One of my favorite dealer clients once said to me, “All I get is ‘What,’ stuff all day; I’d like to see some ‘Why’!” He went on to explain that he only gets reports of what is wrong: expenses are high, we’re out of cash, we’re losing money, accounts are past due, paperwork is missing, overtime is high or the inventory is over aged – but what he needs are the reasons why. Then if he knows the “why” he will be better prepared to know what changes to make.
Look at the reports that you’re creating every day. Are they truly “what” reports, or do they also provide dealers and operational managers the reason “why?”
An example of a “what” report is one that lists out in descending order every vehicle in a used vehicle inventory that is over 45 days old. A reaction to this report is to circle the oldest units and tell a manager to get rid of them. This completes the never ending cycle of obtaining used inventory, trying to sell it and then dumping it later at a loss.
A better “why” report would offer data explaining why those vehicles have became over aged. Instead of the typical listing for a used vehicle in your inventory, why not provide more information about where they came from. Did you buy them from the same auction, or wholesaler? Did they came from new vehicle trade-ins or used? Were they appraised by the same manager or purchased by the same buyer? Are they the same makes and models of vehicles that you’ve never been able to successfully sell before and maybe should have wholesaled on day one? Do they have high miles or did they get too much reconditioning done?
This type of report provides value instead of just killing more trees with pages of data. It also brings value to your DMS system that has been faithfully storing this data. Most systems have a field that indicates where a vehicle came from and who appraised it. You might be creative or use some of the features of Excel like Vlookup.
Let’s say that your system shows where the vehicle came from, but not who appraised it. If all your new vehicle deals are appraised by the desk manager which is common in small and medium sized dealerships, then you’d use a Vlookup to the car deals file, looking up the buyer name and populating the sales manager on the deal. You’d use an IF statement to populate your buyer’s name if it came from an auction. It would be also be a lot easier if you’d just have someone enter that information when vehicles are added into stock by looking at the appraisal report.
Another example of a “what” report is our trending of expenses. We are quick to highlight an account that is higher than last month, but what if it was already high last month? This is probably the most dangerous method of analyzing expenses. Instead you need to provide the reason why the expense is that amount. This may mean detailing, regrouping and then investigating the expense.
Jack Ross (my Excel guru friend) developed a way to regroup expenses by base account and vendor. For example if you pay R+R or ADP each month $9,000, this might be broken down between five departments and four accounts: data processing, other supplies, office supplies, and advertising. Departmental accounting is the biggest enemy of expense control! That means 20 entries for one bill in your detail. By regrouping by vendor, you can see the total amount paid to a vendor and then investigate it. The investigating comes from my Item Expense method of expense research.
If you’d like more information on either of these methods, just send me an e-mail.
What are some of the other “why” reports? Here are a few to work on:
- Why do you have comebacks in the shop?
- Why do we miss sublet getting charged out on repair orders?
- Why do we write off warranty claims and obsolete parts?
- Why are there charge backs on car deals from last month?
Make sure you’re getting more “why” reports with answers that will help enable you to make the changes you need to increase profit. Stop creating negative “what” reports, you’ll save paper and time.