It Is Rocket Science – More Profits for Auto Dealerships
By G.M. Dougall
The first man of the industrial age to record and study workers was Frederick Winslow Taylor. Basically, he studied physical laborers by timing them with a stopwatch and recording data on a clipboard. He observed the “first class man” of the group and found the most efficient way to move heavy iron in a steel mill. What resulted from his findings? Higher wages, happier workers, higher production, and happier managers. Thus, Scientific Management was born. He wrote a groundbreaking book aptly named “Shop Management” in 1911. Taylor believed that the best of both worlds was possible, but in his time as well as our time, there is rarely harmonious agreement between managers and their underlings. Taylor faced an uphill battle selling his great discovery. These days we have the same problem, but instead of physical laborers we manage salespeople. They interact with customers, which is harder to measure with a clipboard and a stopwatch. But I assure you as a former car salesman the goal is still the same: to move metal.
Like an amateur astronomer using new methods to find and old planet, I have stumbled across the marriage of modern data analysis with old scientific management. I think I’ve found our modern day Frederick Winslow Taylor, except the stopwatch and clipboard have morphed into a laptop. It’s the best of both worlds, and everyone comes out happier, including the customer. The first question that might pop up is why haven’t we figured this out already? The answer is rocket science.
Running a dealership is very complicated. There are several business components to contend with just within the sales department. They include advertising budgets, walk-ins, salesperson consistency, inventory management, car cost, financing, and overhead expenses. There are thousands of sets of data. How do you keep track of these variables? More importantly, how do they relate to one another? Finally, how can managers make better decisions using modern technology? The answer is called Probabilistic Business EngineeringTM, a new system that has trickled down from the aerospace industry.
I hope your brain is warmed up, because it’s time to lay down some heavy three letter acronyms. The easy ones are I.T. and Q.M. Quality Management and Information Technologies are well understood and fairly well utilized. However, within these are old and newer schools of thought. The problem is that for every piece of a known system that is not fully utilized, money is left floating around out there in the bliss of ignorance. First, the old school… Statistical Process Control, Operations Research, Business Process Re-engineering, and Six Sigma have all been around for decades. You can Google them later, but they are the kind of tools that model and organize complex problems. Want an example? How about calculating the effects of an Electromagnetic Pulse from the detonation of a nuclear weapon on the instruments inside of a bomber flying a mission at 60,000 feet? Right. The new school tools will help cool your brain back down.
Enterprise Resource Planning and Employee Engagement Planning are extremely critical to the car dealership that plans on staying in business. ERP manages the flow of data, and EEP manages the flow of people. Not the flow as in traffic, but the flow of communication and agreement. The buzz of the business. Have you ever walked into an energetic business that has noticeable charisma? What about a business that makes you wince and want to slowly back out the door? Car dealerships have the whole spectrum. They all do things differently, from how they greet the customer, to how they present the deal, to how they send you off down the road. But the problem is that variations in the process mean that somebody is doing it wrong. They’re all doing it wrong, to some extent. That’s why the average closing ratio is tirelessly treading water somewhere between 12 and 22%. There is a major problem with the consistency and quality of car salesmen. There is a major problem with defining and logging walk-ins. There is a major problem with comparing the numbers that never lie from the monthly report to the sales managers that lie for a living. There is a problem with dog eat dog salesmen stealing business from those lower on the food chain. Furthermore, a recent study by Better Bytes Business Systems found that dealership management uses less than 50% of the mature and readily available technologies mentioned above.
The worst part is that these problems have been solved and there is one system that does it today for a fee that earns back the cost in less than one year. It has already saved companies $30 million dollars, and it could single- handedly turn around the fate of car dealerships in America if only everyone knew about it. Better yet, the system and software under development will someday be applied to various other industries, creating a ripple effect in the world economy. How big? Ten years from now, the ripple from probabilistic business engineering will be one and a half billion dollars by my estimate. The inventor is an 81 year old retired aerospace engineer from Southern California. His company is The Paradigm Group, and his name is Edward Horgan. I have interviewed him and was pleased to learn that he is indeed a first class man.
Dealers need only to submit their data reports for analysis. To qualify for an application they may call 310-545-3707.
