Inventory reconditioning cost at a dealership is one of the easiest to control. However, most dealerships are not able to manage these operational costs simply because there is no reliable impartial system to track progress of an automobile through the reconditioning process.
When the reconditioning costs are not managed, the overall cost of inventory acquisition goes up and the business has to suffer with lower gross and net margins.
Below are a few tips that would help you manage costs better
Daily Standup: A daily stand-up meeting is supposed to be a very short meeting where only key managers participate. In this meeting there are three questions to discuss.
What got done yesterday?
What are you working on today?
Do you have any impediments?
You can read more about the daily stand up on Wikipedia
SLAs: Setting up service level agreements(SLAs) between departments helps set expectations between them. This way you can have a workflow in place and have an idea of how long majority of your inventory will take to be reconditioned. This also means that you hold your managers accountable to making sure there are no delays and delays get addressed right away.
Reconditioning Manager/Chaser: This is a key role in the reconditioning process. The reconditioning manager/chaser is at the center of all communication. He/she is responsible for following up on pending inventory and why a department is running behind on a specific unit. This would also be the person to run the daily standup meeting since they are the ones responsible (and compensated) based on how quickly your inventory gets to the front line.
Simple Recon offers a tool to assist the reconditioning manager/chaser track each vehicle through the reconditioning process and provide a dashboard of all inventory across all departments. We also notify departments when work gets assigned and alert managers when they miss their SLA in addition to daily emails with work queue by each department.
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