Consider two typical dealership reconditioning operations processing 100 cars a month.
One transforms cars using the time-to-line (T2L) recon profit model while the other relies on whiteboards to track each vehicle’s progress. Financially, the difference in incremental gross between the two is $300 per car.
The shop practicing a T2L profit model realizes $30,000 a month in expense reduction and revenue gain by using a system that costs only $500 per month — or, in this example, about $5 per vehicle. This shop takes vehicles from acquisition to sale-ready in as little as 72 hours.
Operationally, T2L makes everyone’s job easier, eliminates finger pointing and puts the GM in the position of setting achievable targets based on verifiable metrics.
I’ve had the advantage of being connected to many T2L successes — along with a few T2L failures — and I want to advise those of you who are on the fence, wondering how financially and operationally significant T2L can be to a general manager.
In last month’s column, “How Does a T2L Profit Model Work?” I summarized critical facets of this recon strategy and promised to elaborate on it throughout 2019. So, with this month’s article, we will further investigate the five aspects of theT2L Success Formula.
Before We Begin
If you think, in any way, that T2L is just another “spreadsheet” technique, please leave that notion behind. Spreadsheets (or whiteboard, Google Docs tracking or other such system) never worked to “fix recon” and never will. A holdover from this old-school thinking is that accountability is the domain of only a few individuals who oversee recon. In reality, each individual having a recon-related task responsibility must be held accountable and have their work trackable in real-time. This workflow must also be accessible by those answerable for your T2L goals.
Scalable and Mobile
The point about a scalable and seamless mobile and desktop app is best made by way of example. Recently, I was in Atlanta and had the opportunity to talk to the used car manager and lead tech of a Toyota store about how they move vehicles from tech inspection to used car manager approval in five minutes.
Techs do their own multipoint inspection and then, with a few menu clicks to the store’s T2L recon workflow software, create the recommended repair orders, including parts and labor. The estimate may include from 10 to 20 items totaling $500 to $3,000.
With another click, with the car still on the lift, this estimate is texted to the used car manager for approval. He or she may be at the desk buying cars, working deals or having breakfast at home, but regardless of where this text is received, items deemed unnecessary to sell this car are unclicked.
This approval approach handles the mechanical work quickly and sets the pace for the cosmetic vendor and any body shop work.
Starting with the techs — whether dedicated, shared or a mix — one-to-one accountability begins at the most expensive phase of recon. Since techs can create the recommended repairs for approval by the used car manager from their station or phone, one click “drops” the car into parts or the next logical task in the workflow, such as other-brand recall repairs, warranty or detail.
Good techs are eager to control their own accountability when you make it easy for them to advance the car and eliminate risk they’ll be blamed for taking too much time.
A continuous process improvement framework is an essential component of a firm T2L commitment. You’ll want to exercise this discipline at least monthly and preferably weekly. It is a culture-building opportunity when you review with the recon team the previous T2L metrics to learn where bottlenecks appear.
The most effective process improvement approach I have seen is a prescheduled 30-minute Tuesday morning meeting with the primary T2L-responsible managers. This approach keeps attention on the resource levels and process changes needed to support T2L expectations.
Every dealership has to tackle T2L in its own way to maintain a best-practices level. No one solution fits all needs, but again, T2L is not a DIY opportunity. The common success factor is the GM’s involvement at some level and the ownership of each step by the team members. This is where you need to make sure you and your team have the most experienced partner vendor to guide your success and a support organization available directly by phone or email.
Last, but by no means least, is ROI. The T2L profit center model makes you happy that T2L is a core metric to your success. This is where the results from well over 1,000 dealerships practicing this profit model come into play.
Using T2L, dealers typically shave five days from their average days in recon or ADR. Two additional turns on 100 cars at $1,500 gross equals $300,000 a year or $25,000 a month — a remarkable ROI for a monthly T2L workflow software cost of $500.
Next month, we’ll continue our examination of the T2L profit center model.
Click here to view more solutions from Dennis McGinn and Rapid Recon.