The term “workflow,” as used in the headline of this article, describes a continuum of processes from start to finish. The more organized, assignable and trackable these processes are, the smoother and faster workflow gets done.
Regarding workflow in vehicle reconditioning, the faster the recon team can move vehicles to the sales line, the more efficient and profitable the department’s recon processes are. The ideal Average Days in Recon (ADR) is three days. Getting there is practical and profitable — if you have the right recon workflow accountability system in place.
When we look at the entire used car reconditioning spectrum, from acquisition to vehicle sale, this broad span is called Time To Market (TTM). ADR, which consumes the biggest chunk of TTM, begins when the used car manager moves the cars from the “In Transit” or “Trade Not Cleared” step into a step designated something like “Recon Starts Now” and ends when the vehicle is signed off as “Frontline-Sale Ready.”
For dealerships running at three-days ADR, overall TTM will range from four to five days.
The ADR segment of TTM must be measured, monitored and tracked — and staff held accountable for performing to predetermined production metrics designed to achieve a consistently low ADR.
For years, managers have tried tracking recon’s many individual steps using whiteboards, sticky notes and spreadsheets. Good on paper, bad in practice: There were too many moving parts and too many people to manage. Also, the information was not online accessible so that everyone involved could monitor and track the general flow of who, what, when and where through the shop.
The idea, however, is spot on: Hold managers and staff running reconditioning and affiliated functions accountable for performing and executing assigned productivity outputs, by time and units completed. They should also know their activities are observed, measured and reviewed — on both an individual and team basis — so work performance improves. Cars flow through the shop experiencing fewer delays and bottlenecks. Communication frustrations decrease. ADR declines.
Workflow software automates these processes. It “tags,” follows and provides tracking of and reporting on each step in the flow of mechanical and cosmetic activities you perform to prepare a vehicle for the used car lot. These steps continue through inspection, repair approvals and repairs, including necessary sublet activities, parts requests and outside parts purchases, vehicle photography and final placement on the sales lot.
This solution provides management with highly visible and trackable insight into each step of the work, including who is responsible for that work and how they are performing based on time limits the dealer has set for those steps. Bottlenecks, additional delay points and vehicles taken out of line and now “lost” on back lots or at sublets are identified in real time. Corrections can be addressed immediately, remedying process conflicts and keeping ADR on track.
It is this accountability to a workflow performance the dealer sets that primarily determines recon outcomes — and whether they are profitable for the business or a continuing drain.
When employees have clear-cut, well-defined job descriptions and performance measurements — and know those details are being observed and tracked — they work smarter and faster.
It is not uncommon to learn that non-workflow managed ADR often runs eight to 15 days or more. Once managed by workflow software and strict accountability, times should steadily drop toward the goal of a three-day ADR.
Your ADR either delays or enhances how reconditioning influences your used car grosses. Lowering ADR:
• Increases inventory turn, which means more cars are sold during a month. Every 2.5 days’ reduction in ADR will drive one more turn per year.
• Maintains gross by ensuring more vehicles reach the sales lot having most of their magical 30 days of prime retail sales time available. A vehicle that’s in recon for 10 days leaves only 20 days to sell at maximum gross. After 31 days, profitability drops.
• Reduces holding cost depreciation, a cost every used car incurs from date of purchase to time of sale. Reducing ADR means less depreciation, which erodes less of the true sale gross. NCM Associates reports the average holding cost depreciation in 2017 is $36 per car per day, from the time the dealership acquires a vehicle until it’s sold. The longer it takes a shop to move cars through reconditioning, the more this cost increases.
• Delivers better control of inventory location identification and status in the workflow. Theres no more “lost” inventory on back lots or sublets leading to lost sales and profits.
Workflow accountability software automates the many steps necessary to get used cars ready to sell for maximum gross. Now, each step of the recon processes is visible to everyone:
• The order of steps and individuals responsible
• Time for completion parameters
• Vehicles pulled for parts or sublets
• Every vehicle’s location, on the lot or sublet
• Each advisor, tech or detailer’s project and next project
• Staff notes and other annotations per vehicle
• Next steps in a process and who should be ready to receive that work
• Completed and outstanding tasks per vehicle
• Vehicles having open safety recalls and status of attention to those notifications
• Running costs
• Running ADR
• Running holding costs
• Time moved to photography
• Time and date transferred to the front line
With workflow accountability software running your reconditioning operations, you will reduce reconditioning times toward a three-day ADR goal. You’ll get more cars to the frontline in the same period so turns will increase, depreciation costs will go down and more cars will sell more profitably.