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Automotive After Sales Management

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Hj Mohamad Idrakisyah
Hj Mohamad Idrakisyah

Currently, the global and the domestic automotive market is facing unprecedented competition. The breakthroughs in automotive technology from industrial revolution has changed the landscape of the industry where countries from the west, which once dominated the automotive industry are facing stiff competition from new emerging markets from the east. The objective is to bring about improvements in all levels of the after sales operations in workshops. The growth, profitability and sustainability of the after sales dealerships are possible when the business is managed in an effective and efficient manner. The chapters in the book covers all matters pertaining to the after sales operations, written in an easy-to-understand manner for practical and straightforward implementation across dealerships.

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1 Automotive After Sales Management A Practical Guide to Successful Workshop Parts & Service Operations Mohamad Idrakisyah
Preface 9 ............................................................................................................. CHAPTER 1 - THE BUSINESS OVERVIEW 13 ....................................... The Global Market 13 ....................................................................................... The ASEAN Market 13 ...................................................................................... Potential of the After Sales Business 15 .......................................................... Revamping the After Sales Business 17 ......................................................... CHAPTER 2 - THE AFTER SALES BUSINESS PHILOSOPHY 19 ............. CHAPTER 3 - MANAGEMENT BY OBJECTIVES 22 ............................... The Importance 22 ............................................................................................ Service Operating Standards 23 ..................................................................... Parts Operating Standards 24 .......................................................................... Service Capacity Standards 25 ........................................................................ Parts Capacity Standards 26 ............................................................................. Service Performance Standards 27 ................................................................. Performance Measurement Guideline for Service Department 28 ............ Notes on Performance Measurement Guideline 30 ..................................... Sales Performance 30 ....................................................................................... Gross Pro fi t Margin 31 ...................................................................................... Overheads and Expenses Control 32 ............................................................. Technicians Productivity 34 .............................................................................. Technicians Ef fi ciency 35 .................................................................................. Service Advisors Productivity 36 ...................................................................... Facility Utilisation 37 ......................................................................................... Warranty Rejection Rate 39 .............................................................................. Performance Measurement Guideline for Parts Department 41 ................. Achieving Parts Sales 42 ................................................................................... Maintaining Optimum Stock Holding 43 ....................................................... 2
Preventing Stock Damages 44 ......................................................................... Developing Parts Staffs 45 ................................................................................ Performance Planning 47 ................................................................................. Notes on Performance Measurement Guideline 50 ..................................... Organization Charts and Manpower Capacity Requirements 53 ............... Service Department - Job Description, Roles & Responsibilities 56 .......... Service Manager 56 .......................................................................................... Administration Staffs 57 .................................................................................... Workshop Controller 58 ................................................................................... Foreman 59 ........................................................................................................ Service Advisor 61 ............................................................................................. Technician 62 ..................................................................................................... Parts Department - Job Description, Roles & Responsibilities 63 ............... Parts Manager 63 ............................................................................................... Delivery Staff 65 ................................................................................................. Administrative Staff 65 ...................................................................................... Inventory Controller 67 ..................................................................................... Counter Staff @ Wholesale, Retail & Service 68 ............................................ Manpower Recruitment 70 ............................................................................... Pre-Recruitment Process 71 ............................................................................. The Selection Process 72 .................................................................................. Employee Orientation 73 ................................................................................. CHAPTER 4 - PEOPLE DEVELOPMENT 75 ........................................... The Winnings of Training 75 ............................................................................ Managing Talent Pool 77 .................................................................................. Staff Remuneration & Incentives 79 ................................................................ Performance Measurement 82 ........................................................................ 3
Performance Evaluation 84 .............................................................................. Tracking Results and Sharing Information 87 ................................................ Dismissal of Non-Performers 88 ...................................................................... Dismissal Prevention Measures 90 .................................................................. CHAPTER 5 - HEALTH, SAFETY AND HOUSEKEEPING FUNDAMENTALS 92 ............................................................................ Safety and Health Concerns 92 ....................................................................... Safety and Health Coordination 93 ................................................................. The 5 S of Safety and Health Housekeeping 96 ............................................ The Advantages of 5 S Implementation at the Dealerships 99 ................... CHAPTER 6 - SAFETY AND HEALTH CONCERNS 100 ......................... Automotive Environmental Issues 100 ........................................................... Automotive Workshop Environmental Policy 101 ......................................... Workshop Waste Management Control 103 ................................................. Rewarding Staffs for Compliance 105 ............................................................ CHAPTER 7 - FACILITIES PLANNING AND MANAGEMENT 107 .......... The Importance of Service Facilities 107 ........................................................ Dealership Signages 108 ................................................................................. Service Reception 108 ...................................................................................... Service Workshop Area 112 ............................................................................. Parts and Accessories Area 114 ....................................................................... CHAPTER 8 - SERVICE WORKSHOP TOOLS AND EQUIPMENTS 116 . Tools of the Trade 116 ...................................................................................... Special Service Tools (SST) 117 ....................................................................... Maintenance of Workshop Equipments 118 ................................................. Technician’s Hand Tools 121 ............................................................................ 4
CHAPTER 9 - THE WORKSHOP INFORMATION TECHNOLOGY SYSTEM 123 ........................................................................................ Digitalising the Business 123 ........................................................................... Service Information Technology System 124 ................................................. Parts Information Technology System 126 ..................................................... The Advantages of Computerisation 127 ...................................................... CHAPTER 10 - TECHNICAL AND WARRANTY MANAGEMENT 130 .... The Path to Continuous Improvement 130 .................................................... Operating Standards 130 ................................................................................. Reporting Technical Information 132 .............................................................. Sharing Technical Information 133 .................................................................. Warranty Management 133 ............................................................................. Inculcating the Quality Culture 135 ................................................................ CHAPTER 11 - THE SERVICE MANAGEMENT PROCESS 138 .............. Service Procedure 138 ...................................................................................... Step 1: Appointment System 139 ................................................................... Bene fi ts of Appointment System 140 ............................................................. The Responsibility of the Service Manager 142 ............................................ Handling Service Appointment 143 ............................................................... Setting the Appointment Rate 144 ................................................................. Appointment System 146 ................................................................................. Step 2: Reception 147 ...................................................................................... The Responsibility of the Service Team 148 .................................................. The Role of the Service Advisor 148 ............................................................... The Reception Signages & Vehicle Flow 151 ................................................ The Reception Process 153 .............................................................................. Vehicle Parking and Location 155 ................................................................... 5
Step 3: Repair Order Process 156 ................................................................... The Use of Repair Orders 156 ......................................................................... The Contents of Repair Order 157 .................................................................. Responsibilities for Repair Order Management 159 .................................... Step 4: Dispatch and Production 163 ............................................................. Work Process Control 163 ................................................................................ Ef fi cient Job Process Control 166 .................................................................... Ef fi cient Periodic Maintenance Services 167 ................................................. Reducing Idle Time and Increasing Productivity of Technicians 169 .......... Preventing Work Down Time 171 .................................................................... Work in Progress Vehicles 172 ......................................................................... Step 5: Quality Control 173 ............................................................................. Work Quality – Everyone’s Responsibility 173 ............................................... Resolving Repeat Repair Problems 176 .......................................................... Step 6 : Service Delivery 177 ........................................................................... Service Delivery Procedures 178 ..................................................................... Step 7: Post Service Follow-Up 181 ................................................................ Bene fi cial for Customer Retention 181 .......................................................... Priorities and Communication Methods 183 ................................................. CHAPTER 12 - THE PARTS AND INVENTORY MANAGEMENT 187 ..... The Advantages of Good Parts and Inventory Management 187 ............... Just in Time (JIT) Logistics 188 ........................................................................ Stock Order Management 190 ........................................................................ Managing Stock Availability 190 ..................................................................... Managing Stock Replenishments 191 ............................................................ Clearing Dead Stocks and Slow-Moving Parts 194 ....................................... Parts and Inventory Control 196 ...................................................................... 6
Parts Receiving and Handling 199 .................................................................. Working Environment 200 ............................................................................... Work Safety 200 ................................................................................................. The 7 Storage Techniques (Adapted from Toyota) 201 ................................ The 4 S Activities 202 ........................................................................................ CHAPTER 13 - TEAMWORK BETWEEN PARTS AND SERVICE DEPARTMENT 204 .............................................................................. Ef fi cient Parts Supply to Service 204 ............................................................... Special Order Parts 205 .................................................................................... Monitoring Parts Fill Rate 207 .......................................................................... CHAPTER 14 - PARTS AND SERVICE MARKETING 209 ....................... Customer Analysis 209 ..................................................................................... Market Analysis 210 .......................................................................................... Vehicle Life Cycle and Growth Potential 211 ................................................. The Marketing Mix 212 ..................................................................................... Product 212 ........................................................................................................ Price 214 ............................................................................................................. Promotion 216 ................................................................................................... Place 218 ............................................................................................................ Service Marketing Campaign 220 ................................................................... Parts Wholesale Marketing 222 ....................................................................... Managing Parts Dealers 223 ............................................................................ Retaining Parts Dealers 225 ............................................................................. Digital Parts and Service Marketing 226 ......................................................... CHAPTER 15 - SALES AND AFTER SALES COOPERATION 229 ........... Joint Vehicle Acceptance 229 ......................................................................... New Vehicle Maintenance – The Role of the Service Department 230 ...... 7
New Vehicle Maintenance – The Role of the Sales Department 231 .......... Pre-Delivery Inspection (PDI) 232 .................................................................... Service and Sales Relationship 234 ................................................................ Service and Used Car Relationship 237 ......................................................... CHAPTER 16 - CUSTOMER RELATIONSHIP MANAGEMENT 240 ........ The Importance of Customers 240 ................................................................. Customer Satisfaction Index 241 ..................................................................... Managing Customer Complaints 243 ............................................................ Operating Standards - Complaints Management 247 ................................. CHAPTER 17 - GEARING FORWARD - GLOBAL AFTER SALES TRENDS 249 ........................................................................................ Changes in Customer Expectations 250 ........................................................ Next Generation Vehicles 253 ......................................................................... ABOUT THE AUTHOR 258 ................................................................... 8
Preface Currently, the global and the domestic automotive market is facing unprecedented competition. The breakthroughs in automotive technolo g y from industrial revolution has changed the landscape of the industry where countries from the west, which once dominated the automotive industry are facing sti ff competition from new emerging markets from the east. The after sales segment of the automotive industry is gaining prominence over sales. The intensive competition in sales of new cars has reduced pro fi t margins, but on the other hand, this is compensated from the higher pro fi t margin derived from the after sales business. It is common knowledge that the fi rst car is sold by sales division, and subsequent sales comes from the after sales division and hence, the importance of the after sales business cannot be further emphasised. The onus is on the automotive manufacturers to heed to the new importance of the after sales business in reacting to the changes and expectations of customers. This book is written as a practical guide manual on matters relating to the management of the after sales business. The objective is to bring about improvements in all levels of the after sales operations in workshops. The growth, pro fi tability and sustainability of the after sales dealerships are possible when the business is managed in an e ff ective and e ffi cient manner. The chapters in the book covers all 9
matters pertaining to the after sales operations, written in an easy-to-understand manner for practical and straightforward implementation across dealerships. Customers encounter di ff erent after sales experience as a result of di ff erent service standards applied by dealers across the di ff erent geographical locations. As a consequence, dealerships are unable to meet the desires and expectations of customers on a consistent basis. When dealers react to the needs and expectations of customers in various manners, it will be hard for both the manufacturers and the distributors to achieve total customer satisfaction in uniformity throughout all the dealerships. In light of this situation, this book establishes the after sales operating standards to achieve outstanding customer satisfaction in all dealerships. It aims to increase customer retention, dealer pro fi tability, brand image and business sustainability of the automotive company. In order to achieve these standards, continuous improvements initiatives must be taken by all dealers to raise customer satisfaction and retention standards to a higher level. This book details the standards expected from every aspect of the after sales operations. It explains the how part, in putting the process and structure in place and ways to implement these changes that would result in the successful operation of the parts and service business. 10
These standards detailed in this book are well tested business models proven to strengthen corporate image, leading to increased customer retention and greater pro fi tability of the service and Parts Departments. Adopting these standards are prerequisites to sustained growth of the after sales business of the dealerships. This book provides guide towards the implementation of improvement activities to boost the business of the dealership. Dealers could use the 5-step guide shown below to pilot them through their e ff orts. 1. List down the operational areas where urgent improvement would be needed. 2. As resources are limited, prioritise the areas where it pro fi ts the dealership the most. 3. Use the standards to check if your changes are having positive e ff ect on your operation. 4. Make adjustments as required to keep your improvements activities in place. 5. Once the fi rst project is successful, choose the next area on your priority list and begin the process again. Therefore, it is expected of all dealer Service and Parts Managers to make full use of the standards detailed in this book, to carry out after sales improvement activities in line with global standards. When dealerships are professionally managed, e ffi ciently operated and pro fi tably run, it strengthens brand image, ampli fi es market share and paves 11
way for business expansion, both in the domestic and international markets. 
 12
Chapter 1 - The Business Overview The Global Market The total size of the automotive aftermarket was about USD 418 billion in 2020; that breaks down into USD 315 billion for passenger vehicles and USD 103 billion for medium and heavy-duty trucks. The aftermarket industry is expected to grow between 3% and 3.5% over the next three to four years. 1 Chinese automotive aftermarket revenue is expected to record a compound annual growth rate (CAGR) of 7.7%, increasing from USD 290.44 billion in 2017 to USD 523.80 billion in 2025. 2 Towards 2025, the European aftermarket is projected to annually grow at 2.4% in Western Europe and 5.0% in Eastern Europe, and it is expected to reach USD 161 billion by 2025, driven by a growing European carpark and new sales, longer vehicle lifetime and new digital products and services. 3 The ASEAN Market Thailand has long been recognised as the primary manufacturer of automobiles among ASEAN countries and Hedges & Company. US Automotive Market Size 1 Research & Markets. China Automotive After Market Report 2018 - 2025 2 Stern Stewart & Company. The Automotive After Market in 2025. Trends & Implications 3 13
has gained traction in the automobile export industry. The country produced 2 million units in 2018 and exports more than half of its output to more than 100 countries. The industry has seen an 8.7% year-on-year growth in 2018 and over 1 million vehicles were sold domestically. Indonesia bene fi ts from a huge domestic automobile market driven by an emerging middle-class population. The automobile consumer base is expected to grow rapidly, with most purchases occurring in Indonesia’s cities, mainly in Jakarta. Car sales grew by 6% by the end of 2018, at just over 1.3 million units, with 346,000 exported to markets such as Philippines, Saudi Arabia, and Vietnam. Vietnam’s automobile manufacturing industry developed slower than its ASEAN neighbours, but has witnessed exponential growth in recent years. The industry began making progress in the early 2000s and is on course to be one of ASEAN’s fastest growing automobile industry over the next 20 years. According to the Vietnam Automobile Manufacturers Association, over 288,000 automobiles were sold in Vietnam in 2018, an increase of 6% from 2017. Malaysia is an important contributor to automobile manufacturing in ASEAN. In 2018, Malaysian automobile manufacturers produced a total of 572,000 vehicles, with 522,000 of them being passenger cars. But Malaysia’s automotive manufacturing landscape is sharply divided between domestically produced vehicles and its foreign competitors. Automobile producers Proton 14
and Perodua dominate Malaysia’s domestic companies, with Proton recording 64,700 and Perodua 227,200 of vehicles sold in 2018. With the liberalisation of the Malaysian automotive industry, Proton and Perodua face immense foreign competition. Both Honda and Toyota have gained momentum in the Malaysian market with Honda surpassing Proton’s total sales in 2018. 4 Potential of the After Sales Business Traditionally, after sales business is labelled as cost centres and sales as pro fi t centres. This is about to change, as studies show that by 2030, the compounded average growth rate (CAGR) of the after sales market is expected to grow at 8% compared to 4% from new car sales. 5 With the reduction in sales volume and pro fi t margin from new cars, the after sales market has become a signi fi cant source of pro fi t for car manufacturers and their dealers and it has grown to be a more important entrepreneurship model for car and original spare parts manufacturers. 6 The aftermarket is a part of the automotive industry sector comprising of automotive services and parts businesses. The maintenance and repairs business generate about 45% of total aftermarket revenues and wholesale of vehicle parts ASEAN Brie fi ng. The ASEAN Automotive Industry. Top Destination for Manufacturers 4 McKinsey & Company. McKinsey Centre For Future Mobility. Ready For Inspection - The Automotive 5 Market in 2030 Science Direct. The Car After Sales Market Development Trends In The New Economy. 6 15
make up the remaining around 55%. Together, the two businesses are an important part of the overall automotive industry as they deliver substantial revenue of approximately, around 20% of total automotive revenues and higher pro fi tability than most of the industry’s other sub sectors. 7 The automobile market for passenger cars is anticipated to show positive growth as customers are exhibiting increased a ffi nity towards this form of transport. The passenger car segment is estimated to hold more than 80% share in the total incremental opportunity between 2016 and 2026. In replacement and repair, the passenger car segment held more than 60% share in 2015 which is double the share than the commercial vehicle segment. With passenger cars emerging as favourable means of transport, the average kilometres driven per vehicle has increased over time. This increase in kilometres driven per vehicle is closely associated with increased parts wear and tear, which in turn requires timely maintenance and repair. Passenger car segment is projected to expand at a CAGR of more than 10% over the forecast period in Malaysia. The passenger car segment accounted for more than 90.8% of the market value share of the total Malaysia automotive aftermarket in 2016 and is projected to reach 92% by 2026. On the average, customers return for after sales service McKinsey & Co. The Changing Aftermarket Game and How Automotive Suppliers Can Bene fi t from 7 Arising Opportunities 16
twice a year, rendering a higher revenue for the after sales segment compared to the earnings from the sales sector. 8 Revamping the After Sales Business The after sales industry needs to get into the driver’s seat to overhaul the after sales operations or risked being left out from the competition. Great customer service will play an even more critical role in separating the winners who are focused on delighting drivers, from the losers, focused on the nuts and bolts of car service. If you receive good service and value for your money, you will go back to the same place the next time you need their services. So will your customers. Organisations needs to incorporate high work standards into their service and Parts Departments. The moment of truth is when a customer should be able to walk into any one dealership at any location and expect the same high level of service standards. Though slight variance in standards could be expected across the dealership, but basic standards cannot not be compromised. No customer enjoys long waiting time, shoddy workmanship and unexplained charges. We need to put ourselves in the customers’ shoes to discover and solve such sub standards issues for long term business sustainability. The after sales business is a signi fi cant contributor to the fi nancial strength of the automotive industry. Several Future Market Insights. ASEAN Automotive After-Market 8 17
challenges, however, will likely a ff ect this lucrative sector in the future, calling fundamental principles into question. A new paradigm will be required to build service networks and o ff erings that truly meet the needs of tomorrow’s customers. The after sales business contributes as much as 50% to the overall pro fi t of some automakers and the stability of the after sales business also has proved vital for retail networks in times of economic uncertainty. Despite these advantages, however, automakers and dealerships will face a number of challenges in the after sales sector in the future, particularly from the advancements in vehicle quality, digitalisation and electri fi cation that would lead to a decline in service demand per vehicle in most markets. Customer retention at many automakers continues to decline, especially for customers with older cars, who switch more often to independent service providers in search of more a ff ordable and personalised service. In general, most of the after sales business has failed to ful fi l one of its key promises in cementing customer loyalty through superior servicing, thus ensuring the person will purchase another car from the brand. Achieving this goal was the basis for building combined sales and service outlets, in the hope that the service business would generate leads that would bene fi t the new car business, but this has seldom held true. 9 Oliver Wyman. The Next Horizon of Automotive After Sales 9 18
Chapter 2 - The After Sales Business Philosophy Customer satisfaction refers to the creation of customer joy and excitement by providing a level of value that not only satis fi es customers’ expectations on the after sales service, but also exceeds them. The experience of excitement through these services forges an emotional connection that elevates the dealership to become the customers’ preferred choice. In accordance with the Honda philosophy of respect for the individual and the “Three Joys” of buying, selling, and creating, Honda has always worked closely with its dealerships to maximise customer satisfaction. Every step of the way, from purchase to after-sales service, dealerships work together with Honda to earn and maintain the trust of customers. 10 The Toyota slogan of “ fi x it right the fi rst time”, generates the same kind of customer satisfaction that increases customer retention. It keeps customers coming back to the dealership to buy another vehicle, to buy parts, or to get a vehicle serviced. Customers are treated as members of the Toyota family and dealers work toward exceeding their customers’ expectations in the areas of quality, convenience, courtesy Global Honda. Honda’s Approach to Customer Satisfaction 10 19
and care by strictly adhering to Toyota’s business standards. 11 The Proton-Geely partnership views customer service philosophy seriously which is evidenced by their exercise to revamp all their dealership into 4S operation. This decision is made in the best interest of their customers, which also pro fi ts the dealership. The bulk of the existing Proton dealers have already bought into the 4S setup because of the decent pro fi ts normally associated with one stop automotive centres. 12 The core of the Volkswagen cares philosophy is the commitment to care and provide the best for Volkswagen customers. It is Volkswagen’s after sales initiative for the brand to engage with its customers and continuously improve the ownership experience. 13 The mission and vision of Perodua relates with the Daihatsu corporate philosophy, which is “to provide new products and services by anticipating market needs and pursuing a true form of customer satisfaction”. Perodua also pledges to continually expand horizons with boldness and originality, to gain complete customer Toyota Motor Corporation. The Handbook on After Sales Operations 11 Careta. Proton – Let’s Focus on The Real Thing 12 Volkswagen. Volkswagen Launches Volkswagen Cares 13 20
con fi dence with honesty and sincerity and lastly to nurture a lasting relationship with their customers. 14 Malaysian national car makers namely Proton and Perodua carry a huge responsibility to elevate the national car as the preferred brand in the domestic market. As a national asset with 3.4% contribution to the GDP, it has become the symbol of pride for Malaysians. High service quality is the important determinant that keeps the customer returning for a long-term relationship, which subsequently contributes to organisation’s long-term pro fi tability. It provides an opportunity for the national car makers to come back to their top position in Malaysian automotive market. 15 The philosophy of all the automotive industries discussed above are geared towards customer satisfaction and customer retention. It makes business sense as these guiding principles are directly related to market share and pro fi tability of these organization or risk losing it to the competition. 
 Daihatsu. Corporate Philosophy and Corporate Principles: Top Message 14 International Academic Journal of Business and Technolo g y. Automotive After Sales Quality and 15 Relationship Quality in Malaysian National Car Makers 21
Chapter 3 - Management By Objectives The Importance The after-sales human resource management system is a method for establishing the optimum number of sta ff s to maintain maximum performance of the workshop operations. An automotive business is only as strong as its employees. Within the automotive industry, human resources departments are tasked with identifying, recruiting and developing talent that ranges from cashiers to mechanics to managers and supervisors. By remaining aware of the challenges of recruiting the right person for the right job, it helps the dealership to grow and improve the performance of the after sales business. One of the biggest human resources challenges the auto industry faces is the fact that many automotive businesses lack a comprehensive and step-by-step action plan to become an employer of choice. The business struggles with major human resources functions because they do not have a strategic and focused plan that involves hiring, training, delegating, promoting and potential second liners, who could quickly fi ll the position when the vacancies arise. 16 Miranda Morley. Human Resources Challenges In The Auto Industry 16 22
High employee attrition leads to loss of skilled and experienced employees to the competitors. New replacement has fi nancial implications in terms of recruitment, training and development cost. The right human resource management strategies augurs well for business continuity as when the organization builds the people, the people build the business. Service Operating Standards 1. The dealership has to have in place an organization chart that incorporates the all the position within the Service and Parts Departments. It also needs to have a job description list for all these positions, clearly stating the roles and responsibilities expected of the job position. 2. The Service Manager must be accountable to achieve the business target as decided by the management. 3. A recruitment policy in place for the recruitment of apprentice Technicians. 4. Training programs for all levels of employees must be planned and developed a year prior, based on the training need analysis. This would enable the dealership to identify competency gaps in their employee’s performance and design the appropriate training program to help close these gaps. 23
5. Systematic evaluations of standard operating procedures should be conducted to identify and resolve problems in department operations. 6. Employees must be in their uniforms, together with their personal protective equipment (PPE) during work hours. The dealership must set the standards and display the notice for employees to see and comply accordingly. 7. The employee’s compensation package must commensurate or better the standards across the industry. It must be appropriate and motivating, that would encourage employees to remain loyal and contribute positively to the dealership. Parts Operating Standards 1. The dealer should have a written parts organization chart. 2. The Parts Manager should be responsible for setting and achieving Parts Department goals. 3. The Parts Manager should be dedicated to improving customer satisfaction and dealer pro fi tability. 4. The dealer should have a written job descriptions set for all positions in the Parts Department. 5. In addition to normal duties, the job descriptions of some parts employees should include maintaining 4S 24
conditions in the warehouse and following up on special order parts. 6. All Parts sta ff should be trained in storage techniques and other basic parts practices so that they can competently carry out their assigned jobs. Service Capacity Standards 1. Adequate number of service sta ff should be employed in line with the service organization requirements to meet market demands. 2. Service Advisors in charge of service reception should be certi fi ed and quali fi ed for the job. They should handle a reasonable number of Repair Orders, on the order of 15 to 20 Repair Orders per day. 3. The dealer should appoint a Foreman to support the Technicians (approximately 10 per Foreman) and for clear communication with the Service Advisors and Parts Departments. 4. The Dealer should appoint a Job Controller with the responsibility for the allocation and monitoring of all work to the service shop. 5. Assign a person the responsibility for quality control checks of all work carried out in the dealership. 6. The dealership must have an apprenticeship program in place, to recruit and train Technicians, based on their projected manpower needs for the year following. 25
7. The composition of Technicians should be as follows: Apprentice Technicians: about 20% Junior Technicians: about 40% Senior Technicians: about 40% 8. A Cashier should be assigned the responsibility for cash receipt/payments. 9. Assign a Clerk the responsibility for the administration of all warranty matters. Parts Capacity Standards 1. Adequate number of parts sta ff s should be employed to meet the needs of Technicians as well as wholesale and counter customers . 17 2. Keep adequate stock based on the dealerships business volume. 3. Use of minimum stock level and economic order quantity as a stock control method. 4. Use bar codes and stock cards for stock control system. Info Entrepreneurs. Stock Control and Inventory 17 26
Service Performance Standards 1. The Service Manager needs to ensure that there is su ffi cient service manpower capacity to handle the monthly target of total labor hours sold. 2. Service manpower capacity should not exceed service facility capacity. 3. All employees must be subjected to periodical performance evaluation, which must be based on their stated roles and responsibilities, that includes the key performance indicator (KPI) and key result areas (KRA) in relation to their job position. The KRA can be described as the major areas, that requires exceptional performance, so as to survive and obtain a competitive position in the market. The KPI denotes a quanti fi able metric, to measure the performance of KRA. Periodical 18 evaluation facilitates the dealership to take early counter measures on shortfalls to keep employees in track in achieving the set business target. 4. The Service Manager must have in place, plans to manage, monitor and fi x problem areas in the dealership, in line with continuous improvement philosophy. Key Di ff erences. Di ff erence Between KRA and KPI 18 27
Performance Measurement Guideline for Service Department NO KRA KPI MEASUREMENT 1 Sales Performance 100% Actual Sales / Target x 100% Remarks Sales performance must be monitored on daily basis by generating reports. Take necessary actions or submit proposals for countermeasure if business is declining signi fi cantly. 2 Gross Pro fi t Margin > 70% Sales - Cost of Sales / Sales x 100% Remarks Cost of sales can be obtained from the monthly branch Responsibility Report (RR) generated by Head O ffi ce. Study the trend and fi nd some methods to control and maintain a steady cost of sales to achieve high gross and net pro fi t 3 Overheads and Expenses Control < 10% Overheads - Budget / Budget x 100% Remarks Overheads and expenses control will also appear in the monthly RR. Study the trend and prepare some methods of control within budget (AMP) 28
NO KRA KPI MEASUREMENT 4 Technicians Productivity > 85% Sold Hours / Employed Hours x 100% Remarks Ensure workshop loading is also su ffi cient for all mechanics to achieve > 85% productivity. Appointment system and express service concept will provide lots of help 5 Technicians E ffi ciency > 100% Sold Hours / Clocked Hours x 100% Remarks High idle time and unnecessary overtime re fl ects poor e ffi ciency of a mechanic. Don’t allow the mechanics to skip job to achieve high e ffi ciency rate. Ask the Foreman to monitor their mechanics. Try to complete all jobs with the fl at rate time (FRT) 6 Service Advisor’s Productivity > 80% Throughput / Target x 100% Remarks Ensure all Service Advisors carry out customer retention program to retain and expand our customer base. Adequate daily throughput will help the SA achieve their productivity target >80% 29
Notes on Performance Measurement Guideline Sales Performance About 53% of the average dealership’s gross pro fi t comes from the Service Department, but only 30% of sales customers bring their vehicle in for service within the fi rst year of ownership. The number drops to 13% after three years and to 2% after fi ve years. Your unique selling point should be speed, convenience and attractive pricing. Respecting and working around your customers busy schedules are another one, especially when NO KRA KPI MEASUREMENT 7 Facility Utilisation > 100% Throughout Per Bay x Total Bays / Throughput Target Per Day x 100% Remarks Increase workshop loading to maximise the utilisation of the work bays. Don’t park the vehicle o ff roads (VOR) for too long. Study the throughput trend and services frequented by customers. Prepare proposals and submit to Head O ffi ce. 8 Warranty Rejection Rate < 2% Number of Rejection / Number of Submission x 100% Remarks All warranty claims must be processed and submitted in time as stipulated by the Technical & Warranty Dept. Avoid late processing and submission to ensure <2% rejection rate. 30
it comes to delivering on your promises. Being digitally present and using technolo g y to make it easier for your customers to reach you, helps to create a modern experience that makes the dealer’s o ff er more desirable and meets customer’s expectations. There are various CRM tools, after sales platforms and apps that help dealerships retain their service customers. Social media is bursting with conversations about car failures or threads about poor customer service. As customers vent their car struggles and service disappointments, you should be listening closely for opportunities to step in and o ff er a solution to their issues. Many car owners perceive dealership service centres as overpriced. Your best shot at changing that view is to drive awareness through content that highlights the quality of your service and its competitive pricing. Dealerships are most vulnerable to losing their service customers to independent service providers when their warranty runs out. A good way of preventing that scenario is by o ff ering cost down maintenance and repair specials for vehicles out of warranty. 19 Gross Profit Margin In an attempt to increase pro fi t margin, dealerships look to increase sales fi rst. In reality, the shop that reduces its costs by a small percentage has a faster impact on pro fi t margin than one that increases sales by a small percentage. Buzz 2 Get. 10 Strategies for Increasing After Sales Revenue in Dealerships 19 31
For example, assume the dealership has a total revenue of $100,000 and total expenses of $95,000, leaving it a pro fi t of $5,000 or a 5% pro fi t margin. 20 Through tighter expense control, the store reduces its expenses by $5,000 to a total of $90,000 while sales remain at $100,000. The store now operates at a 10% pro fi t margin. Gross pro fi t percentages are very important if you want to show a pro fi t in the service and Parts Departments. You should set your minimum goals to achieve 70% for labor and 40% for parts. Many dealerships are subletting out repairs they could complete themselves. If dealerships have the shop space, they should be completing these repairs themselves even if it is cheaper to outsource the work. The reason being the dealership will make some pro fi t even at the cheaper price, which will go straight to the bottom line as pro fi t and utilise unused workshop space. 21 Overheads and Expenses Control Overhead costs are expenses that are not directly attributable to the automotive repair process. They are a part of the cost of doing business and must be considered when developing future business plans. Some overhead Auto fi xsos. Auto Repair Shop Pro fi t Margin 20 David Keller. Service and Parts Pro fi tability 21 32
costs are fi xed. That is, they don’t fl uctuate from period to period. Other overhead costs are variable in that they will rise and fall due to business mix or volume. The cost of business in auto repair can be classi fi ed as direct cost or indirect cost. Direct costs are practically quanti fi able and relate speci fi cally to the repair process. Labor and parts are direct costs. Expendable supplies used during the repair process could be considered direct but generally the cost of keeping track of them speci fi cally is not practical. So, they’re usually treated as indirect costs. Then the other costs such as rent, utilities are considered indirect. Indirect costs are classi fi ed as overhead. A fi xed overhead cost is the same each accounting period. Rent is an example of a fi xed overhead cost. Variable overhead costs change as business volume changes. For example, an increase in business will result in an increase in electricity usage. Bonuses based on sales volume will change and are therefore variable. Costs that rise and fall with business volume should be projected based on anticipated sales numbers. Sales growth is the objective and a corresponding increase in variable overhead costs should be taken into consideration when planning. 22 Fast Trak. Estimating Future Overheads in Auto Repair 22 33
Technicians Productivity Productivity and e ffi ciency are terms that are frequently used in di ff erent situations to describe the same thing. In order to be pro fi table and o ff er customers great service, the dealership needs to be truly productive and e ffi cient. The Technician e ffi ciency is measured in this way. If we give a Technician a one-hour job that and they complete it in half an hour, then that Technician is 200% e ffi cient. Most Technicians are e ffi cient. When you give them a one- hour job they are usually done in one hour. Sometimes even less. Productivity is a measure of how many of those e ffi cient jobs get stacked on top of each other in an eight- hour day to make eight hours of labor sales or more. The next step will be to fi gure out exactly where the problem lies if your Technicians aren’t at least 85% productive. Technician e ffi ciency could be a cause of low productivity, so what hinders e ffi ciency in Technicians? Technician skill level could stand in the way of our being productive. Are we dispatching the correct skill level work to the correctly skilled Technicians? Do we have a training issue or even a retraining issue? Are Technicians being pulled on and o ff of vehicles and that prevents them from being productive? Are the Technicians standing around waiting for parts, or could they possibly be standing around waiting for okays from customers on the work they have already checked out? Are they waiting for someone to direct them to what to work on next, or have we set expectations, so they already know which jobs to work on 34
next? Is it a car count concern, or is it a concern with the amount of work we recommend on each vehicle? 23 The other possible reason for low Technicians’ productivity could be related to not enough work in the Service Department, the process of booking Repair Orders may not be e ff ective and there could issues with clocking and under billing. 24 Technicians Efficiency The e ffi ciency and pro fi tability go hand in hand. The old management trope about “what can’t be measured can’t be managed” is true. Increased Technician e ffi ciency will almost certainly lead to an increased pro fi t per hour. Track the e ffi ciency numbers and you may discover you are oversta ff ed, that you can take on more work, and which one of your Technician is not up to mark. Look at your systems and procedures, look at your parts ordering process, and why wrong parts are always supplied. Every time a Technician is waiting around for parts, it is killing their e ffi ciency and reducing the number of cars your dealership can work on each day. That means customers have to wait longer and some will get annoyed and not return again. Every disturbance that takes a Technician’s concentration o ff the job in hand uses an extra 10 minutes of his time to Chris Chubby Frederick. Productivity vs E ffi ciency: Which Matters Most 23 Deloitte. KPI Guide for Service Department 24 35
get his head back into the job. So, a 5-minute phone call uses up 15 minutes of his work time in reality. Increasing Technician’s e ffi ciency requires you to look at the whole process that you go through from when a car comes in right the way through to the customer collecting the vehicle. Small improvements at each step of the process will result in greater e ffi ciencies and e ffi ciency equals pro fi t. 25 The other possible reason for low Technicians’ e ffi ciency could be related to job not being allocated to Technicians with the right skill level, possible issues with discounting or costing at the front counter, there are diagnostic issue in the service fl oor and perhaps Technicians and workshop sta ff s are not motivated. 26 Service Advisors Productivity A key position for building gross pro fi ts is that of the Service Advisor. These employees speak with more customers on the phone and face to face than any other employee in your dealership. This is a critical position and requires a de fi nitive plan for recruiting quali fi ed candidates to achieve top performer status. Avoid hiring experienced Service Advisor who has been an underachiever in their previous organization. Pro fi t Boost. How to Calculate Technician’s E ffi ciency? 25 Deloitte. KPI Guide for Service Department 26 36
Recruit aggressively for women, for at least half of your customers are women. 27 In any realistic employer/employee relationship, attainable goals should be established for the Service Advisors. Vehicle throughput measurement is a quick, simple way to gauge whether or not sales goals are being achieved. When throughput goals are established for a Service Advisor, the likelihood of achieving overall goals is increased. Sales target are total sales dollars which can be used in conjunction with car count goals to measure results in achieving planned sales objectives. A Service Advisor can assess progress toward goals real time to make sure objectives are reached. 28 Facility Utilisation The stepping stones for fi nding this answer lies in a better understanding of capacity planning. This requires a deep understanding of the work content, customer demand, and the capabilities of your workforce. The industry average is one work bay per Technician with a turnaround of 4 vehicles per bay per day. If the dealership has 12 Technicians, it needs 12 work bays, and able to complete repairs on 48 cars per day. The need for additional work bays would depend upon the work variation, scheduling and sta ffi ng at the dealership. Don Reed. How Do Your Service Advisors Measure Up? 27 Fast Trak. Evaluating Auto Service Advisor Performance 28 37
This makes generalities or industry standards around bays per Technician ratios di ffi cult to establish and compare one dealership to another. On work variation, it is common practices to allocate multiple bays per Technician on the assumption that if a repair is halted, the Technician in question can walk away from the work and utilise additional space to begin working on the next vehicle while they wait for additional parts to arrive. When the Technician walks away, the work bay and the equipment used becomes dormant and eats into the workshop pro fi ts. For work scheduling, the appointment system is an excellent platform to start when considering what resources to allocate when no-shows, walk-ins, and over cycle repairs do occur. Knowing that these schedule upsets are bound to happen, it is important to consider how much of your available time and talent will be available to handle these events. Once a core schedule of available appointment labour hours is determined, the next focus is to ensure that the right Technician in the right work bay is available to take on each repair. Dedicated workstations and work bays for express lubrication service, wheel alignment and balancing service, vehicles safety inspections and component repairs are common in dealerships and would need to be considered as part of capacity planning. 38
Sta ffi ng is the focus of getting the most out of your existing team in their existing work space before looking to add or subtract the bay allocations. Pull the data of individual Technician e ffi ciencies as well as the overall service e ffi ciencies to identify vehicle over work bay ratio, in relation to dealership target. 29 Warranty Rejection Rate A primary reason for a rejected claims happens when the dealership recommends unnecessary repairs and parts. Most dealerships and repair shops increase their pro fi ts by adding additional repairs to the original problem. Warranties, whether the originally factory warranty or an extended warranty, will replace and repair parts that have failed. They do not replace parts that maybe could fail. Another reason for denied claims is a misdiagnosis or an inability to diagnose a problem by the workshop. According to a study, 73% of repairs are misdiagnosed the fi rst time. The manufacture would not accept if the dealership guesses the problem and replaces good parts at their expense. The manufacturer wants it fi xed right the fi rst time, which could seem unreasonable on the dealership in certain circumstances. A major reason for a claim being denied, is the part is simply not covered under the warranty. All warranties, including the original factory warranty, will only cover exactly what is listed in the contract or warranty booklet. Michael Pokora. How Do I Determine the Right Number of Bays Per Technician? 29 39
Some dealerships may think anything that causes a component to stop working is covered when in a lot of cases it is not. For example, a power train warranty covers the engine and if it stops running you would expect it to be covered. However this may not be the case. The engine is covered but it may have stopped running because of some external modi fi cations by the customer. A power train warranty does cover the engine but not the unauthorised modi fi cations, and in a case like this the repair would not be covered under warranty. 30 Consumer Automotive Research. Why Repair Claims Are Denied? 30 40
Performance Measurement Guideline for Parts Department NO KRA KPI 1 To Achieve Parts Sales T h r o u g h W o r k s h o p , Counter, Franchise Service Dealers (FSD), Franchised Parts Dealers (FPD) Based On Target Set By Head O ffi ce. 100% Sales Achievement 2 To Maintain Optimum Stock Holding To Support 95% And Above Service Fill Rate And Sales Achievement Through E ff ective Inventory Management And Stock Turnover. 1. Prime Locations - 6.0 x 2. Cities - 3.5 x 3. Outskirts - 2.5 x 3 To Maintain Company Assets And Stock Kept In The Branch Based On The Given KPIs:- 1. Stock Variance of Less Than 0.2% Based on the Branch Total Cost of Sales Per Month 2. Stock Damages of Less Than 0.2% Based on the Branch Cost of Sales Per Month 3. N o A s s e t Va r i a n c e (Based on Account Asset List) 4. Zero Warranty Parts Processing Rejection 41
Achieving Parts Sales When car sales increase, demand for auto parts typically rises as well. But to grab your share of the market, you need to incorporate innovative marketing techniques, take advantage of the customers you serve through your body shop or parts dealers and participate in online and mobile NO KRA KPI 4 To Develop Sta ff s To Enable Smooth Performance To Support The Business With Excellent Customer Service And Salesmanship. Productivity 1. Throughput / Number of Sta ff s 2. Turnover / Number of Sta ff s 3. Dollar Per Car Value (DPCR) E ffi ciency 1. M i n u t e s P e r R O Processing 2. Vehicle O ff Road (VOR) / Stock Order Ratio 3. Inventory Management As Indicated in Item No.2 5 To Provide Medium And Short Term Planning And Feedback For The Overall Branch Requirement As Well As Project Planning For E ff ective And E ffi cient Branch Performance S t o c k R a t i o o f P a r t s Movement:- 1. Fast - 60% 2. Medium - 30% 3. Slow - 10% 4. Dead - 0% 42
marketing e ff orts. Adding a few dollars in revenue every day leads to increased annual pro fi ts. Expand your market by creating an online shopping portal for auto parts. By creating a website that search engines point to when consumers look for auto parts, you can begin to increase sales incrementally. Make your website accessible and remove any obstacles customers may face when ordering. A long sign-in process can cause buyers to leave your site for simpler online shopping options. 31 Maintaining Optimum Stock Holding ABC inventory management is a technique that is based on putting products into categories in order of importance, with A being the most valuable and C being the least. Not all products are of equal value and more attention should be paid to more popular products. Although there are no hard-and-fast rules, ABC analysis leans on annual consumption units, inventory value, and cost signi fi cance. The use of ABC inventory management aids demand forecasting by analysing a product’s popularity over time, allows for better time management and resource allocation, helps determine a tiered customer service approach, enables more accurate inventory optimisation and fosters strategic pricing. 32 Periodically review all spare parts classi fi cations, i.e. critical and non-critical since the classi fi cation of a part could Linda Ray. How to Improve Auto Parts Sales? 31 Trade Gecko. Inventory Management Techniques 32 43
change over time, based on replacements/substitutes that may become available. A regular review of spares for excess stock can help to reduce cost too. 33 Preventing Stock Damages Inventory damage is a huge issue in the warehouse business. Product damage accounts for signi fi cant revenue loss for the dealership and the transportation industry. Businesses all across the supply chain su ff er untold losses resulting from crushed, broken, bent and defective goods. Much of it can be prevented. The damage in the warehouse can hurt the dealerships in three major ways: lost pro fi ts, damage to dealer’s business reputation and employee injuries. Taking small steps toward reducing product damage in dealerships are easily achievable. It starts with identifying the causes of warehouse inventory damage and making a concentrated plan for eliminating the hazards that created the loss. Almost all damage to valuable stock happens during movement in the supply chain. Loss by damage occurs for two main reasons. One is that goods are improperly packaged and stored. The other is they are mishandled by workers or equipments used in transit. Some of the initiatives the dealership could implement to for prevent product damage in their warehouse could include, secure loaded pallets, contain and protect bulk Sigma Thermal. 7 Things to Consider for Successful Spare Parts Management 33 44
items, organise and store loaded pallets, move products safely, and maintain a safe warehouse. The best form of prevention is by training the workers, so they are familiar with their tasks. Much of the loss can be cut by being aware of the root causes and reducing or eliminating pain points with the right material handling techniques. 34 Developing Parts Staffs The parts sta ff s in the dealership manage the parts inventory to meet the requirements of the Service Department and external customers. Many may not have the formal education for the job, but they have a great of experience in the running of the Parts Department. Sales skills are important as they are involved in selling parts and accessories to the public at the retail counter. They must be able to identify prospects, set prices, negotiate discounts, and run promotions to build sales. Product knowledge is essential to the job. Parts sta ff s must be able to identify the right part for the job and provide advice on selection and fi tting to service Technicians and retail customers. They must keep up to date with changes to vehicle speci fi cations and any related changes to parts. Parts sta ff s require good inventory management skills and knowledge of computerised stock control systems. They must be able to estimate demand based on levels of work in Cherry’s Industrial Equipment. Tips for Reducing Product Damage in Your Warehouse. 34 45
the service and repair departments and estimate forecasts of sales to wholesale and retail customers. They must maintain su ffi cient stock to meet internal dealership demand so that service or repair jobs can be completed without delays. But they must also balance that against the costs of holding excessive inventory. The scale and complexity of auto parts inventories makes having e ffi cient administrative skills essential. Parts sta ff s must set up e ff ective systems to record incoming and outgoing parts and organise records of warranties, returns and faulty parts. They also must ensure that parts are categorised correctly to reduce the risk of an incorrect choice or delays in fi nding the right parts. Part sta ff s require good purchasing and negotiation skills to control costs and maintain the quality of their parts supplies. They can source parts from a number of sources, including original equipment manufacturers, component suppliers who o ff er parts that are equivalent to original spares, and suppliers that o ff er low-cost replacement parts. Parts sta ff s use their experience to evaluate the quality of merchandise from suppliers and employ their negotiating skills to obtain the best deals. Parts sta ff s must have good customer service skills to deal with customers’ problems and build loyalty. Parts sta ff s must aim to build strong relationships with their wholesale customers so that they can increase and secure long-term revenue. They also must maintain high levels of customer 46
satisfaction so that customers return for their next purchase. 35 Performance Planning One thing that stays the same for any automotive Parts Department or service dealership is that no matter how dealerships manage their inventory, there are always room for mistakes. Not only do stock shortages make it more di ffi cult to maintain productivity and increases con fl ict among departments, but it also has a negative e ff ect on customer satisfaction. Conducting regular inventory counts can help o ff set this problem. While many dealerships practice annual physical inventory counts, reconciling parts more frequently can help dealers ensure inventory accuracy to reduce the likelihood of stock out and identify any problem areas. Another common mistake made by automotive dealerships is a lack of experience or not ensuring their sta ff s are properly trained. While inventory management can seem like a simple task, organising, forecasting and keeping track of your inventory requires a number of skills and often a number of employees with specialised roles. In dealerships that have large inventories, poor storage management can result in many inventory problems, in the areas of storing, tracking and the store layout system. Having proper processes in place and ensuring everyone follows them is a great place to start when resolving poorly managed inventory. Ian Linton. Skills Needed to Become an Auto Parts Manager 35 47
In addition, e ff ectively laying out the parts storage so that parts are organised and placed in the most productive way possible is also important, as for example, placing the most commonly used parts in the most accessible areas. 36 Before the dealerships tries to resolve the inventory issues, they must fi rst be able to identify the issues. They need to look at your inventory records and identify key areas of losses. Areas that could be causing the dealership biggest inventory losses which includes lost sales opportunities due to misplaced parts, lost sales opportunities from insu ffi cient stock, obsolete parts, capital tied up in overstock, and defective parts. Having identi fi ed the inventory issues, short term planning could include fi nding a buyer, using manufacturer return programs, breaking down parts to use the individual components for training or sending for scrap. Having dealt with the short-term issues and identi fi ed the underlying problem, it is time to fi x it. Often times, the solution will uncover itself as the problems are identi fi ed. For long term planning, some solutions will be easy to implement while others may require more time and transition. The important thing to remember throughout this process is that taking the time to follow these steps and implement a real solution will ultimately lead to greater e ffi ciency, Mike Bachara. What Are the Common Inventory Problems from a Poorly Managed Auto Parts 36 Inventory? 48
improved customer service, greater revenues and the overall success of the business. 49
Notes on Performance Measurement Guideline NO KRA MEASUREMENT 1 Sales Mix Total Sales by Type* / Total Parts Sales x 100% Remarks The Contribution of Each Sales Type Towards the Total Sales of The Parts Department. This Is Useful as Some Sales Types Are More Pro fi table Than Others - See Gross Pro fi t Sales. As Such, A Mix That Focuses More on Lower Grossing Sales Types (e.g., Wholesale) Will Need to Be O ff set by Greater Throughput in These Areas. 2 Gross Pro fi t Sales Total Gross by Type / Total Sales by Type x 100% Remarks The Gross Pro fi t Margin for Each Sales Type. Re fl ects the Size of The Dealership's Trade Margins for Each Type of Sale. 3 Monthly Sales Per Employee Total Parts Sales / Number of Parts Employees Remarks The Number of Sales Generated on Average for Each Person Employed in The Parts Department. Indicates How E ff ective the Department Is at Generating Sales Given the Level of Sta ff . 50
Note * Parts sales types include retail, wholesale, workshop, warranty, internal and others. 37 NO KRA MEASUREMENT 4 Monthly Gross Pro fi t Per Employee Total Parts Gross Pro fi t (Including Other Income) / Number of Parts Employees Remarks The Number of Sales Generated on Average for Each Person Employed in The Parts Department 5 Sales Over Salary Parts Salaries Expenses / Total Parts Sales x 100% Remarks How Much You Pay Your Sta ff Relative to Their Ability to Generate Sales. Allows the Dealership to Assess Its Cost Structure Relative to Sales as Salaries Are the P r e d o m i n a n t E x p e n s e i n T h e Department. 6 Externally Generated Sales Retail Sales + Wholesale Sales / Total Parts Sales Remarks The Ratio of Retail (Over the Counter) And Wholesale Revenue Against Internal Sales (Workshop, Warranty, Internal). Indicates How E ff ective the Penetration Is in The Trade and Retail Sales Sectors. A High Value for This KPI May Lead to Reduced Gross Pro fi t Margins but Too Low A Value Could Indicate Unrealised Market Opportunity. Deloitte. Pro fi t Focus. KPI guide. Parts Department 37 51
Note * Cost of Sales = Sales - Gross Pro fi t NO KRA MEASUREMENT 7 Parts Days’ Supply Value of Parts Stock on Hand / Total Parts Cost of Sales* x Number of Working Days in Month Remarks How Many Days the Dealership Can Sustain Sales for Based on Levels of Parts Stock and Current Sales Performance. Indicates How Well Parts Stock Levels Are Controlled. Consistently High Parts Days’ Supply Should Be Addressed as Parts Are Susceptible Towards Ageing and Can Bring About Inventory Obsolescence and Other Costs Associated with Holding Stock. 8 Stock Turn Per Annum 365 Days / Parts Days’ Supply Remarks The Number of Times Your Parts Inventory Can Be Completely Sold and Bought in A Year. A Low Turnover Rate May Indicate That the Dealership Should Assess Its Stock Mix to Address Issues Like Overstocking, Obsolescence or De fi ciencies in The Model Line or Marketing E ff ort. A High Turnover Rate May Signal A Dealership That There May Be an Inadequate Level of Inventory Which May Lead to A Loss in Business Opportunity. 52
Organization Charts and Manpower Capacity Requirements In a given dealership, the manpower requirements for both its parts and Service Department can be determined using its business volume as benchmark. The formula may vary among the di ff erent automotive companies, but it is important to have a basis in place to justify the head count within these departments. The head count should be lean and ideal for optimum business performance. The excess in manpower dilutes business pro fi ts, and at the same time, shortages could also lead to loss of pro fi ts and bad customer experience. Dealerships must be able to balance this equation based on their business needs, justifying their actions through falling back on the formulas set by their head o ffi ce management team. An organisational chart is a diagram which shows the structure of a dealership. The organisational chart graphically illustrates the concept known as chain of command and shows the fl ow of authority and NO KRA MEASUREMENT 9 Return on Investment ( Gross ROI ) Parts Gross Pro fi t / Parts Cost of Sales x Stock Turns Remarks A Measure of The E ffi cient Utilization of Current Investment in Inventory. The Higher the Figure for the KPI, The Better Return A Dealership Is Getting from Holding Stock. 53
responsibility. It vividly depicts the superior and subordinate relationship while it shows the lines of authority and lines of communication as well. An organisational chart is of great support to create and de fi ne the dealerships structure, so that the business objectives may be accomplished accordingly and successfully. It not only helps in dividing the functions of the dealership in an appropriate manner, but it also aids greatly in developing the structure of reporting while guiding the employees properly, as the connecting lines on the chart show who is accountable to whom and who is in charge of what department. It is a great way of improving the performance of the employees and on the other hand, it enables to see whether or not the promotion channels are open for deserving employees. The organization chart is cited as a valuable means of a detailed representation through which the complete dealership may be visualised enabling management to understand how the work fi ts in all the related departments in a dealership. 38 Fareed Siddiqui. Importance of Organization Chart and Its Use in A Business 38 54
The after-sales organization chart for Parts and Service Departments at the dealerships comes in various shapes and forms, again depending upon di ff erent automotive companies. A general organization chart for a mid-sized dealership is shown here and the head count and the job position could either increase or decrease depending on the size of the dealership. 55 Basic Service Department Workshop Flow Basic Parts Department Management Flow
The job description, roles and responsibilities of each job designation within the Service and Parts Departments are also detailed here to serve as a guideline. Service Department - Job Description, Roles & Responsibilities Service Manager 1. Oversee operations to ensure compliance with quality standards. 2. Oversee the hiring and training of an e ff ective service team. 3. Maintain accurate record of all accounts and relevant fi nancial information. 4. Ensure sta ff s comply with environmental laws and regulations. 5. Oversee the procurement of vehicle parts, automotive equipment and various other items required in the dealership. 56 Basic Service Department Management Flow
6. Evaluate the performance of service sta ff in order to acknowledge e ffi cient employees and guide underperforming ones. 7. Listen to customer complaints and assist in addressing their issues and resolving their problems. 8. Oversee the disposal of workshop wastes such as used engine oil and scrapped parts to ensure adherence to health and safety laws. 9. Follow up on customers to obtain feedback and ensure they are satis fi ed with the services received. 10. Attend trainings, seminars and study relevant publications to stay up to date with developments in the automotive service industry. 39 Administration Staffs 1. Provides administrative support to ensure e ffi cient operation of o ffi ce in line with the designated job of a cashier, warranty claims processor, general administration and front desk receptionist. 2. Answers phone calls, schedule meetings and attend to visitors. 3. Carries out administrative duties such as fi ling, typing, copying, binding, scanning etc. JD&RE. Automotive Service Manager Job Description Example 39 57
4. Completes operational requirements through scheduling and assigning administrative projects and expediting work results. 5. Exhibits polite and professional communication via phone, e-mail, and postal mail. 6. Supports team by performing tasks related to organization. 7. Ensures operation of o ffi ce equipment by completing preventive maintenance requirements, calling for repairs, maintaining equipment inventories. 40 8. Provides information by answering questions and requests. 9. Contributes to team e ff ort by accomplishing related results as needed. Workshop Controller 1. Managing Technicians and apprentices, making sure targets and business objectives are met. 2. Working with colleagues to ensure a seamless service for customers. 3. Scheduling work to meet customer needs, taking into account workshop targets, the complexity of each job and the availability of parts. Monster. Administrative Assistant Job Description Sample 40 58
4. Providing estimates for servicing and repairs and setting timescales. 5. Accurately recording Technician time and writing technical reports and recommendations. 6. Ordering correct parts for vehicles. 7. Ensuring warranty standards are adhered to. 8. Liaising with other departments with regards to parts and any other queries as the workshop representative. 9. Making sure all servicing work is carried out correctly, competently and on time, with customer satisfaction in mind. 41 10. Ensuring that all work complies health and safety and manufacturer policy, as well as company standards. Foreman 1. Assist in the recruitment of new Technicians. 2. Provides employee training. 3. Creates and manages Technicians schedule. 4. Oversees daily work of Technicians. In Automotive Blog. Workshop Controller Job Description 41 59
5. Warns, disciplines, or terminates Technicians not working according to dealer standards. 6. Processes customer work orders. 7. Maintains work records and fi les. 8. Assigns duties to workshop fl oor sta ff s. 9. Assists in repair, construction, maintenance or other tasks involved in customer work orders. 10. Reviews work completed to ensure it is up to quality standards. 42 11. Enforces all health and safety policies in the dealership. 12. Ensures that all repair deadlines are met. 13. Assists employees in on site health or safety emergencies. 14. Addresses and resolves customer issues and complaints. 15. Oversees inspection and maintenance of workshop tools and equipments. 16. Fixes equipment and machinery as necessary. 17. Updates and replenishes workshop supplies. Great Sample Resume. Shop Foreman Job Description 42 60
18. Ensures that workshop area is clean, organised, and free of dangerous or hazardous material. Service Advisor 1. Greeting customers. 2. Writing service orders and descriptions of problems and repairs. 3. Translating customers’ repair problems into standard repair terminolo g y. 4. Consulting with Technicians regarding necessary repairs and possible alternatives to expensive repairs. 5. Liaising with Technicians about parts ordering and ensuring parts are available when needed. 43 6. Using products and services knowledge to sell and provide in depth information about available parts and service options to customers. 7. Answering questions about service outcomes and scheduling and booking appointments, vehicle drop-o ff , and vehicle pick-up. 8. Providing customers with information and advice on warranty protections, potential cost savings from regular preventive maintenance. Better Team. Service Advisor Job Description 43 61
9. Managing and overseeing the dealership's work fl ow and schedule. 10. Calling customers to advise them about service changes or car pick-up times. 11. Explaining repairs to customers. 12. Test-driving vehicles to con fi rm service repairs. 13. Maintaining positive customer relationships to ensure repeat business. 14. Ensuring all details on services rendered and costs are related to customers and processing their payments. 15. Handling customer complaint. Technician 1. Perform maintenance and repair on customer vehicles. 2. Identify problems with vehicles using the diagnostic equipment. 3. Explain automotive repairs and issues and provide great customer service. 4. Plan repair procedures using workshop manuals and experience. 5. Test the functionality of parts and systems. 6. Perform basic auto care and vehicles maintenance tasks. 62
7. Maintains vehicle records by recording service and repairs. 8. Perform routine maintenance and general technical work on vehicles. 9. Help keep workshop clean and organised. 10. Maintain a working knowledge of current industry best practices in automotive repair. 44 11. Keep a professional appearance. Parts Department - Job Description, Roles & Responsibilities Parts Manager 1. Monitors the parts inventory and anticipates parts needs in light of future promotions. 2. Responsible for the security of inventory and for analysing the quality of parts. 3. Manage all purchase orders and resolve any discrepancy for all purchase orders. 4. Maintain all warranty claims and assist in all changes and coordinate with vendors for all shipping delays to ensure compliance to time. 45 Better Team. Automotive Technician Job Description 44 School Field Honda. Parts Manager Job Description 45 63
5. Determine part sales objectives and targets and ensure compatibility for same with dealer productivity and provide assistance to all customers. 6. Develop e ff ective parts processes for both internal and external customers and maintain an inventory for all Service Departments and coordinate with various vendors on outstanding parts orders. 7. Works with retail and wholesale customers in considering credit applications, handling complaints, and negotiating prices to ensure customer enthusiasm. 8. Responsible for the pro fi t management in the Parts Department and must examine department fi nancial statements, including expenses and revenue, to ensure the department’s pro fi tability. 9. Review the previous month’s sales/pro fi t performance to determine where improvements can be made. 10. Must time inventory purchases to coincide with sales and special initiatives in order to take advantage of savings. 11. Responsible for training and leading the Parts Department team and for reviewing team performance on a regular basis, according to dealership policy. 64
Delivery Staff 1. Unloading consignments, loading, transporting, and delivering items to customers or businesses in a safe and timely manner. 2. Reviewing orders before and after delivery to ensure that orders are complete, the charges are correct, and the customer is satis fi ed. 46 3. Providing excellent customer service, answering questions, and handling complaints from internal and external clients. 4. Abiding by all transportation laws and maintaining a safe driving record. 5. Preparing reports and other documents relating to deliveries. Administrative Staff 1. Assist to analyse and resolve all parts issues and monitor all requests for branch. 2. Monitor and correct invoices if required and prepare the related paper works. Better Team. Delivery Driver Job Description 46 65
3. Administer and maintain stock of all parts and evaluate all work order and maintain and update information on parts system. 47 4. Maintain inventory of all stock delivered items and prepare appropriate purchase orders as per requirement and remove all obsolete supplies from inventory. 5. Administer and maintain parts inventory for assign locations and manage all purchasing of o ffi ce supplies. 6. Manage all warranty part return from customer and processes all receipts and invoices received from suppliers. 7. Review and perform physical count of all inventory reports and prepare requisitions for all automotive parts. 8. Maintain neat and clean parts room at all times and recommend ways to improve e ffi ciency and reduce downtime and provide optimal level of customer services. 9. Greet all customers and vendors on telephone pleasantly. Great Sample Resume. Parts Clerks Responsibilities and Duties 47 66
Inventory Controller 1. Maintain accurate record of inventory and stock management systems according to set standards. 2. Ensure regulation of in-stock level complies with inventory parameters. 48 3. Develop inventory control models that promote lower cost of sales, shorter lead times, and reduced stock levels. 4. Oversee the standard of merchandising to ensure appropriate presentation of stock. 5. Engage in the forecast of supply and demand to obtain information useful in improving the continuity of supply chain. 6. Oversee the functionality of electronic ordering systems and point of sales systems. 7. Supervise the maintenance of a warehouse and ensure proper arrangement of stock. 8. Carry out stock management operations in line with set product/retail policies and procedures. 9. Oversee the placing of orders and ensure requested goods are delivered on time. JD & RE. Stock Controller Job Description Example 48 67
10. Establish and maintain good working relationships with suppliers to enable easier procurement of products. 11. Work alongside workshops personnel to ensure required products are readily available. Counter Staff @ Wholesale, Retail & Service In a big dealership, it is common to employ dedicated counter sta ff s to serve wholesale, retail and service customers. The volume of business justi fi es the division in functions in order to serve customers e ff ectively. In smaller dealerships, these responsibilities are shared among the limited sta ff s. Nevertheless, the job description is similar across all three roles, which is to serve customers from di ff erent segments on parts related matters. 49 1. Receive and fi ll telephone orders for parts, take product orders from customers and process sales or other transactions. 2. Fill customer orders from stock and place orders when requested items are out of stock. 3. Read catalogues or computer displays to determine replacement part stock numbers and prices and gather customer or product information to determine customer needs. My Plan.com. Parts Salesperson 49 68
4. Receive payment or obtain credit authorisation to process sales or other transactions. 5. Determine replacement parts required, according to inspections of old parts, customer requests, or customers' descriptions of malfunctions. Gather customer or product information to determine customer needs. 6. Assist customers, such as responding to customer complaints and updating them about back-ordered parts. Explain technical product or service information to customers. 7. Locate and label parts and maintain inventory of stock. Monitor inventories of products or materials. 8. Mark and store parts in stockrooms according to prearranged systems. 9. Pick up and deliver parts. Arrange delivery of goods or services. 10. Manage shipments by researching shipping methods or costs and tracking packages. 11. Maintain and clean work and inventory areas. 12. Examine returned parts for defects and exchange defective parts or refund money. 13. Advise customers on substitution or modi fi cation of parts when identical replacements are not available. 69
14. Explain technical product or service information to customers. 15. Place new merchandise on display and set up merchandise displays. 16. Process sales or other transactions. Manpower Recruitment Manpower recruitment planning enables dealerships to have the right kind of employees in the right number in the right place at the right time. The time it takes for employees to be recruited and trained, before they can begin to contribute productively to the goals of the organization, should be considered in the manpower planning process, to ensure that the organization invests its resources e ff ectively. It is an ongoing process in dealerships to recruit new employees, guide and motivate them. The costs of losing knowledgeable and experienced sta ff can be critical to the dealership in terms of training costs for new employees, repeated recruiting costs, and loss of pro fi ts resulting from customer dissatisfactions. The growing complexity of the automotive after sales business means that they are in need of many specialist skills that are very rare to fi nd. Such employees should be recruited and retained because they can be very di ffi cult to replace when they leave. Manpower planning is critical to the dealership and it helps the dealership to foresee its future needs and to plan it well 70
in advance. If done well, it can put the dealership ahead of its competition. Pre-Recruitment Process Prior to new recruitment, the dealership needs to review the justi fi cation of employing new sta ff s. If the surge in business is only seasonal, it is more cost e ff ective to share the additional workload among the existing sta ff s. Sometimes improving a system or procedure can be enough to improve a problem without additional personnel. 50 It is encouraged to give the current employees the fi rst consideration when there is an opening for a promotion, if they possess the necessary quali fi cation and experience required of the job. This practice would sync well with the employees’ career path planning, gives rise to their work motivation and instills sta ff loyalty and retention among the dealers work force. It is also important for the dealership to ensure that it's hiring practices conforms to local employment contract laws as fl outing it could cause irreparable damage to its reputation in the eyes of its customers. After establishing sta ffi ng needs and positions, the dealership may initiate an ongoing recruitment process to ensure that it has su ffi cient and competent sta ff s at all times for the smooth fl ow of its business operations. Nicky Marco. Manpower Planning and Development Process 50 71
If it is for an apprentice position, local automotive technical colleges have a large pool of potential candidates and the best could be shortlisted by obtaining feedback from the college Principal. For non-apprentice positions, and in the absence of internal talents, the dealership may advertise for external candidates. The advertisement in relation to the vacant position must comprise of details regarding the dealership (size, range of services, working atmosphere, management style, location), information regarding the post to be fi lled (main tasks, responsibilities, working hours, opportunity for advancement), the description of ideal candidate (quali fi cations, skills and experience), information regarding compensation and bene fi ts (salary, holidays, bonuses, sick-leave bene fi ts, training), and information regarding how to apply (contact person and number , business address, phone/fax numbers, and submission deadline). The Selection Process Prior to assessing applications for suitability to a position, selection criteria will be developed by the immediate Manager. The selection criteria will be based on the relevant skills, experience and quali fi cations required of the job. Past employment history and referee checks should also be taken into account in shortlisting the right candidate. A selection panel should be formed to conduct interviews with applicants short-listed by the immediate Manager. The panel ought to be well versed on matters relating to the job 72
to enable them to identify and select the right person for the job. When interview is conducted by the Human Resource department without the participation of the user department, more often than not, wrong candidates get selected and this could later cause potential manpower problems at the dealership. Proper selection and placement of employees lead to growth and development of the dealership. The level of services customers experience at the dealership can only be as good as the capabilities of its employees. The hiring of employees with the right talent and skill results in the swift achievement of dealership’s business goals. Employees who are satis fi ed with their jobs often tend to have high morale and motivation to perform better. 51 Employee Orientation The dealership should establish an employee handbook which contains the rules and regulations practiced in the dealership. It should also cover information on company bene fi ts, pay dates, lunch and other work breaks, basic employment laws and acts and more. The book should provide the employee with a signature page that outlines that he or she has read and understands Toppr. Human Resource Management. Selection Process 51 73
what is outlined in the handbook. This procedure that must be completed by the employee before they start work. 52 The job orientation allows employees the chance to feel comfortable within their new teams, departments, and roles within the company. After being introduced to immediate superiors and colleagues, the new employee must be given information with regards to the responsibilities and coordination with other sections and departments, tools, equipment and uniforms, work safety, risk of accidents and environmental protection, and dealership policies, bene fi ts and procedures. Miranda Brookins. Example of an Orientation Program for New Employees 52 74
Chapter 4 - People Development The Winnings of Training Dealerships must take serious view on the importance of training their employees, so they are equipped to work on the constantly changing work environment. Training at the dealerships must be an ongoing process as frequent changes in the automotive technolo g y and repair methods requires re-training. 53 A holistic training system helps dealership to keep pace with automotive technological advancements, maintain customer satisfaction, attract and retain quality employees, that helps to maintain a high level of employee morale. Training at the dealership should be based on the training needs analysis and implemented all year long. The training framework should be designed to address weak points in the dealership, changes in sta ff , new products, etc. It should also identify who requires training, what is the most e ff ective form of training, and when is the best time for training. Alternatively, the dealers could also have in place an in- house training program that could be integrated with the manufacturers training program. For example, if the Foreman receives air-conditioning training from the manufacturer, back at the workplace, the Foreman should provide on-the-job training to other Technicians. This is an After Market Business World. The Importance of Retraining Auto Technicians 53 75
inexpensive way to increase the skill level of all Technicians in the dealership, enabling them to provide quality repairs to customers. Generally, employee training tends to receive little importance as dealers are so focused on meeting business targets. Employee training are either delayed, postponed or outrightly cancelled, in order to get employees to work on hitting their monthly sales targets. As a result, the skill and technical levels of their Technicians are far back in relation to their years of service. The dealership needs to put training on the calendar and make it a priority to certify both their front and back liners. It makes business sense to view training as an investment and not as a cost and implement it as an ongoing process and not as a one-o ff event. The training must be made mandatory and the dealership has to ensure that everyone receives the opportunity to continuously upgrade their skills and knowledge. Survey report shows that 73% of consumers are more comfortable patronising a dealership that has certi fi cates of completion of employees training on display. 54 Some dealerships have gone to the extent of including a wall of fame at their service reception with photos of each Service Advisor and Technician and information about their level of certi fi cation and how many years they have spent working in the industry. Auto Success. The Importance of Training Your Dealership Sta f 54 76
The dealership would also need to educate customers about these certi fi cations to help them understand the advantages of using quali fi ed and certi fi ed Technicians. When they understand the di ff erence and the value it provides to them as vehicle owners, it will help them feel good about choosing your dealership for repairs, thus making it the customers preferred choice. 55 Managing Talent Pool Manpower recruitment is a constant challenge in dealerships. Sta ff turnover costs the dealers money in several ways such as wasted recruitment and training expenses, lack of continuity with customers and, ultimately, loss of sales. The di ff erence between a mediocre dealership and a great dealership is the strength of its people. The potential for improving aftermarket sales and customer satisfaction through better hires has more dealers paying attention towards sta ffi ng. Career path is laid out for new hires as a retention strate g y to minimise the risk of losing experienced employees to the competition. 56 To hire good quality sta ff s, especially Technicians who are quali fi ed for the position, could pose a challenge. It is tough to fi nd good candidates in this area, especially where young people are not attracted to the automotive after sales business. Performance Administration Corp. The Advantages of a Certi fi ed Auto Technician 55 Amy Wilson. Automotive News. Employee Turnover Costs Billions of Dollars. Managers Experiment New 56 Ways to Attract the Right People 77
The Service Manager should establish relationship with the local technical schools, vocational colleges and universities as potential talents pools. Service Managers may also consider the possibility of setting up an intern or work- study program to establish a continuous supply of talent pools. Skills shortage vacancies, where the dealerships are unable to fi nd people with the right skills or quali fi cations for the job, now account for more than 20% of vacancies in the after sales division. Dealerships must overcome their doubts about employing young people and be prepared to invest in them, if the after sales industry is serious about business continuity. A well-designed in-house apprentice training program can generate a return on investment of up to 300% for automotive businesses, according to a new study from the Institute of the Motor Industry (UK). The study also shows that apprentices that start with no experience are able to generate pro fi t for the division within 18 to 24 months of employment. 57 Once the apprentice come on board, the dealership could practice a mentor system, where the senior Technicians should be assigned to them. The apprentice begins performing some of the simpler repair operations under the supervision of senior Technicians. Driving the Motor Industry. Automotive Apprentice Can Give 300% Return on Investment 57 78
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Automotive After Sales Management

  • 1. 1 Automotive After Sales Management A Practical Guide to Successful Workshop Parts & Service Operations Mohamad Idrakisyah
  • 2. Preface 9 ............................................................................................................. CHAPTER 1 - THE BUSINESS OVERVIEW 13 ....................................... The Global Market 13 ....................................................................................... The ASEAN Market 13 ...................................................................................... Potential of the After Sales Business 15 .......................................................... Revamping the After Sales Business 17 ......................................................... CHAPTER 2 - THE AFTER SALES BUSINESS PHILOSOPHY 19 ............. CHAPTER 3 - MANAGEMENT BY OBJECTIVES 22 ............................... The Importance 22 ............................................................................................ Service Operating Standards 23 ..................................................................... Parts Operating Standards 24 .......................................................................... Service Capacity Standards 25 ........................................................................ Parts Capacity Standards 26 ............................................................................. Service Performance Standards 27 ................................................................. Performance Measurement Guideline for Service Department 28 ............ Notes on Performance Measurement Guideline 30 ..................................... Sales Performance 30 ....................................................................................... Gross Pro fi t Margin 31 ...................................................................................... Overheads and Expenses Control 32 ............................................................. Technicians Productivity 34 .............................................................................. Technicians Ef fi ciency 35 .................................................................................. Service Advisors Productivity 36 ...................................................................... Facility Utilisation 37 ......................................................................................... Warranty Rejection Rate 39 .............................................................................. Performance Measurement Guideline for Parts Department 41 ................. Achieving Parts Sales 42 ................................................................................... Maintaining Optimum Stock Holding 43 ....................................................... 2
  • 3. Preventing Stock Damages 44 ......................................................................... Developing Parts Staffs 45 ................................................................................ Performance Planning 47 ................................................................................. Notes on Performance Measurement Guideline 50 ..................................... Organization Charts and Manpower Capacity Requirements 53 ............... Service Department - Job Description, Roles & Responsibilities 56 .......... Service Manager 56 .......................................................................................... Administration Staffs 57 .................................................................................... Workshop Controller 58 ................................................................................... Foreman 59 ........................................................................................................ Service Advisor 61 ............................................................................................. Technician 62 ..................................................................................................... Parts Department - Job Description, Roles & Responsibilities 63 ............... Parts Manager 63 ............................................................................................... Delivery Staff 65 ................................................................................................. Administrative Staff 65 ...................................................................................... Inventory Controller 67 ..................................................................................... Counter Staff @ Wholesale, Retail & Service 68 ............................................ Manpower Recruitment 70 ............................................................................... Pre-Recruitment Process 71 ............................................................................. The Selection Process 72 .................................................................................. Employee Orientation 73 ................................................................................. CHAPTER 4 - PEOPLE DEVELOPMENT 75 ........................................... The Winnings of Training 75 ............................................................................ Managing Talent Pool 77 .................................................................................. Staff Remuneration & Incentives 79 ................................................................ Performance Measurement 82 ........................................................................ 3
  • 4. Performance Evaluation 84 .............................................................................. Tracking Results and Sharing Information 87 ................................................ Dismissal of Non-Performers 88 ...................................................................... Dismissal Prevention Measures 90 .................................................................. CHAPTER 5 - HEALTH, SAFETY AND HOUSEKEEPING FUNDAMENTALS 92 ............................................................................ Safety and Health Concerns 92 ....................................................................... Safety and Health Coordination 93 ................................................................. The 5 S of Safety and Health Housekeeping 96 ............................................ The Advantages of 5 S Implementation at the Dealerships 99 ................... CHAPTER 6 - SAFETY AND HEALTH CONCERNS 100 ......................... Automotive Environmental Issues 100 ........................................................... Automotive Workshop Environmental Policy 101 ......................................... Workshop Waste Management Control 103 ................................................. Rewarding Staffs for Compliance 105 ............................................................ CHAPTER 7 - FACILITIES PLANNING AND MANAGEMENT 107 .......... The Importance of Service Facilities 107 ........................................................ Dealership Signages 108 ................................................................................. Service Reception 108 ...................................................................................... Service Workshop Area 112 ............................................................................. Parts and Accessories Area 114 ....................................................................... CHAPTER 8 - SERVICE WORKSHOP TOOLS AND EQUIPMENTS 116 . Tools of the Trade 116 ...................................................................................... Special Service Tools (SST) 117 ....................................................................... Maintenance of Workshop Equipments 118 ................................................. Technician’s Hand Tools 121 ............................................................................ 4
  • 5. CHAPTER 9 - THE WORKSHOP INFORMATION TECHNOLOGY SYSTEM 123 ........................................................................................ Digitalising the Business 123 ........................................................................... Service Information Technology System 124 ................................................. Parts Information Technology System 126 ..................................................... The Advantages of Computerisation 127 ...................................................... CHAPTER 10 - TECHNICAL AND WARRANTY MANAGEMENT 130 .... The Path to Continuous Improvement 130 .................................................... Operating Standards 130 ................................................................................. Reporting Technical Information 132 .............................................................. Sharing Technical Information 133 .................................................................. Warranty Management 133 ............................................................................. Inculcating the Quality Culture 135 ................................................................ CHAPTER 11 - THE SERVICE MANAGEMENT PROCESS 138 .............. Service Procedure 138 ...................................................................................... Step 1: Appointment System 139 ................................................................... Bene fi ts of Appointment System 140 ............................................................. The Responsibility of the Service Manager 142 ............................................ Handling Service Appointment 143 ............................................................... Setting the Appointment Rate 144 ................................................................. Appointment System 146 ................................................................................. Step 2: Reception 147 ...................................................................................... The Responsibility of the Service Team 148 .................................................. The Role of the Service Advisor 148 ............................................................... The Reception Signages & Vehicle Flow 151 ................................................ The Reception Process 153 .............................................................................. Vehicle Parking and Location 155 ................................................................... 5
  • 6. Step 3: Repair Order Process 156 ................................................................... The Use of Repair Orders 156 ......................................................................... The Contents of Repair Order 157 .................................................................. Responsibilities for Repair Order Management 159 .................................... Step 4: Dispatch and Production 163 ............................................................. Work Process Control 163 ................................................................................ Ef fi cient Job Process Control 166 .................................................................... Ef fi cient Periodic Maintenance Services 167 ................................................. Reducing Idle Time and Increasing Productivity of Technicians 169 .......... Preventing Work Down Time 171 .................................................................... Work in Progress Vehicles 172 ......................................................................... Step 5: Quality Control 173 ............................................................................. Work Quality – Everyone’s Responsibility 173 ............................................... Resolving Repeat Repair Problems 176 .......................................................... Step 6 : Service Delivery 177 ........................................................................... Service Delivery Procedures 178 ..................................................................... Step 7: Post Service Follow-Up 181 ................................................................ Bene fi cial for Customer Retention 181 .......................................................... Priorities and Communication Methods 183 ................................................. CHAPTER 12 - THE PARTS AND INVENTORY MANAGEMENT 187 ..... The Advantages of Good Parts and Inventory Management 187 ............... Just in Time (JIT) Logistics 188 ........................................................................ Stock Order Management 190 ........................................................................ Managing Stock Availability 190 ..................................................................... Managing Stock Replenishments 191 ............................................................ Clearing Dead Stocks and Slow-Moving Parts 194 ....................................... Parts and Inventory Control 196 ...................................................................... 6
  • 7. Parts Receiving and Handling 199 .................................................................. Working Environment 200 ............................................................................... Work Safety 200 ................................................................................................. The 7 Storage Techniques (Adapted from Toyota) 201 ................................ The 4 S Activities 202 ........................................................................................ CHAPTER 13 - TEAMWORK BETWEEN PARTS AND SERVICE DEPARTMENT 204 .............................................................................. Ef fi cient Parts Supply to Service 204 ............................................................... Special Order Parts 205 .................................................................................... Monitoring Parts Fill Rate 207 .......................................................................... CHAPTER 14 - PARTS AND SERVICE MARKETING 209 ....................... Customer Analysis 209 ..................................................................................... Market Analysis 210 .......................................................................................... Vehicle Life Cycle and Growth Potential 211 ................................................. The Marketing Mix 212 ..................................................................................... Product 212 ........................................................................................................ Price 214 ............................................................................................................. Promotion 216 ................................................................................................... Place 218 ............................................................................................................ Service Marketing Campaign 220 ................................................................... Parts Wholesale Marketing 222 ....................................................................... Managing Parts Dealers 223 ............................................................................ Retaining Parts Dealers 225 ............................................................................. Digital Parts and Service Marketing 226 ......................................................... CHAPTER 15 - SALES AND AFTER SALES COOPERATION 229 ........... Joint Vehicle Acceptance 229 ......................................................................... New Vehicle Maintenance – The Role of the Service Department 230 ...... 7
  • 8. New Vehicle Maintenance – The Role of the Sales Department 231 .......... Pre-Delivery Inspection (PDI) 232 .................................................................... Service and Sales Relationship 234 ................................................................ Service and Used Car Relationship 237 ......................................................... CHAPTER 16 - CUSTOMER RELATIONSHIP MANAGEMENT 240 ........ The Importance of Customers 240 ................................................................. Customer Satisfaction Index 241 ..................................................................... Managing Customer Complaints 243 ............................................................ Operating Standards - Complaints Management 247 ................................. CHAPTER 17 - GEARING FORWARD - GLOBAL AFTER SALES TRENDS 249 ........................................................................................ Changes in Customer Expectations 250 ........................................................ Next Generation Vehicles 253 ......................................................................... ABOUT THE AUTHOR 258 ................................................................... 8
  • 9. Preface Currently, the global and the domestic automotive market is facing unprecedented competition. The breakthroughs in automotive technolo g y from industrial revolution has changed the landscape of the industry where countries from the west, which once dominated the automotive industry are facing sti ff competition from new emerging markets from the east. The after sales segment of the automotive industry is gaining prominence over sales. The intensive competition in sales of new cars has reduced pro fi t margins, but on the other hand, this is compensated from the higher pro fi t margin derived from the after sales business. It is common knowledge that the fi rst car is sold by sales division, and subsequent sales comes from the after sales division and hence, the importance of the after sales business cannot be further emphasised. The onus is on the automotive manufacturers to heed to the new importance of the after sales business in reacting to the changes and expectations of customers. This book is written as a practical guide manual on matters relating to the management of the after sales business. The objective is to bring about improvements in all levels of the after sales operations in workshops. The growth, pro fi tability and sustainability of the after sales dealerships are possible when the business is managed in an e ff ective and e ffi cient manner. The chapters in the book covers all 9
  • 10. matters pertaining to the after sales operations, written in an easy-to-understand manner for practical and straightforward implementation across dealerships. Customers encounter di ff erent after sales experience as a result of di ff erent service standards applied by dealers across the di ff erent geographical locations. As a consequence, dealerships are unable to meet the desires and expectations of customers on a consistent basis. When dealers react to the needs and expectations of customers in various manners, it will be hard for both the manufacturers and the distributors to achieve total customer satisfaction in uniformity throughout all the dealerships. In light of this situation, this book establishes the after sales operating standards to achieve outstanding customer satisfaction in all dealerships. It aims to increase customer retention, dealer pro fi tability, brand image and business sustainability of the automotive company. In order to achieve these standards, continuous improvements initiatives must be taken by all dealers to raise customer satisfaction and retention standards to a higher level. This book details the standards expected from every aspect of the after sales operations. It explains the how part, in putting the process and structure in place and ways to implement these changes that would result in the successful operation of the parts and service business. 10
  • 11. These standards detailed in this book are well tested business models proven to strengthen corporate image, leading to increased customer retention and greater pro fi tability of the service and Parts Departments. Adopting these standards are prerequisites to sustained growth of the after sales business of the dealerships. This book provides guide towards the implementation of improvement activities to boost the business of the dealership. Dealers could use the 5-step guide shown below to pilot them through their e ff orts. 1. List down the operational areas where urgent improvement would be needed. 2. As resources are limited, prioritise the areas where it pro fi ts the dealership the most. 3. Use the standards to check if your changes are having positive e ff ect on your operation. 4. Make adjustments as required to keep your improvements activities in place. 5. Once the fi rst project is successful, choose the next area on your priority list and begin the process again. Therefore, it is expected of all dealer Service and Parts Managers to make full use of the standards detailed in this book, to carry out after sales improvement activities in line with global standards. When dealerships are professionally managed, e ffi ciently operated and pro fi tably run, it strengthens brand image, ampli fi es market share and paves 11
  • 12. way for business expansion, both in the domestic and international markets. 
 12
  • 13. Chapter 1 - The Business Overview The Global Market The total size of the automotive aftermarket was about USD 418 billion in 2020; that breaks down into USD 315 billion for passenger vehicles and USD 103 billion for medium and heavy-duty trucks. The aftermarket industry is expected to grow between 3% and 3.5% over the next three to four years. 1 Chinese automotive aftermarket revenue is expected to record a compound annual growth rate (CAGR) of 7.7%, increasing from USD 290.44 billion in 2017 to USD 523.80 billion in 2025. 2 Towards 2025, the European aftermarket is projected to annually grow at 2.4% in Western Europe and 5.0% in Eastern Europe, and it is expected to reach USD 161 billion by 2025, driven by a growing European carpark and new sales, longer vehicle lifetime and new digital products and services. 3 The ASEAN Market Thailand has long been recognised as the primary manufacturer of automobiles among ASEAN countries and Hedges & Company. US Automotive Market Size 1 Research & Markets. China Automotive After Market Report 2018 - 2025 2 Stern Stewart & Company. The Automotive After Market in 2025. Trends & Implications 3 13
  • 14. has gained traction in the automobile export industry. The country produced 2 million units in 2018 and exports more than half of its output to more than 100 countries. The industry has seen an 8.7% year-on-year growth in 2018 and over 1 million vehicles were sold domestically. Indonesia bene fi ts from a huge domestic automobile market driven by an emerging middle-class population. The automobile consumer base is expected to grow rapidly, with most purchases occurring in Indonesia’s cities, mainly in Jakarta. Car sales grew by 6% by the end of 2018, at just over 1.3 million units, with 346,000 exported to markets such as Philippines, Saudi Arabia, and Vietnam. Vietnam’s automobile manufacturing industry developed slower than its ASEAN neighbours, but has witnessed exponential growth in recent years. The industry began making progress in the early 2000s and is on course to be one of ASEAN’s fastest growing automobile industry over the next 20 years. According to the Vietnam Automobile Manufacturers Association, over 288,000 automobiles were sold in Vietnam in 2018, an increase of 6% from 2017. Malaysia is an important contributor to automobile manufacturing in ASEAN. In 2018, Malaysian automobile manufacturers produced a total of 572,000 vehicles, with 522,000 of them being passenger cars. But Malaysia’s automotive manufacturing landscape is sharply divided between domestically produced vehicles and its foreign competitors. Automobile producers Proton 14
  • 15. and Perodua dominate Malaysia’s domestic companies, with Proton recording 64,700 and Perodua 227,200 of vehicles sold in 2018. With the liberalisation of the Malaysian automotive industry, Proton and Perodua face immense foreign competition. Both Honda and Toyota have gained momentum in the Malaysian market with Honda surpassing Proton’s total sales in 2018. 4 Potential of the After Sales Business Traditionally, after sales business is labelled as cost centres and sales as pro fi t centres. This is about to change, as studies show that by 2030, the compounded average growth rate (CAGR) of the after sales market is expected to grow at 8% compared to 4% from new car sales. 5 With the reduction in sales volume and pro fi t margin from new cars, the after sales market has become a signi fi cant source of pro fi t for car manufacturers and their dealers and it has grown to be a more important entrepreneurship model for car and original spare parts manufacturers. 6 The aftermarket is a part of the automotive industry sector comprising of automotive services and parts businesses. The maintenance and repairs business generate about 45% of total aftermarket revenues and wholesale of vehicle parts ASEAN Brie fi ng. The ASEAN Automotive Industry. Top Destination for Manufacturers 4 McKinsey & Company. McKinsey Centre For Future Mobility. Ready For Inspection - The Automotive 5 Market in 2030 Science Direct. The Car After Sales Market Development Trends In The New Economy. 6 15
  • 16. make up the remaining around 55%. Together, the two businesses are an important part of the overall automotive industry as they deliver substantial revenue of approximately, around 20% of total automotive revenues and higher pro fi tability than most of the industry’s other sub sectors. 7 The automobile market for passenger cars is anticipated to show positive growth as customers are exhibiting increased a ffi nity towards this form of transport. The passenger car segment is estimated to hold more than 80% share in the total incremental opportunity between 2016 and 2026. In replacement and repair, the passenger car segment held more than 60% share in 2015 which is double the share than the commercial vehicle segment. With passenger cars emerging as favourable means of transport, the average kilometres driven per vehicle has increased over time. This increase in kilometres driven per vehicle is closely associated with increased parts wear and tear, which in turn requires timely maintenance and repair. Passenger car segment is projected to expand at a CAGR of more than 10% over the forecast period in Malaysia. The passenger car segment accounted for more than 90.8% of the market value share of the total Malaysia automotive aftermarket in 2016 and is projected to reach 92% by 2026. On the average, customers return for after sales service McKinsey & Co. The Changing Aftermarket Game and How Automotive Suppliers Can Bene fi t from 7 Arising Opportunities 16
  • 17. twice a year, rendering a higher revenue for the after sales segment compared to the earnings from the sales sector. 8 Revamping the After Sales Business The after sales industry needs to get into the driver’s seat to overhaul the after sales operations or risked being left out from the competition. Great customer service will play an even more critical role in separating the winners who are focused on delighting drivers, from the losers, focused on the nuts and bolts of car service. If you receive good service and value for your money, you will go back to the same place the next time you need their services. So will your customers. Organisations needs to incorporate high work standards into their service and Parts Departments. The moment of truth is when a customer should be able to walk into any one dealership at any location and expect the same high level of service standards. Though slight variance in standards could be expected across the dealership, but basic standards cannot not be compromised. No customer enjoys long waiting time, shoddy workmanship and unexplained charges. We need to put ourselves in the customers’ shoes to discover and solve such sub standards issues for long term business sustainability. The after sales business is a signi fi cant contributor to the fi nancial strength of the automotive industry. Several Future Market Insights. ASEAN Automotive After-Market 8 17
  • 18. challenges, however, will likely a ff ect this lucrative sector in the future, calling fundamental principles into question. A new paradigm will be required to build service networks and o ff erings that truly meet the needs of tomorrow’s customers. The after sales business contributes as much as 50% to the overall pro fi t of some automakers and the stability of the after sales business also has proved vital for retail networks in times of economic uncertainty. Despite these advantages, however, automakers and dealerships will face a number of challenges in the after sales sector in the future, particularly from the advancements in vehicle quality, digitalisation and electri fi cation that would lead to a decline in service demand per vehicle in most markets. Customer retention at many automakers continues to decline, especially for customers with older cars, who switch more often to independent service providers in search of more a ff ordable and personalised service. In general, most of the after sales business has failed to ful fi l one of its key promises in cementing customer loyalty through superior servicing, thus ensuring the person will purchase another car from the brand. Achieving this goal was the basis for building combined sales and service outlets, in the hope that the service business would generate leads that would bene fi t the new car business, but this has seldom held true. 9 Oliver Wyman. The Next Horizon of Automotive After Sales 9 18
  • 19. Chapter 2 - The After Sales Business Philosophy Customer satisfaction refers to the creation of customer joy and excitement by providing a level of value that not only satis fi es customers’ expectations on the after sales service, but also exceeds them. The experience of excitement through these services forges an emotional connection that elevates the dealership to become the customers’ preferred choice. In accordance with the Honda philosophy of respect for the individual and the “Three Joys” of buying, selling, and creating, Honda has always worked closely with its dealerships to maximise customer satisfaction. Every step of the way, from purchase to after-sales service, dealerships work together with Honda to earn and maintain the trust of customers. 10 The Toyota slogan of “ fi x it right the fi rst time”, generates the same kind of customer satisfaction that increases customer retention. It keeps customers coming back to the dealership to buy another vehicle, to buy parts, or to get a vehicle serviced. Customers are treated as members of the Toyota family and dealers work toward exceeding their customers’ expectations in the areas of quality, convenience, courtesy Global Honda. Honda’s Approach to Customer Satisfaction 10 19
  • 20. and care by strictly adhering to Toyota’s business standards. 11 The Proton-Geely partnership views customer service philosophy seriously which is evidenced by their exercise to revamp all their dealership into 4S operation. This decision is made in the best interest of their customers, which also pro fi ts the dealership. The bulk of the existing Proton dealers have already bought into the 4S setup because of the decent pro fi ts normally associated with one stop automotive centres. 12 The core of the Volkswagen cares philosophy is the commitment to care and provide the best for Volkswagen customers. It is Volkswagen’s after sales initiative for the brand to engage with its customers and continuously improve the ownership experience. 13 The mission and vision of Perodua relates with the Daihatsu corporate philosophy, which is “to provide new products and services by anticipating market needs and pursuing a true form of customer satisfaction”. Perodua also pledges to continually expand horizons with boldness and originality, to gain complete customer Toyota Motor Corporation. The Handbook on After Sales Operations 11 Careta. Proton – Let’s Focus on The Real Thing 12 Volkswagen. Volkswagen Launches Volkswagen Cares 13 20
  • 21. con fi dence with honesty and sincerity and lastly to nurture a lasting relationship with their customers. 14 Malaysian national car makers namely Proton and Perodua carry a huge responsibility to elevate the national car as the preferred brand in the domestic market. As a national asset with 3.4% contribution to the GDP, it has become the symbol of pride for Malaysians. High service quality is the important determinant that keeps the customer returning for a long-term relationship, which subsequently contributes to organisation’s long-term pro fi tability. It provides an opportunity for the national car makers to come back to their top position in Malaysian automotive market. 15 The philosophy of all the automotive industries discussed above are geared towards customer satisfaction and customer retention. It makes business sense as these guiding principles are directly related to market share and pro fi tability of these organization or risk losing it to the competition. 
 Daihatsu. Corporate Philosophy and Corporate Principles: Top Message 14 International Academic Journal of Business and Technolo g y. Automotive After Sales Quality and 15 Relationship Quality in Malaysian National Car Makers 21
  • 22. Chapter 3 - Management By Objectives The Importance The after-sales human resource management system is a method for establishing the optimum number of sta ff s to maintain maximum performance of the workshop operations. An automotive business is only as strong as its employees. Within the automotive industry, human resources departments are tasked with identifying, recruiting and developing talent that ranges from cashiers to mechanics to managers and supervisors. By remaining aware of the challenges of recruiting the right person for the right job, it helps the dealership to grow and improve the performance of the after sales business. One of the biggest human resources challenges the auto industry faces is the fact that many automotive businesses lack a comprehensive and step-by-step action plan to become an employer of choice. The business struggles with major human resources functions because they do not have a strategic and focused plan that involves hiring, training, delegating, promoting and potential second liners, who could quickly fi ll the position when the vacancies arise. 16 Miranda Morley. Human Resources Challenges In The Auto Industry 16 22
  • 23. High employee attrition leads to loss of skilled and experienced employees to the competitors. New replacement has fi nancial implications in terms of recruitment, training and development cost. The right human resource management strategies augurs well for business continuity as when the organization builds the people, the people build the business. Service Operating Standards 1. The dealership has to have in place an organization chart that incorporates the all the position within the Service and Parts Departments. It also needs to have a job description list for all these positions, clearly stating the roles and responsibilities expected of the job position. 2. The Service Manager must be accountable to achieve the business target as decided by the management. 3. A recruitment policy in place for the recruitment of apprentice Technicians. 4. Training programs for all levels of employees must be planned and developed a year prior, based on the training need analysis. This would enable the dealership to identify competency gaps in their employee’s performance and design the appropriate training program to help close these gaps. 23
  • 24. 5. Systematic evaluations of standard operating procedures should be conducted to identify and resolve problems in department operations. 6. Employees must be in their uniforms, together with their personal protective equipment (PPE) during work hours. The dealership must set the standards and display the notice for employees to see and comply accordingly. 7. The employee’s compensation package must commensurate or better the standards across the industry. It must be appropriate and motivating, that would encourage employees to remain loyal and contribute positively to the dealership. Parts Operating Standards 1. The dealer should have a written parts organization chart. 2. The Parts Manager should be responsible for setting and achieving Parts Department goals. 3. The Parts Manager should be dedicated to improving customer satisfaction and dealer pro fi tability. 4. The dealer should have a written job descriptions set for all positions in the Parts Department. 5. In addition to normal duties, the job descriptions of some parts employees should include maintaining 4S 24
  • 25. conditions in the warehouse and following up on special order parts. 6. All Parts sta ff should be trained in storage techniques and other basic parts practices so that they can competently carry out their assigned jobs. Service Capacity Standards 1. Adequate number of service sta ff should be employed in line with the service organization requirements to meet market demands. 2. Service Advisors in charge of service reception should be certi fi ed and quali fi ed for the job. They should handle a reasonable number of Repair Orders, on the order of 15 to 20 Repair Orders per day. 3. The dealer should appoint a Foreman to support the Technicians (approximately 10 per Foreman) and for clear communication with the Service Advisors and Parts Departments. 4. The Dealer should appoint a Job Controller with the responsibility for the allocation and monitoring of all work to the service shop. 5. Assign a person the responsibility for quality control checks of all work carried out in the dealership. 6. The dealership must have an apprenticeship program in place, to recruit and train Technicians, based on their projected manpower needs for the year following. 25
  • 26. 7. The composition of Technicians should be as follows: Apprentice Technicians: about 20% Junior Technicians: about 40% Senior Technicians: about 40% 8. A Cashier should be assigned the responsibility for cash receipt/payments. 9. Assign a Clerk the responsibility for the administration of all warranty matters. Parts Capacity Standards 1. Adequate number of parts sta ff s should be employed to meet the needs of Technicians as well as wholesale and counter customers . 17 2. Keep adequate stock based on the dealerships business volume. 3. Use of minimum stock level and economic order quantity as a stock control method. 4. Use bar codes and stock cards for stock control system. Info Entrepreneurs. Stock Control and Inventory 17 26
  • 27. Service Performance Standards 1. The Service Manager needs to ensure that there is su ffi cient service manpower capacity to handle the monthly target of total labor hours sold. 2. Service manpower capacity should not exceed service facility capacity. 3. All employees must be subjected to periodical performance evaluation, which must be based on their stated roles and responsibilities, that includes the key performance indicator (KPI) and key result areas (KRA) in relation to their job position. The KRA can be described as the major areas, that requires exceptional performance, so as to survive and obtain a competitive position in the market. The KPI denotes a quanti fi able metric, to measure the performance of KRA. Periodical 18 evaluation facilitates the dealership to take early counter measures on shortfalls to keep employees in track in achieving the set business target. 4. The Service Manager must have in place, plans to manage, monitor and fi x problem areas in the dealership, in line with continuous improvement philosophy. Key Di ff erences. Di ff erence Between KRA and KPI 18 27
  • 28. Performance Measurement Guideline for Service Department NO KRA KPI MEASUREMENT 1 Sales Performance 100% Actual Sales / Target x 100% Remarks Sales performance must be monitored on daily basis by generating reports. Take necessary actions or submit proposals for countermeasure if business is declining signi fi cantly. 2 Gross Pro fi t Margin > 70% Sales - Cost of Sales / Sales x 100% Remarks Cost of sales can be obtained from the monthly branch Responsibility Report (RR) generated by Head O ffi ce. Study the trend and fi nd some methods to control and maintain a steady cost of sales to achieve high gross and net pro fi t 3 Overheads and Expenses Control < 10% Overheads - Budget / Budget x 100% Remarks Overheads and expenses control will also appear in the monthly RR. Study the trend and prepare some methods of control within budget (AMP) 28
  • 29. NO KRA KPI MEASUREMENT 4 Technicians Productivity > 85% Sold Hours / Employed Hours x 100% Remarks Ensure workshop loading is also su ffi cient for all mechanics to achieve > 85% productivity. Appointment system and express service concept will provide lots of help 5 Technicians E ffi ciency > 100% Sold Hours / Clocked Hours x 100% Remarks High idle time and unnecessary overtime re fl ects poor e ffi ciency of a mechanic. Don’t allow the mechanics to skip job to achieve high e ffi ciency rate. Ask the Foreman to monitor their mechanics. Try to complete all jobs with the fl at rate time (FRT) 6 Service Advisor’s Productivity > 80% Throughput / Target x 100% Remarks Ensure all Service Advisors carry out customer retention program to retain and expand our customer base. Adequate daily throughput will help the SA achieve their productivity target >80% 29
  • 30. Notes on Performance Measurement Guideline Sales Performance About 53% of the average dealership’s gross pro fi t comes from the Service Department, but only 30% of sales customers bring their vehicle in for service within the fi rst year of ownership. The number drops to 13% after three years and to 2% after fi ve years. Your unique selling point should be speed, convenience and attractive pricing. Respecting and working around your customers busy schedules are another one, especially when NO KRA KPI MEASUREMENT 7 Facility Utilisation > 100% Throughout Per Bay x Total Bays / Throughput Target Per Day x 100% Remarks Increase workshop loading to maximise the utilisation of the work bays. Don’t park the vehicle o ff roads (VOR) for too long. Study the throughput trend and services frequented by customers. Prepare proposals and submit to Head O ffi ce. 8 Warranty Rejection Rate < 2% Number of Rejection / Number of Submission x 100% Remarks All warranty claims must be processed and submitted in time as stipulated by the Technical & Warranty Dept. Avoid late processing and submission to ensure <2% rejection rate. 30
  • 31. it comes to delivering on your promises. Being digitally present and using technolo g y to make it easier for your customers to reach you, helps to create a modern experience that makes the dealer’s o ff er more desirable and meets customer’s expectations. There are various CRM tools, after sales platforms and apps that help dealerships retain their service customers. Social media is bursting with conversations about car failures or threads about poor customer service. As customers vent their car struggles and service disappointments, you should be listening closely for opportunities to step in and o ff er a solution to their issues. Many car owners perceive dealership service centres as overpriced. Your best shot at changing that view is to drive awareness through content that highlights the quality of your service and its competitive pricing. Dealerships are most vulnerable to losing their service customers to independent service providers when their warranty runs out. A good way of preventing that scenario is by o ff ering cost down maintenance and repair specials for vehicles out of warranty. 19 Gross Profit Margin In an attempt to increase pro fi t margin, dealerships look to increase sales fi rst. In reality, the shop that reduces its costs by a small percentage has a faster impact on pro fi t margin than one that increases sales by a small percentage. Buzz 2 Get. 10 Strategies for Increasing After Sales Revenue in Dealerships 19 31
  • 32. For example, assume the dealership has a total revenue of $100,000 and total expenses of $95,000, leaving it a pro fi t of $5,000 or a 5% pro fi t margin. 20 Through tighter expense control, the store reduces its expenses by $5,000 to a total of $90,000 while sales remain at $100,000. The store now operates at a 10% pro fi t margin. Gross pro fi t percentages are very important if you want to show a pro fi t in the service and Parts Departments. You should set your minimum goals to achieve 70% for labor and 40% for parts. Many dealerships are subletting out repairs they could complete themselves. If dealerships have the shop space, they should be completing these repairs themselves even if it is cheaper to outsource the work. The reason being the dealership will make some pro fi t even at the cheaper price, which will go straight to the bottom line as pro fi t and utilise unused workshop space. 21 Overheads and Expenses Control Overhead costs are expenses that are not directly attributable to the automotive repair process. They are a part of the cost of doing business and must be considered when developing future business plans. Some overhead Auto fi xsos. Auto Repair Shop Pro fi t Margin 20 David Keller. Service and Parts Pro fi tability 21 32
  • 33. costs are fi xed. That is, they don’t fl uctuate from period to period. Other overhead costs are variable in that they will rise and fall due to business mix or volume. The cost of business in auto repair can be classi fi ed as direct cost or indirect cost. Direct costs are practically quanti fi able and relate speci fi cally to the repair process. Labor and parts are direct costs. Expendable supplies used during the repair process could be considered direct but generally the cost of keeping track of them speci fi cally is not practical. So, they’re usually treated as indirect costs. Then the other costs such as rent, utilities are considered indirect. Indirect costs are classi fi ed as overhead. A fi xed overhead cost is the same each accounting period. Rent is an example of a fi xed overhead cost. Variable overhead costs change as business volume changes. For example, an increase in business will result in an increase in electricity usage. Bonuses based on sales volume will change and are therefore variable. Costs that rise and fall with business volume should be projected based on anticipated sales numbers. Sales growth is the objective and a corresponding increase in variable overhead costs should be taken into consideration when planning. 22 Fast Trak. Estimating Future Overheads in Auto Repair 22 33
  • 34. Technicians Productivity Productivity and e ffi ciency are terms that are frequently used in di ff erent situations to describe the same thing. In order to be pro fi table and o ff er customers great service, the dealership needs to be truly productive and e ffi cient. The Technician e ffi ciency is measured in this way. If we give a Technician a one-hour job that and they complete it in half an hour, then that Technician is 200% e ffi cient. Most Technicians are e ffi cient. When you give them a one- hour job they are usually done in one hour. Sometimes even less. Productivity is a measure of how many of those e ffi cient jobs get stacked on top of each other in an eight- hour day to make eight hours of labor sales or more. The next step will be to fi gure out exactly where the problem lies if your Technicians aren’t at least 85% productive. Technician e ffi ciency could be a cause of low productivity, so what hinders e ffi ciency in Technicians? Technician skill level could stand in the way of our being productive. Are we dispatching the correct skill level work to the correctly skilled Technicians? Do we have a training issue or even a retraining issue? Are Technicians being pulled on and o ff of vehicles and that prevents them from being productive? Are the Technicians standing around waiting for parts, or could they possibly be standing around waiting for okays from customers on the work they have already checked out? Are they waiting for someone to direct them to what to work on next, or have we set expectations, so they already know which jobs to work on 34
  • 35. next? Is it a car count concern, or is it a concern with the amount of work we recommend on each vehicle? 23 The other possible reason for low Technicians’ productivity could be related to not enough work in the Service Department, the process of booking Repair Orders may not be e ff ective and there could issues with clocking and under billing. 24 Technicians Efficiency The e ffi ciency and pro fi tability go hand in hand. The old management trope about “what can’t be measured can’t be managed” is true. Increased Technician e ffi ciency will almost certainly lead to an increased pro fi t per hour. Track the e ffi ciency numbers and you may discover you are oversta ff ed, that you can take on more work, and which one of your Technician is not up to mark. Look at your systems and procedures, look at your parts ordering process, and why wrong parts are always supplied. Every time a Technician is waiting around for parts, it is killing their e ffi ciency and reducing the number of cars your dealership can work on each day. That means customers have to wait longer and some will get annoyed and not return again. Every disturbance that takes a Technician’s concentration o ff the job in hand uses an extra 10 minutes of his time to Chris Chubby Frederick. Productivity vs E ffi ciency: Which Matters Most 23 Deloitte. KPI Guide for Service Department 24 35
  • 36. get his head back into the job. So, a 5-minute phone call uses up 15 minutes of his work time in reality. Increasing Technician’s e ffi ciency requires you to look at the whole process that you go through from when a car comes in right the way through to the customer collecting the vehicle. Small improvements at each step of the process will result in greater e ffi ciencies and e ffi ciency equals pro fi t. 25 The other possible reason for low Technicians’ e ffi ciency could be related to job not being allocated to Technicians with the right skill level, possible issues with discounting or costing at the front counter, there are diagnostic issue in the service fl oor and perhaps Technicians and workshop sta ff s are not motivated. 26 Service Advisors Productivity A key position for building gross pro fi ts is that of the Service Advisor. These employees speak with more customers on the phone and face to face than any other employee in your dealership. This is a critical position and requires a de fi nitive plan for recruiting quali fi ed candidates to achieve top performer status. Avoid hiring experienced Service Advisor who has been an underachiever in their previous organization. Pro fi t Boost. How to Calculate Technician’s E ffi ciency? 25 Deloitte. KPI Guide for Service Department 26 36
  • 37. Recruit aggressively for women, for at least half of your customers are women. 27 In any realistic employer/employee relationship, attainable goals should be established for the Service Advisors. Vehicle throughput measurement is a quick, simple way to gauge whether or not sales goals are being achieved. When throughput goals are established for a Service Advisor, the likelihood of achieving overall goals is increased. Sales target are total sales dollars which can be used in conjunction with car count goals to measure results in achieving planned sales objectives. A Service Advisor can assess progress toward goals real time to make sure objectives are reached. 28 Facility Utilisation The stepping stones for fi nding this answer lies in a better understanding of capacity planning. This requires a deep understanding of the work content, customer demand, and the capabilities of your workforce. The industry average is one work bay per Technician with a turnaround of 4 vehicles per bay per day. If the dealership has 12 Technicians, it needs 12 work bays, and able to complete repairs on 48 cars per day. The need for additional work bays would depend upon the work variation, scheduling and sta ffi ng at the dealership. Don Reed. How Do Your Service Advisors Measure Up? 27 Fast Trak. Evaluating Auto Service Advisor Performance 28 37
  • 38. This makes generalities or industry standards around bays per Technician ratios di ffi cult to establish and compare one dealership to another. On work variation, it is common practices to allocate multiple bays per Technician on the assumption that if a repair is halted, the Technician in question can walk away from the work and utilise additional space to begin working on the next vehicle while they wait for additional parts to arrive. When the Technician walks away, the work bay and the equipment used becomes dormant and eats into the workshop pro fi ts. For work scheduling, the appointment system is an excellent platform to start when considering what resources to allocate when no-shows, walk-ins, and over cycle repairs do occur. Knowing that these schedule upsets are bound to happen, it is important to consider how much of your available time and talent will be available to handle these events. Once a core schedule of available appointment labour hours is determined, the next focus is to ensure that the right Technician in the right work bay is available to take on each repair. Dedicated workstations and work bays for express lubrication service, wheel alignment and balancing service, vehicles safety inspections and component repairs are common in dealerships and would need to be considered as part of capacity planning. 38
  • 39. Sta ffi ng is the focus of getting the most out of your existing team in their existing work space before looking to add or subtract the bay allocations. Pull the data of individual Technician e ffi ciencies as well as the overall service e ffi ciencies to identify vehicle over work bay ratio, in relation to dealership target. 29 Warranty Rejection Rate A primary reason for a rejected claims happens when the dealership recommends unnecessary repairs and parts. Most dealerships and repair shops increase their pro fi ts by adding additional repairs to the original problem. Warranties, whether the originally factory warranty or an extended warranty, will replace and repair parts that have failed. They do not replace parts that maybe could fail. Another reason for denied claims is a misdiagnosis or an inability to diagnose a problem by the workshop. According to a study, 73% of repairs are misdiagnosed the fi rst time. The manufacture would not accept if the dealership guesses the problem and replaces good parts at their expense. The manufacturer wants it fi xed right the fi rst time, which could seem unreasonable on the dealership in certain circumstances. A major reason for a claim being denied, is the part is simply not covered under the warranty. All warranties, including the original factory warranty, will only cover exactly what is listed in the contract or warranty booklet. Michael Pokora. How Do I Determine the Right Number of Bays Per Technician? 29 39
  • 40. Some dealerships may think anything that causes a component to stop working is covered when in a lot of cases it is not. For example, a power train warranty covers the engine and if it stops running you would expect it to be covered. However this may not be the case. The engine is covered but it may have stopped running because of some external modi fi cations by the customer. A power train warranty does cover the engine but not the unauthorised modi fi cations, and in a case like this the repair would not be covered under warranty. 30 Consumer Automotive Research. Why Repair Claims Are Denied? 30 40
  • 41. Performance Measurement Guideline for Parts Department NO KRA KPI 1 To Achieve Parts Sales T h r o u g h W o r k s h o p , Counter, Franchise Service Dealers (FSD), Franchised Parts Dealers (FPD) Based On Target Set By Head O ffi ce. 100% Sales Achievement 2 To Maintain Optimum Stock Holding To Support 95% And Above Service Fill Rate And Sales Achievement Through E ff ective Inventory Management And Stock Turnover. 1. Prime Locations - 6.0 x 2. Cities - 3.5 x 3. Outskirts - 2.5 x 3 To Maintain Company Assets And Stock Kept In The Branch Based On The Given KPIs:- 1. Stock Variance of Less Than 0.2% Based on the Branch Total Cost of Sales Per Month 2. Stock Damages of Less Than 0.2% Based on the Branch Cost of Sales Per Month 3. N o A s s e t Va r i a n c e (Based on Account Asset List) 4. Zero Warranty Parts Processing Rejection 41
  • 42. Achieving Parts Sales When car sales increase, demand for auto parts typically rises as well. But to grab your share of the market, you need to incorporate innovative marketing techniques, take advantage of the customers you serve through your body shop or parts dealers and participate in online and mobile NO KRA KPI 4 To Develop Sta ff s To Enable Smooth Performance To Support The Business With Excellent Customer Service And Salesmanship. Productivity 1. Throughput / Number of Sta ff s 2. Turnover / Number of Sta ff s 3. Dollar Per Car Value (DPCR) E ffi ciency 1. M i n u t e s P e r R O Processing 2. Vehicle O ff Road (VOR) / Stock Order Ratio 3. Inventory Management As Indicated in Item No.2 5 To Provide Medium And Short Term Planning And Feedback For The Overall Branch Requirement As Well As Project Planning For E ff ective And E ffi cient Branch Performance S t o c k R a t i o o f P a r t s Movement:- 1. Fast - 60% 2. Medium - 30% 3. Slow - 10% 4. Dead - 0% 42
  • 43. marketing e ff orts. Adding a few dollars in revenue every day leads to increased annual pro fi ts. Expand your market by creating an online shopping portal for auto parts. By creating a website that search engines point to when consumers look for auto parts, you can begin to increase sales incrementally. Make your website accessible and remove any obstacles customers may face when ordering. A long sign-in process can cause buyers to leave your site for simpler online shopping options. 31 Maintaining Optimum Stock Holding ABC inventory management is a technique that is based on putting products into categories in order of importance, with A being the most valuable and C being the least. Not all products are of equal value and more attention should be paid to more popular products. Although there are no hard-and-fast rules, ABC analysis leans on annual consumption units, inventory value, and cost signi fi cance. The use of ABC inventory management aids demand forecasting by analysing a product’s popularity over time, allows for better time management and resource allocation, helps determine a tiered customer service approach, enables more accurate inventory optimisation and fosters strategic pricing. 32 Periodically review all spare parts classi fi cations, i.e. critical and non-critical since the classi fi cation of a part could Linda Ray. How to Improve Auto Parts Sales? 31 Trade Gecko. Inventory Management Techniques 32 43
  • 44. change over time, based on replacements/substitutes that may become available. A regular review of spares for excess stock can help to reduce cost too. 33 Preventing Stock Damages Inventory damage is a huge issue in the warehouse business. Product damage accounts for signi fi cant revenue loss for the dealership and the transportation industry. Businesses all across the supply chain su ff er untold losses resulting from crushed, broken, bent and defective goods. Much of it can be prevented. The damage in the warehouse can hurt the dealerships in three major ways: lost pro fi ts, damage to dealer’s business reputation and employee injuries. Taking small steps toward reducing product damage in dealerships are easily achievable. It starts with identifying the causes of warehouse inventory damage and making a concentrated plan for eliminating the hazards that created the loss. Almost all damage to valuable stock happens during movement in the supply chain. Loss by damage occurs for two main reasons. One is that goods are improperly packaged and stored. The other is they are mishandled by workers or equipments used in transit. Some of the initiatives the dealership could implement to for prevent product damage in their warehouse could include, secure loaded pallets, contain and protect bulk Sigma Thermal. 7 Things to Consider for Successful Spare Parts Management 33 44
  • 45. items, organise and store loaded pallets, move products safely, and maintain a safe warehouse. The best form of prevention is by training the workers, so they are familiar with their tasks. Much of the loss can be cut by being aware of the root causes and reducing or eliminating pain points with the right material handling techniques. 34 Developing Parts Staffs The parts sta ff s in the dealership manage the parts inventory to meet the requirements of the Service Department and external customers. Many may not have the formal education for the job, but they have a great of experience in the running of the Parts Department. Sales skills are important as they are involved in selling parts and accessories to the public at the retail counter. They must be able to identify prospects, set prices, negotiate discounts, and run promotions to build sales. Product knowledge is essential to the job. Parts sta ff s must be able to identify the right part for the job and provide advice on selection and fi tting to service Technicians and retail customers. They must keep up to date with changes to vehicle speci fi cations and any related changes to parts. Parts sta ff s require good inventory management skills and knowledge of computerised stock control systems. They must be able to estimate demand based on levels of work in Cherry’s Industrial Equipment. Tips for Reducing Product Damage in Your Warehouse. 34 45
  • 46. the service and repair departments and estimate forecasts of sales to wholesale and retail customers. They must maintain su ffi cient stock to meet internal dealership demand so that service or repair jobs can be completed without delays. But they must also balance that against the costs of holding excessive inventory. The scale and complexity of auto parts inventories makes having e ffi cient administrative skills essential. Parts sta ff s must set up e ff ective systems to record incoming and outgoing parts and organise records of warranties, returns and faulty parts. They also must ensure that parts are categorised correctly to reduce the risk of an incorrect choice or delays in fi nding the right parts. Part sta ff s require good purchasing and negotiation skills to control costs and maintain the quality of their parts supplies. They can source parts from a number of sources, including original equipment manufacturers, component suppliers who o ff er parts that are equivalent to original spares, and suppliers that o ff er low-cost replacement parts. Parts sta ff s use their experience to evaluate the quality of merchandise from suppliers and employ their negotiating skills to obtain the best deals. Parts sta ff s must have good customer service skills to deal with customers’ problems and build loyalty. Parts sta ff s must aim to build strong relationships with their wholesale customers so that they can increase and secure long-term revenue. They also must maintain high levels of customer 46
  • 47. satisfaction so that customers return for their next purchase. 35 Performance Planning One thing that stays the same for any automotive Parts Department or service dealership is that no matter how dealerships manage their inventory, there are always room for mistakes. Not only do stock shortages make it more di ffi cult to maintain productivity and increases con fl ict among departments, but it also has a negative e ff ect on customer satisfaction. Conducting regular inventory counts can help o ff set this problem. While many dealerships practice annual physical inventory counts, reconciling parts more frequently can help dealers ensure inventory accuracy to reduce the likelihood of stock out and identify any problem areas. Another common mistake made by automotive dealerships is a lack of experience or not ensuring their sta ff s are properly trained. While inventory management can seem like a simple task, organising, forecasting and keeping track of your inventory requires a number of skills and often a number of employees with specialised roles. In dealerships that have large inventories, poor storage management can result in many inventory problems, in the areas of storing, tracking and the store layout system. Having proper processes in place and ensuring everyone follows them is a great place to start when resolving poorly managed inventory. Ian Linton. Skills Needed to Become an Auto Parts Manager 35 47
  • 48. In addition, e ff ectively laying out the parts storage so that parts are organised and placed in the most productive way possible is also important, as for example, placing the most commonly used parts in the most accessible areas. 36 Before the dealerships tries to resolve the inventory issues, they must fi rst be able to identify the issues. They need to look at your inventory records and identify key areas of losses. Areas that could be causing the dealership biggest inventory losses which includes lost sales opportunities due to misplaced parts, lost sales opportunities from insu ffi cient stock, obsolete parts, capital tied up in overstock, and defective parts. Having identi fi ed the inventory issues, short term planning could include fi nding a buyer, using manufacturer return programs, breaking down parts to use the individual components for training or sending for scrap. Having dealt with the short-term issues and identi fi ed the underlying problem, it is time to fi x it. Often times, the solution will uncover itself as the problems are identi fi ed. For long term planning, some solutions will be easy to implement while others may require more time and transition. The important thing to remember throughout this process is that taking the time to follow these steps and implement a real solution will ultimately lead to greater e ffi ciency, Mike Bachara. What Are the Common Inventory Problems from a Poorly Managed Auto Parts 36 Inventory? 48
  • 49. improved customer service, greater revenues and the overall success of the business. 49
  • 50. Notes on Performance Measurement Guideline NO KRA MEASUREMENT 1 Sales Mix Total Sales by Type* / Total Parts Sales x 100% Remarks The Contribution of Each Sales Type Towards the Total Sales of The Parts Department. This Is Useful as Some Sales Types Are More Pro fi table Than Others - See Gross Pro fi t Sales. As Such, A Mix That Focuses More on Lower Grossing Sales Types (e.g., Wholesale) Will Need to Be O ff set by Greater Throughput in These Areas. 2 Gross Pro fi t Sales Total Gross by Type / Total Sales by Type x 100% Remarks The Gross Pro fi t Margin for Each Sales Type. Re fl ects the Size of The Dealership's Trade Margins for Each Type of Sale. 3 Monthly Sales Per Employee Total Parts Sales / Number of Parts Employees Remarks The Number of Sales Generated on Average for Each Person Employed in The Parts Department. Indicates How E ff ective the Department Is at Generating Sales Given the Level of Sta ff . 50
  • 51. Note * Parts sales types include retail, wholesale, workshop, warranty, internal and others. 37 NO KRA MEASUREMENT 4 Monthly Gross Pro fi t Per Employee Total Parts Gross Pro fi t (Including Other Income) / Number of Parts Employees Remarks The Number of Sales Generated on Average for Each Person Employed in The Parts Department 5 Sales Over Salary Parts Salaries Expenses / Total Parts Sales x 100% Remarks How Much You Pay Your Sta ff Relative to Their Ability to Generate Sales. Allows the Dealership to Assess Its Cost Structure Relative to Sales as Salaries Are the P r e d o m i n a n t E x p e n s e i n T h e Department. 6 Externally Generated Sales Retail Sales + Wholesale Sales / Total Parts Sales Remarks The Ratio of Retail (Over the Counter) And Wholesale Revenue Against Internal Sales (Workshop, Warranty, Internal). Indicates How E ff ective the Penetration Is in The Trade and Retail Sales Sectors. A High Value for This KPI May Lead to Reduced Gross Pro fi t Margins but Too Low A Value Could Indicate Unrealised Market Opportunity. Deloitte. Pro fi t Focus. KPI guide. Parts Department 37 51
  • 52. Note * Cost of Sales = Sales - Gross Pro fi t NO KRA MEASUREMENT 7 Parts Days’ Supply Value of Parts Stock on Hand / Total Parts Cost of Sales* x Number of Working Days in Month Remarks How Many Days the Dealership Can Sustain Sales for Based on Levels of Parts Stock and Current Sales Performance. Indicates How Well Parts Stock Levels Are Controlled. Consistently High Parts Days’ Supply Should Be Addressed as Parts Are Susceptible Towards Ageing and Can Bring About Inventory Obsolescence and Other Costs Associated with Holding Stock. 8 Stock Turn Per Annum 365 Days / Parts Days’ Supply Remarks The Number of Times Your Parts Inventory Can Be Completely Sold and Bought in A Year. A Low Turnover Rate May Indicate That the Dealership Should Assess Its Stock Mix to Address Issues Like Overstocking, Obsolescence or De fi ciencies in The Model Line or Marketing E ff ort. A High Turnover Rate May Signal A Dealership That There May Be an Inadequate Level of Inventory Which May Lead to A Loss in Business Opportunity. 52
  • 53. Organization Charts and Manpower Capacity Requirements In a given dealership, the manpower requirements for both its parts and Service Department can be determined using its business volume as benchmark. The formula may vary among the di ff erent automotive companies, but it is important to have a basis in place to justify the head count within these departments. The head count should be lean and ideal for optimum business performance. The excess in manpower dilutes business pro fi ts, and at the same time, shortages could also lead to loss of pro fi ts and bad customer experience. Dealerships must be able to balance this equation based on their business needs, justifying their actions through falling back on the formulas set by their head o ffi ce management team. An organisational chart is a diagram which shows the structure of a dealership. The organisational chart graphically illustrates the concept known as chain of command and shows the fl ow of authority and NO KRA MEASUREMENT 9 Return on Investment ( Gross ROI ) Parts Gross Pro fi t / Parts Cost of Sales x Stock Turns Remarks A Measure of The E ffi cient Utilization of Current Investment in Inventory. The Higher the Figure for the KPI, The Better Return A Dealership Is Getting from Holding Stock. 53
  • 54. responsibility. It vividly depicts the superior and subordinate relationship while it shows the lines of authority and lines of communication as well. An organisational chart is of great support to create and de fi ne the dealerships structure, so that the business objectives may be accomplished accordingly and successfully. It not only helps in dividing the functions of the dealership in an appropriate manner, but it also aids greatly in developing the structure of reporting while guiding the employees properly, as the connecting lines on the chart show who is accountable to whom and who is in charge of what department. It is a great way of improving the performance of the employees and on the other hand, it enables to see whether or not the promotion channels are open for deserving employees. The organization chart is cited as a valuable means of a detailed representation through which the complete dealership may be visualised enabling management to understand how the work fi ts in all the related departments in a dealership. 38 Fareed Siddiqui. Importance of Organization Chart and Its Use in A Business 38 54
  • 55. The after-sales organization chart for Parts and Service Departments at the dealerships comes in various shapes and forms, again depending upon di ff erent automotive companies. A general organization chart for a mid-sized dealership is shown here and the head count and the job position could either increase or decrease depending on the size of the dealership. 55 Basic Service Department Workshop Flow Basic Parts Department Management Flow
  • 56. The job description, roles and responsibilities of each job designation within the Service and Parts Departments are also detailed here to serve as a guideline. Service Department - Job Description, Roles & Responsibilities Service Manager 1. Oversee operations to ensure compliance with quality standards. 2. Oversee the hiring and training of an e ff ective service team. 3. Maintain accurate record of all accounts and relevant fi nancial information. 4. Ensure sta ff s comply with environmental laws and regulations. 5. Oversee the procurement of vehicle parts, automotive equipment and various other items required in the dealership. 56 Basic Service Department Management Flow
  • 57. 6. Evaluate the performance of service sta ff in order to acknowledge e ffi cient employees and guide underperforming ones. 7. Listen to customer complaints and assist in addressing their issues and resolving their problems. 8. Oversee the disposal of workshop wastes such as used engine oil and scrapped parts to ensure adherence to health and safety laws. 9. Follow up on customers to obtain feedback and ensure they are satis fi ed with the services received. 10. Attend trainings, seminars and study relevant publications to stay up to date with developments in the automotive service industry. 39 Administration Staffs 1. Provides administrative support to ensure e ffi cient operation of o ffi ce in line with the designated job of a cashier, warranty claims processor, general administration and front desk receptionist. 2. Answers phone calls, schedule meetings and attend to visitors. 3. Carries out administrative duties such as fi ling, typing, copying, binding, scanning etc. JD&RE. Automotive Service Manager Job Description Example 39 57
  • 58. 4. Completes operational requirements through scheduling and assigning administrative projects and expediting work results. 5. Exhibits polite and professional communication via phone, e-mail, and postal mail. 6. Supports team by performing tasks related to organization. 7. Ensures operation of o ffi ce equipment by completing preventive maintenance requirements, calling for repairs, maintaining equipment inventories. 40 8. Provides information by answering questions and requests. 9. Contributes to team e ff ort by accomplishing related results as needed. Workshop Controller 1. Managing Technicians and apprentices, making sure targets and business objectives are met. 2. Working with colleagues to ensure a seamless service for customers. 3. Scheduling work to meet customer needs, taking into account workshop targets, the complexity of each job and the availability of parts. Monster. Administrative Assistant Job Description Sample 40 58
  • 59. 4. Providing estimates for servicing and repairs and setting timescales. 5. Accurately recording Technician time and writing technical reports and recommendations. 6. Ordering correct parts for vehicles. 7. Ensuring warranty standards are adhered to. 8. Liaising with other departments with regards to parts and any other queries as the workshop representative. 9. Making sure all servicing work is carried out correctly, competently and on time, with customer satisfaction in mind. 41 10. Ensuring that all work complies health and safety and manufacturer policy, as well as company standards. Foreman 1. Assist in the recruitment of new Technicians. 2. Provides employee training. 3. Creates and manages Technicians schedule. 4. Oversees daily work of Technicians. In Automotive Blog. Workshop Controller Job Description 41 59
  • 60. 5. Warns, disciplines, or terminates Technicians not working according to dealer standards. 6. Processes customer work orders. 7. Maintains work records and fi les. 8. Assigns duties to workshop fl oor sta ff s. 9. Assists in repair, construction, maintenance or other tasks involved in customer work orders. 10. Reviews work completed to ensure it is up to quality standards. 42 11. Enforces all health and safety policies in the dealership. 12. Ensures that all repair deadlines are met. 13. Assists employees in on site health or safety emergencies. 14. Addresses and resolves customer issues and complaints. 15. Oversees inspection and maintenance of workshop tools and equipments. 16. Fixes equipment and machinery as necessary. 17. Updates and replenishes workshop supplies. Great Sample Resume. Shop Foreman Job Description 42 60
  • 61. 18. Ensures that workshop area is clean, organised, and free of dangerous or hazardous material. Service Advisor 1. Greeting customers. 2. Writing service orders and descriptions of problems and repairs. 3. Translating customers’ repair problems into standard repair terminolo g y. 4. Consulting with Technicians regarding necessary repairs and possible alternatives to expensive repairs. 5. Liaising with Technicians about parts ordering and ensuring parts are available when needed. 43 6. Using products and services knowledge to sell and provide in depth information about available parts and service options to customers. 7. Answering questions about service outcomes and scheduling and booking appointments, vehicle drop-o ff , and vehicle pick-up. 8. Providing customers with information and advice on warranty protections, potential cost savings from regular preventive maintenance. Better Team. Service Advisor Job Description 43 61
  • 62. 9. Managing and overseeing the dealership's work fl ow and schedule. 10. Calling customers to advise them about service changes or car pick-up times. 11. Explaining repairs to customers. 12. Test-driving vehicles to con fi rm service repairs. 13. Maintaining positive customer relationships to ensure repeat business. 14. Ensuring all details on services rendered and costs are related to customers and processing their payments. 15. Handling customer complaint. Technician 1. Perform maintenance and repair on customer vehicles. 2. Identify problems with vehicles using the diagnostic equipment. 3. Explain automotive repairs and issues and provide great customer service. 4. Plan repair procedures using workshop manuals and experience. 5. Test the functionality of parts and systems. 6. Perform basic auto care and vehicles maintenance tasks. 62
  • 63. 7. Maintains vehicle records by recording service and repairs. 8. Perform routine maintenance and general technical work on vehicles. 9. Help keep workshop clean and organised. 10. Maintain a working knowledge of current industry best practices in automotive repair. 44 11. Keep a professional appearance. Parts Department - Job Description, Roles & Responsibilities Parts Manager 1. Monitors the parts inventory and anticipates parts needs in light of future promotions. 2. Responsible for the security of inventory and for analysing the quality of parts. 3. Manage all purchase orders and resolve any discrepancy for all purchase orders. 4. Maintain all warranty claims and assist in all changes and coordinate with vendors for all shipping delays to ensure compliance to time. 45 Better Team. Automotive Technician Job Description 44 School Field Honda. Parts Manager Job Description 45 63
  • 64. 5. Determine part sales objectives and targets and ensure compatibility for same with dealer productivity and provide assistance to all customers. 6. Develop e ff ective parts processes for both internal and external customers and maintain an inventory for all Service Departments and coordinate with various vendors on outstanding parts orders. 7. Works with retail and wholesale customers in considering credit applications, handling complaints, and negotiating prices to ensure customer enthusiasm. 8. Responsible for the pro fi t management in the Parts Department and must examine department fi nancial statements, including expenses and revenue, to ensure the department’s pro fi tability. 9. Review the previous month’s sales/pro fi t performance to determine where improvements can be made. 10. Must time inventory purchases to coincide with sales and special initiatives in order to take advantage of savings. 11. Responsible for training and leading the Parts Department team and for reviewing team performance on a regular basis, according to dealership policy. 64
  • 65. Delivery Staff 1. Unloading consignments, loading, transporting, and delivering items to customers or businesses in a safe and timely manner. 2. Reviewing orders before and after delivery to ensure that orders are complete, the charges are correct, and the customer is satis fi ed. 46 3. Providing excellent customer service, answering questions, and handling complaints from internal and external clients. 4. Abiding by all transportation laws and maintaining a safe driving record. 5. Preparing reports and other documents relating to deliveries. Administrative Staff 1. Assist to analyse and resolve all parts issues and monitor all requests for branch. 2. Monitor and correct invoices if required and prepare the related paper works. Better Team. Delivery Driver Job Description 46 65
  • 66. 3. Administer and maintain stock of all parts and evaluate all work order and maintain and update information on parts system. 47 4. Maintain inventory of all stock delivered items and prepare appropriate purchase orders as per requirement and remove all obsolete supplies from inventory. 5. Administer and maintain parts inventory for assign locations and manage all purchasing of o ffi ce supplies. 6. Manage all warranty part return from customer and processes all receipts and invoices received from suppliers. 7. Review and perform physical count of all inventory reports and prepare requisitions for all automotive parts. 8. Maintain neat and clean parts room at all times and recommend ways to improve e ffi ciency and reduce downtime and provide optimal level of customer services. 9. Greet all customers and vendors on telephone pleasantly. Great Sample Resume. Parts Clerks Responsibilities and Duties 47 66
  • 67. Inventory Controller 1. Maintain accurate record of inventory and stock management systems according to set standards. 2. Ensure regulation of in-stock level complies with inventory parameters. 48 3. Develop inventory control models that promote lower cost of sales, shorter lead times, and reduced stock levels. 4. Oversee the standard of merchandising to ensure appropriate presentation of stock. 5. Engage in the forecast of supply and demand to obtain information useful in improving the continuity of supply chain. 6. Oversee the functionality of electronic ordering systems and point of sales systems. 7. Supervise the maintenance of a warehouse and ensure proper arrangement of stock. 8. Carry out stock management operations in line with set product/retail policies and procedures. 9. Oversee the placing of orders and ensure requested goods are delivered on time. JD & RE. Stock Controller Job Description Example 48 67
  • 68. 10. Establish and maintain good working relationships with suppliers to enable easier procurement of products. 11. Work alongside workshops personnel to ensure required products are readily available. Counter Staff @ Wholesale, Retail & Service In a big dealership, it is common to employ dedicated counter sta ff s to serve wholesale, retail and service customers. The volume of business justi fi es the division in functions in order to serve customers e ff ectively. In smaller dealerships, these responsibilities are shared among the limited sta ff s. Nevertheless, the job description is similar across all three roles, which is to serve customers from di ff erent segments on parts related matters. 49 1. Receive and fi ll telephone orders for parts, take product orders from customers and process sales or other transactions. 2. Fill customer orders from stock and place orders when requested items are out of stock. 3. Read catalogues or computer displays to determine replacement part stock numbers and prices and gather customer or product information to determine customer needs. My Plan.com. Parts Salesperson 49 68
  • 69. 4. Receive payment or obtain credit authorisation to process sales or other transactions. 5. Determine replacement parts required, according to inspections of old parts, customer requests, or customers' descriptions of malfunctions. Gather customer or product information to determine customer needs. 6. Assist customers, such as responding to customer complaints and updating them about back-ordered parts. Explain technical product or service information to customers. 7. Locate and label parts and maintain inventory of stock. Monitor inventories of products or materials. 8. Mark and store parts in stockrooms according to prearranged systems. 9. Pick up and deliver parts. Arrange delivery of goods or services. 10. Manage shipments by researching shipping methods or costs and tracking packages. 11. Maintain and clean work and inventory areas. 12. Examine returned parts for defects and exchange defective parts or refund money. 13. Advise customers on substitution or modi fi cation of parts when identical replacements are not available. 69
  • 70. 14. Explain technical product or service information to customers. 15. Place new merchandise on display and set up merchandise displays. 16. Process sales or other transactions. Manpower Recruitment Manpower recruitment planning enables dealerships to have the right kind of employees in the right number in the right place at the right time. The time it takes for employees to be recruited and trained, before they can begin to contribute productively to the goals of the organization, should be considered in the manpower planning process, to ensure that the organization invests its resources e ff ectively. It is an ongoing process in dealerships to recruit new employees, guide and motivate them. The costs of losing knowledgeable and experienced sta ff can be critical to the dealership in terms of training costs for new employees, repeated recruiting costs, and loss of pro fi ts resulting from customer dissatisfactions. The growing complexity of the automotive after sales business means that they are in need of many specialist skills that are very rare to fi nd. Such employees should be recruited and retained because they can be very di ffi cult to replace when they leave. Manpower planning is critical to the dealership and it helps the dealership to foresee its future needs and to plan it well 70
  • 71. in advance. If done well, it can put the dealership ahead of its competition. Pre-Recruitment Process Prior to new recruitment, the dealership needs to review the justi fi cation of employing new sta ff s. If the surge in business is only seasonal, it is more cost e ff ective to share the additional workload among the existing sta ff s. Sometimes improving a system or procedure can be enough to improve a problem without additional personnel. 50 It is encouraged to give the current employees the fi rst consideration when there is an opening for a promotion, if they possess the necessary quali fi cation and experience required of the job. This practice would sync well with the employees’ career path planning, gives rise to their work motivation and instills sta ff loyalty and retention among the dealers work force. It is also important for the dealership to ensure that it's hiring practices conforms to local employment contract laws as fl outing it could cause irreparable damage to its reputation in the eyes of its customers. After establishing sta ffi ng needs and positions, the dealership may initiate an ongoing recruitment process to ensure that it has su ffi cient and competent sta ff s at all times for the smooth fl ow of its business operations. Nicky Marco. Manpower Planning and Development Process 50 71
  • 72. If it is for an apprentice position, local automotive technical colleges have a large pool of potential candidates and the best could be shortlisted by obtaining feedback from the college Principal. For non-apprentice positions, and in the absence of internal talents, the dealership may advertise for external candidates. The advertisement in relation to the vacant position must comprise of details regarding the dealership (size, range of services, working atmosphere, management style, location), information regarding the post to be fi lled (main tasks, responsibilities, working hours, opportunity for advancement), the description of ideal candidate (quali fi cations, skills and experience), information regarding compensation and bene fi ts (salary, holidays, bonuses, sick-leave bene fi ts, training), and information regarding how to apply (contact person and number , business address, phone/fax numbers, and submission deadline). The Selection Process Prior to assessing applications for suitability to a position, selection criteria will be developed by the immediate Manager. The selection criteria will be based on the relevant skills, experience and quali fi cations required of the job. Past employment history and referee checks should also be taken into account in shortlisting the right candidate. A selection panel should be formed to conduct interviews with applicants short-listed by the immediate Manager. The panel ought to be well versed on matters relating to the job 72
  • 73. to enable them to identify and select the right person for the job. When interview is conducted by the Human Resource department without the participation of the user department, more often than not, wrong candidates get selected and this could later cause potential manpower problems at the dealership. Proper selection and placement of employees lead to growth and development of the dealership. The level of services customers experience at the dealership can only be as good as the capabilities of its employees. The hiring of employees with the right talent and skill results in the swift achievement of dealership’s business goals. Employees who are satis fi ed with their jobs often tend to have high morale and motivation to perform better. 51 Employee Orientation The dealership should establish an employee handbook which contains the rules and regulations practiced in the dealership. It should also cover information on company bene fi ts, pay dates, lunch and other work breaks, basic employment laws and acts and more. The book should provide the employee with a signature page that outlines that he or she has read and understands Toppr. Human Resource Management. Selection Process 51 73
  • 74. what is outlined in the handbook. This procedure that must be completed by the employee before they start work. 52 The job orientation allows employees the chance to feel comfortable within their new teams, departments, and roles within the company. After being introduced to immediate superiors and colleagues, the new employee must be given information with regards to the responsibilities and coordination with other sections and departments, tools, equipment and uniforms, work safety, risk of accidents and environmental protection, and dealership policies, bene fi ts and procedures. Miranda Brookins. Example of an Orientation Program for New Employees 52 74
  • 75. Chapter 4 - People Development The Winnings of Training Dealerships must take serious view on the importance of training their employees, so they are equipped to work on the constantly changing work environment. Training at the dealerships must be an ongoing process as frequent changes in the automotive technolo g y and repair methods requires re-training. 53 A holistic training system helps dealership to keep pace with automotive technological advancements, maintain customer satisfaction, attract and retain quality employees, that helps to maintain a high level of employee morale. Training at the dealership should be based on the training needs analysis and implemented all year long. The training framework should be designed to address weak points in the dealership, changes in sta ff , new products, etc. It should also identify who requires training, what is the most e ff ective form of training, and when is the best time for training. Alternatively, the dealers could also have in place an in- house training program that could be integrated with the manufacturers training program. For example, if the Foreman receives air-conditioning training from the manufacturer, back at the workplace, the Foreman should provide on-the-job training to other Technicians. This is an After Market Business World. The Importance of Retraining Auto Technicians 53 75
  • 76. inexpensive way to increase the skill level of all Technicians in the dealership, enabling them to provide quality repairs to customers. Generally, employee training tends to receive little importance as dealers are so focused on meeting business targets. Employee training are either delayed, postponed or outrightly cancelled, in order to get employees to work on hitting their monthly sales targets. As a result, the skill and technical levels of their Technicians are far back in relation to their years of service. The dealership needs to put training on the calendar and make it a priority to certify both their front and back liners. It makes business sense to view training as an investment and not as a cost and implement it as an ongoing process and not as a one-o ff event. The training must be made mandatory and the dealership has to ensure that everyone receives the opportunity to continuously upgrade their skills and knowledge. Survey report shows that 73% of consumers are more comfortable patronising a dealership that has certi fi cates of completion of employees training on display. 54 Some dealerships have gone to the extent of including a wall of fame at their service reception with photos of each Service Advisor and Technician and information about their level of certi fi cation and how many years they have spent working in the industry. Auto Success. The Importance of Training Your Dealership Sta f 54 76
  • 77. The dealership would also need to educate customers about these certi fi cations to help them understand the advantages of using quali fi ed and certi fi ed Technicians. When they understand the di ff erence and the value it provides to them as vehicle owners, it will help them feel good about choosing your dealership for repairs, thus making it the customers preferred choice. 55 Managing Talent Pool Manpower recruitment is a constant challenge in dealerships. Sta ff turnover costs the dealers money in several ways such as wasted recruitment and training expenses, lack of continuity with customers and, ultimately, loss of sales. The di ff erence between a mediocre dealership and a great dealership is the strength of its people. The potential for improving aftermarket sales and customer satisfaction through better hires has more dealers paying attention towards sta ffi ng. Career path is laid out for new hires as a retention strate g y to minimise the risk of losing experienced employees to the competition. 56 To hire good quality sta ff s, especially Technicians who are quali fi ed for the position, could pose a challenge. It is tough to fi nd good candidates in this area, especially where young people are not attracted to the automotive after sales business. Performance Administration Corp. The Advantages of a Certi fi ed Auto Technician 55 Amy Wilson. Automotive News. Employee Turnover Costs Billions of Dollars. Managers Experiment New 56 Ways to Attract the Right People 77
  • 78. The Service Manager should establish relationship with the local technical schools, vocational colleges and universities as potential talents pools. Service Managers may also consider the possibility of setting up an intern or work- study program to establish a continuous supply of talent pools. Skills shortage vacancies, where the dealerships are unable to fi nd people with the right skills or quali fi cations for the job, now account for more than 20% of vacancies in the after sales division. Dealerships must overcome their doubts about employing young people and be prepared to invest in them, if the after sales industry is serious about business continuity. A well-designed in-house apprentice training program can generate a return on investment of up to 300% for automotive businesses, according to a new study from the Institute of the Motor Industry (UK). The study also shows that apprentices that start with no experience are able to generate pro fi t for the division within 18 to 24 months of employment. 57 Once the apprentice come on board, the dealership could practice a mentor system, where the senior Technicians should be assigned to them. The apprentice begins performing some of the simpler repair operations under the supervision of senior Technicians. Driving the Motor Industry. Automotive Apprentice Can Give 300% Return on Investment 57 78