Wednesday, December 2, 2020

Go Find That Car! The Costly Calamity of Misplaced & Idle Recon Inventory

As much as we hate to admit it, we’ve all lost cars – sometimes for days or longer. A car may have been stolen and no one at the dealership was aware it was “missing”, or brand new cars without PDIs were parked in the service lot for an extended time and no one knew about them, or cars have gone “missing” because employees decided to take them home for the weekend or loan them to friends in need. Often, it’s not until a prospect is in front of us or on their way to the dealership that we discover we’ve “lost the car” they are interested in seeing. Whether you are managing hundreds of vehicles scattered across acres of parking lots or a few at disparate locations, if you are using manual processes, it’s impossible to maintain 100% visibility into the whereabouts of each vehicle and inevitable that at some point, one or more will go missing.

Losing any car for an hour or a day costs the dealership money. As far as a vehicle in reconditioning goes, the cost of “lost” or idle recon time has even greater financial ramifications. When it comes to getting a vehicle Retail-Ready, time is money… lost time chips away gross profit as does inefficient processes that are part of a recon workflow mapped out using antiquated methods such as spreadsheets or whiteboards. When you pencil the financial impact of lost cars, idle time, and the related frustration and anxiety, it becomes clear that a solution is warranted.

Related: Putting The Reins On Vendors In Reconditioning Workflows For Higher Gross Profits

Smart recon practices give dealers control of the recon process and visibility into vehicle location and recon progress while equipping managers with time management tools so they can prevent profit leaks from lost or idle vehicle time.

Visibility of inventory should begin at acquisition – the moment the dealership commits to the purchase of a unit. Using software to define clear and specific steps in the recon workflow enables managers to quickly identify idle time issues and prevent bottlenecks as units move from one recon step to the next. The recon workflow should run like a well-oiled machine, with individuals assigned to perform specific tasks within specific timeframes within each step of the process. Advanced recon software, such as ReconVelocity, allows dealerships to build custom recon steps, assign time thresholds for each step, and then to streamline communications between individuals across departments responsible for reconditioning using real-time app notifications.

With its embodied VIN-scanning technology, ReconVelocity pinpoints the last location of a vehicle, while its smart-routing capability facilitates the calculation of the overall Average Idle Time of all recon units in the workflow. This provides managers with the insight they need to adjust processes or individual assignments to reduce idle time, giving pace to the overall recon process.

Managers should strive to keep the average Time-in-Recon between 2-4 days. Eliminating idle and lost time in recon can shave days off a unit’s total recon time, preserving gross profit. Consider that a dealership’s average daily carrying cost can range from $40 upwards to $100. To illustrate the financial potential, shaving five days off the recon process at a dealership that recons 100 units per month with an average daily carrying cost of $40 equates to a savings of $20,000 per month or $240,000 per year.

The dealership’s reconditioning function should run just like the BDC, sales, or accounting functions, with each workflow step being clearly defined and each employee knowing what is expected. With everyone having a clear understanding of expectations for performance, managers can hold individuals accountable for achieving targeted goals. Every employee that has a stake in the dealership’s recon workflow must understand how their input affects the financial success of the dealership.

Karla Guleserian, MSEC
ReconVelocity Recon Expert
June 2020


Did you enjoy this article from Karla Guleserian? Please share your thoughts, comments, or questions regarding this topic with host Jim Fitzpatrick at jfitzpatrick@cbtnews.com.

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Karla Guleserian, MSEChttps://reconvelocity.com/
Automotive Process Implementer | Author | Trainer & Mentor Karla Guleserian is a Recon Expert at ReconVelocity, which provides new and used car dealerships with the most advanced reconditioning software in the industry, giving velocity to inventory turns while maximizing the net return on the dealership’s inventory investment. For more than a decade, Karla worked in a wide range of capacities in automotive dealerships, including Business Development, Fixed Operations, Modern Retailing, and Digital Advertising. In these various roles, she developed and implemented processes to improve internal dealership practices that led to increased operational performance across variable and fixed operations. Karla spearheaded Nissan’s Modern Retailing Beta Program in a small dealer group comprised of four Nissan points. She has taught numerous educational sessions in partnership with Digital Dealer Conference & Expo and has been featured in Digital Dealer Magazine, Auto Success Magazine, and numerous industry case studies. Karla earned a Master of Science in Electronic Commerce and a Bachelor of Science in Technology & Management from the University of Maryland with the highest honors, receiving the President’s Award for Outstanding Academic Excellence. Karla also has extensive experience planning and managing the development, launch, and marketing of high-tech applications across B2B integration, Web-services, digital advertising, and healthcare.

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