers can certainly follow this practice.

Now, list down all the bottlenecks your have identified. Try to figure out the potential time savings that you can gain by eliminating these bottlenecks. By streamlining the process, you should be able to reduce the TTM as well as your holding cost. This cost refers to your overhead’s daily percentage that gets carried by each of the units present in your inventory. As per the calculations made by NCMA Associates, this cost per vehicle amounts to $32 per day until it gets sold. Based on this calculation, you should be able to figure out how much gross you are losing for this. It has been found that an average dealership ends up losing anything between $230,000 and $750,000 per year.

Access in real time: The third and final stage for you is to achieve a TTM range of three to four days consistently. Within this stringent zone of TTM, it is extremely important for the owners of process steps to have real time access to all data relevant to their reconditioning process. Only by ensuring this, it is probably possible to keep the entire crew well aware of where each vehicle is at a given point of time. This practice also helps ascertain whether the vehicles reach the correct stage at the desired time.

It is also important to have a well defined and clearly communicated process that keeps all responsible parties abreast with the status of the different stages. It is particularly important for the stakeholders to know when a specific stage is ready to move over to the next one. This communication can be accomplished by phone, text, or email. With the proper use of the workflow software here, it is possible to exercise tighter communication, management, and control. It has been observed that the whiteboards and spreadsheets are not at all effective.

Best practices also demand a process for the addition of technical notes to the inspection sheets or screens. With the help of these notes, the advisors can be quickly notified about the labor and parts related requirements. As a result, the managers can be quickly alerted just in case their approval is required quickly.

Every dealership must assign ownership for all the steps involved in the workflow. There should be a well documented plan to be followed by each individual involved in the reconditioning process. Make use of texts and email based trouble reports to keep every step owner on the top of his/her personal metrics.

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