Sandi Jerome is the founder of Sandi Jerome Computer Consulting, and has more than 25 years experience in the automobile business. In addition to be a consultant and software developer, she is a CPA with a degree in accounting, and also worked as a fixed operations manager and as a dealership controller and CFO.
What do you think is the most significant challenge facing dealer fixed-operations departments right now?
Almost every dealership that I know has cut staff, but with the fixed operations having the highest number of transactions and customer contacts throughout the day, they are stretched extremely thin. I find service managers who are writing service and parts managers that are unpacking and shipping parts.
I get the impression from many consultants and parts managers that parts and service departments are often left relatively to their own devices (or un-managed) by dealership owners. Is this the case? Should dealership management be more actively involved in their fixed-ops?
In these two departments, I don't feel a great need for others to manage the departments. Normally both of these managers are quite capable and they get a lot of training and help from various outsiders. Rather than being actively involved, I like dealers and CFOs to instead "monitor" the departments on a more daily basis. For example, they shouldn't wait for the financial statement results; rather they should ask, "How many appointments do we have for today and how many hours did we do yesterday?" They should ask throughout the day about the fill rate in parts: Are the requested parts by the shop being filled the same day?
You've worked in both fixed-ops and on the financial side. How well integrated are most dealerships in terms of how their sales and service departments work together to drive new business? How well versed are managers and controllers, typically, about how to make fixed-ops (particularly parts) run profitably?
There is still a lack of synergy between the departments, and even outright conflict and competition can exist. They spend more time deciding who is going to pay for something than figuring out why something has to be paid. I think the biggest problem in knowing what it takes for fixed ops to be profitable is the difficulty in quantifying their results. For example, most dealers know that they need to sell 200 cars at an average gross profit of $900, but how many repair orders and what amount per RO do they need daily? How many parts tickets? It's harder to predict.
Conversely, how do you think parts and service managers understand their role within the larger business of the dealership?
This is the sad thing. They often operate as an island, and are not involved in planning, especially not in capital requirements and long range plans. I had one service manager tell me that he was told after it happened that the dealer had dropped a franchise. He didn't get a chance to fight for the service work that was involved in carrying that make. The way for them to be more involved is to make the time. Often dealers, controllers, and CFOs don't want to bother them—they are so busy that they leave them out of meetings and planning. If a typical parts and service manager listed everything they do in one day, I bet less than 10% could be labeled as "managing." Thus we get back to your first question and the problem with having no staff!
