As a purchasing group, we are continually investigating, interacting with and meeting new suppliers and industry experts who have proven they can impact a business in a very positive way. Many of these suppliers have new and innovative approaches to old problems and some are meeting new challenges head on. Since the focus of our articles is to present ideas, processes and approaches to help dealers reduce costs, enhance profitability and mitigate risk, this is a good time to introduce some fresh and interesting opportunities that might have a positive impact in your businesses.

1. Marketing strategy assessment – Based on our experience, dealerships use many suppliers and spend hundreds of thousands of dollars on marketing and sales strategies. Some of those strategies are effective, some are not. We became aware of a uniquely qualified group that will come into your business to assess your marketing and advertising suppliers, your spend and your advertising and marketing strategies in an effort to establish a more effective marketing strategy that goes after your best demographics. The premise of this service is that many organizations have a very disjointed marketing strategy, executed by a number of individuals that may ultimately sub-optimize your marketing and advertising budget, costing you significant dollars and not producing the leads you need to generate additional top line revenue. This proven approach has yielded success in finding the right customers, targeting them with a coordinated campaign and driving new traffic and sales.
2. Shop supply strategy – There are hundreds of shop supply companies out there today that have a range of products and capabilities. Some sell supplies from their truck, others come into your organization, take inventory and place orders, which can be a costly approach. A well known national organization with a long pedigree in the shop supply world is now making significant progress in the auto dealer space bringing high quality products at highly competitive prices, with a business model that is very different from the current vendor managed inventory (VMI) model. This supplier business model is based on the notion that the customer places their own orders, via the Internet for the products they need rather than rely on a supplier representative to perform that function. By taking the middle man out of the equation, inventory levels can be reduced and costs decrease, reducing your overall shop supply expense.
3. Compliance and manufacturer incentive audits – Your organization can lose money in several ways if incentives are not properly administered or applied for. An effective incentive management process consists of three parts: compliance, application and training. The incentive management process is a risk mitigation strategy that is having success in dealerships by ensuring that your deal jackets are correct and that your documents supporting incentives are complete and in compliance. Incentive documentation must be accurate, complete and well documented to support audits and to ensure that incentives that are due to your organization are in fact obtained in a timely basis. This service can save you money if an audit is scheduled and it can also help your organization achieve incentive payments that have not been applied for.
4. DMS audit services – The DMS monthly invoice can be a challenge for most organizations to decipher and review prior to payment. Many dealers implement their own detailed reviews of the DMS bill to ensure that they will are charged accurately for all line items. Many dealers, perform no audit of the DMS bill at all. Additionally, many dealers have learned that not all functionality that they signed up for is actually being used within the dealership and there may be an opportunity to shut off that functionality and reduce costs immediately. The DMS audit service is a service designed to verify invoice compliance with current contract rates, and can be expanded to include a review of internal use of DMS functionality and usage. An audit of the DMS invoice against the contract can reduce costs and provide some peace of mind that a high cost spend category is being managed appropriately.
5. Energy management services – In certain parts of the U.S., energy is deregulated and can be shopped for competitive pricing with price guarantees fixed over time. This organization tracks the markets with sophisticated energy tracking software and makes buy recommendations based on trends and current market activity. This group focuses on the bid process, which is based on market timing using established management protocols. This organization can serve as a buying group for large organizations with large energy needs, or pool many smaller companies together to form a buying group at a different level. Energy is currently deregulated in the following states: CA (lottery), TX, IL, OH, PA, NY, NJ, MA, RI, CT, MD, and the District of Columbia. Energy costs can be a significant hit to the expense line and exploring all options and tweaking an existing strategy, if one exists, can often pay dividends.
6. Identity verification – Dealers frequently hand thieves the keys to a car and watch them drive away. A new, very low cost solution has emerged that will protect dealers from criminals posing as car buyers. This simple solution uses a scanner that quickly and accurately authenticates a customers’ driver’s license and exposes fraudulent photo IDs. If your dealership or dealership group is experiencing losses from these activities, this solution can reduce your losses with a small monthly investment in equipment and software.
7. Dealer pricing tool – The goal of most dealers is to generate traffic to their websites and increase their VDP (vehicle detail page) views. In order to improve overall VDP’s, one of the key components is having the vehicle priced right according to experts. A compelling statistic suggests that Costco sold 300,000 vehicles last year, based on the premise that buyers are looking for the right vehicle, at a fair price, in a relatively quick transaction. This new innovative business will help drive traffic to your store and create the customer check in based on providing a web-site that will provide the best price – your best price, leading the customer into your dealership.
8. Expense management reporting tool – An aggressive expense management strategy depends upon the right information to measure performance and progress against plan. Ideally this information will be detailed at the supplier level rather than just at the G/L level, so management can dig deeper and develop the appropriate strategies. There is a proven product out that interfaces with the DMS system and becomes an indispensable tool for executive management to view vendors by department with general ledger lines, complete with month to date and year to date detail. This tool provides key performance indicators displaying business exceptions for every area of the dealership, plus consolidated financial and operational reporting, including enterprise summaries and dealership department details. This information can be vital to an organization intent on managing expenses and managing improvement strategies.

Summary

Most dealerships are top line, revenue focused organizations. Finding new sources of revenue and new processes and tools to increase top-line sales could be a full-time job with all of the options in the marketplace today. The same can be said of cost reduction ideas and the various strategies used to reduce, manage and sustain cost reductions in over 100 expense categories. Risk mitigation is an important consideration in most dealerships given the regulations, assets and overall exposure a Dealer has in the marketplace. Tapping into new thinking, reviewing new solutions to old problems can yield significant impact to top line revenue generation, bottom line profitability and overall risk mitigation.

If you are interested in receiving more information about these effective strategies to reduce costs, increase revenues and mitigate risk, contact Doug Austin via e-mail at: [email protected] I will be happy to put you in touch with the expert, the supplier or suppliers that can assist you in these areas.