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Service Management – Unit I March 21st & 22nd, 2012

The “New” Quest Service Management – Unit I

What it looks like when it is Right

A more professional, productive and profitable Service Operation is necessary for the distributors in the Capitals Goods Industries to be successful. To assist in the development of this Service Management team we have designed a new series of training courses aimed at enhancing the skills of those charged with this responsibility. The “New Quest Service Management Level I” consists of 4 elements presented during a two day seminar.

The Principles of Management

The Basic Principles of Management – what we call the Pursuit of Performance: Planning, Organizing and Control; Job Descriptions and Responsibilities, Performance Standards and Targets – what it looks like when it is right; Employee counseling with praise and constructive criticism in Personnel Management; Time Management to set yourself free; The Business of Change and how to overcome resistance to change; How to survive in spite of ourselves.

Introduction to Accounting & Finance for Service Personnel

Understand Financial Statements from the Service Department Perspective.  Clear and understandable definitions of the main financial terminology a supervisor/manager must have. Learn the Dealership Financial Fitness Model; and Profitability Pyramid. Asset Management and the value of Return On Assets. Pricing and Return on Capital Employed (ROCE) Discover new truths about the famous “Discount” and the consequences of it on the customer and the business.

The Operational and Process Foundation

Balancing Labor and Skills Availability with Customer Service: Work Order Process Management; simplification is not just a nice word it is very possible in this clear exposure of the flow and needs of a service management job function. The impossible made understandable. Completion Dates and Meeting Them. Unleash your true power of knowledge by learning about flat rating and shop floor scheduling.

It’s All about Customers

Satisfying everyone’s requirements and developing relationships: “Inspections” to ensure Machine Reliability, Technical knowledge and advice. How you should use price as a marketing tool; variable labor rates and their application. Value added selling; and the value of Customer Retention. Surveys to develop satisfied customers for life: Customer Profiles and all the background required to make customers your apostles.

This “New Quest Service Management Level I” provides a broad base introduction to Service Management for the 21st Century. It is intended for Service Lead hands, Instore Sales Lead hands, Supervisors, Managers and Executives. The material covers all management and operational disciplines of a Professional Service Manager.

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Parts Management – Unit I March 19th – 20th, 2012

The “New” Quest Parts Management – Unit I

What it looks like when it is Right

 A more professional, productive and profitable Parts Operation is necessary for the distributors in the Capitals Goods Industries to be successful. To assist in the development of this Parts Management team we have designed a new series of training courses aimed at enhancing the skills of those charged with this responsibility. The “New Quest Parts Management Unit I” consists of 4 elements presented during a two day seminar.

The Principles of Management

The Basic Principles of Management – what we call the Pursuit of Performance: Planning, Organizing and Control; Job Descriptions and Responsibilities, Performance Standards and Targets – what it looks like when it is right; Employee counseling with praise and constructive criticism in Personnel Management; Time Management to set yourself free; The Business of Change and how to overcome resistance to change; How to survive in spite of ourselves.

Introduction to Accounting & Finance for Parts Personnel

Understand Financial Statements from the Parts Department Perspective.  Clear and understandable definitions of the main financial terminology a supervisor/manager must have. Learn the Dealership Financial Fitness Model; and Profitability Pyramid. Asset Management and the value of Return On Assets. Pricing and Return on Capital Employed (ROCE) Discover new truths about the famous “Discount” and the consequences of it on the customer and the business.

The Operational and Process Foundation

Balancing Inventory Requirements with Customer Service: The impossible made understandable. Order Points and Order Quantities; Lead Times and the EOQ; Order Cost and Carrying Cost. Unleash your true power of knowledge by learning the theory of Inventory Control in all its glory. In physical distribution – the job everyone thinks they can do is easy but no one wants to do: Storage systems, transportation logistics; Shipping & Receiving; Parts Office, Sales Counter and Instore Merchandising Design and Layout that makes sense.

It’s All about Customers

Satisfying everyone’s requirements and developing relationships: “Up Selling”, Product knowledge, Features & Benefits selling, and effective telephone techniques. How you should use price as a marketing tool. Instore displays and merchandising; Value added selling; and the value of Customer Retention. Surveys to develop satisfied customers for life: Customer Profiles and all the background required to make customers your apostles.

This “New Quest Parts Management Unit I” provides a broad base introduction to Parts Management for the 21st Century. It is intended for Parts Lead hands, Instore Sales Lead hands, Supervisors, Managers and Executives. The material covers all of the management and operational disciplines required of a Professional Parts Manager.

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I HATE DISCOUNTS

The people that know me and have worked with me in any capacity of the past forty plus years know that I HATE DISCOUNTS.

I know you have to offer some special pricing every now and again. However, too many people just change the price on an item in a transaction and that leaves a bad impression in the mind of the customer. Oh I get it. The customer feels good about getting a reduced price. Until, that is, they think about it. Sooner or later they begin to understand that if you changed the price on that item one time, without requiring anything more from the customer – well your price must have been too high.

If you have to change a price you must change something else in the transaction in order to justify the reduction in the price. Increase the quantity. Place it on a stock order and have the customer wait for it – anything that makes sense.

Why do I HATE DISCOUNTS??

Well look at this example from a typical service department…

Sell Price              100         Discounted         90

Cost Price              35                                     35

Gross Profit            65                                     55

Expenses               40                                     40

Net Income            25                                     15

A 10% discount on the selling price becomes a 15% reduction in the gross profit and a 40% reduction in the operating profit. I HATE DISCOUNTS.

I know you have to make adjustments from time to time. It is important that everyone understand the implication of a small discount in selling price. It becomes huge at the operating net income line. The time is now.

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Updating the Add to stock blog from yesterday

Yesterday we had difficulty in format for the table of probabilities. With this update we hope we can clear up any misunderstandings. The first column is the time between the last two calls of a part number. The second column is the probability of a sale in the coming twelve month period of time.

  • Time between Calls        Probability of 1 Call
  • 3 Mths                                  98%
  • 4 Mths                                  95%
  • 5 Mths                                  91%
  • 6 Mths                                  87%
  • 7 Mths                                  82%
  • 8 Mths                                  78%
  • 9 Mths                                  74%
  • 10 Mths                                70%
  • 11 Mths                                66%
  • 12 Mths                                64%
  • 15 Mths                                56%
  • 18 Mths                                49%

The above percentages represent the probability of AT LEAST one call in the coming twelve months. This should give you more help in determining when to add a part to stock. The time is now.

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Adding Parts to Inventory

Since we started this blog we have written on inventory management three times. Once on variable lead times, once on economic order quantities and once on the only part that matters. They have each received a lot of reads.  Thank you.

Let me introduce a fourth line of attack on managing the inventory – when do you add a part to stock. For years if not decades we have added parts on the basis on two calls in six months or three calls in a year add the part to your stocking inventory. This has been the “norm” since I entered the Industry in 1969. It hasn’t really changed at all. How about we use probability theory in determining when to add a part to stock and yes when to drop a part out of the stock inventory.

  • Time Between Calls        # Calls Last 12 Months                                    Probability of 1 Call
  •                                  0             1             2             3             4             5+
  • 3 Mths                  2%          7%          14%        19%        20%        38%        98%
  • 4 Mths                  5%          15%        22%        22%        17%        19%        95%
  • 5 Mths                  9%          21%        26%        21%        13%        10%        91%
  • 6 Mths                  13%        27%        27%        18%          9%          6%        87%
  • 7 Mths                  18%        31%        26%        15%          6%          4%        82%
  • 8 Mths                  22%        33%        25%        13%          5%          2%        78%
  • 9 Mths                  26%        35%        24%        11%          4%          0%        74%
  • 10 Mths                30%        36%        22%          9%          3%          0%        70%
  • 11 Mths                34%        37%        20%          7%          2%          0%        66%
  • 12 Mths                36%        37%        19%          6%          2%          0%        64%
  • 15 Mths                44%        36%        15%          4%          1%          0%        56%
  • 18 Mths                51%        34%        12%          3%          0%          0%        49%

The above table shows the probabilities of future events based on the time between the last two events.  Take the first line “3 MONTHS”. The columns as headed 0, 1, 2, 3, 4, 5+. That is the number of calls in the coming twelve months. So under 0 is 2%, 7% under 1, 14% under 3 etc. Those represent the probability of the number of calls in the coming twelve months. Si there is a 7% probability that there will be 1 sale in the coming twelve months- or a 20% probability of 4 sales in the coming twelve months.

This is quite a good barometer to use for determining when to add a part to stock. If the last two calls are three months apart there is a 98% probability that you will sell at least one part in the coming year – 87% probability of at least one sale if the last two sales were 6 months apart etc… Don’t you think you should use this type of statistical truth in establishing when you want to add a part to your inventory? The time is now.

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A Customer Service Tool

VoIP – voice over internet protocol. What a name. Well what it does is quite remarkable. This is where your computer drives your phone system. A call comes into your Company and the computer directs the call to the appropriate extension while at the same time it paints your computer screen with the pertinent information from your name and address on the customer. Not only that, it can delivery almost whatever information you want.

“Hello Dave, how are you? Wow, we haven’t spoken since last October, where have you been?”

“Hi Dave, congratulations on your anniversary, how many years has it been?”

“Dave I have been meaning to call you, congratulations on your recent purchase of our “xx” machine.”

I am sure you can imagine various pieces of information that you would like to have displayed before picking up the telephone. There is a machine in the shop, or there is backorder outstanding – pretty critical information that would help you in your discussion with the customer.This is similar to the “Vonage” service that runs through your cable. Contact your dealer business system provider or your telephone system provider and ask what is necessary for you to obtain this type of tool. It will give you a terrific tool for customer service. The time is now.

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Facts are awfully stubborn things

This is a most interesting time, isn’t it? I listened to Jimmy Rogers on CNBC the other night. He was pointing out there is an election this year in the United States, there is one in France. Germany has an election next year. In fact there are 40 governments that will face elections this year. There will be a lot of money spent by the politicians. Yes, they spend our money to get themselves reelected. Sorry to be so cynical.

But 2012 is going to be a good year – one way or another. If we have to show unemployment going down well let’s not look so closely at the shrinking size of the work force;  If the deficits get too large let’s blame it on the recession or the conflicting arguments between one view of the economist Keynes and the rigors of the Austrian school followed by the later Milton Friedman. Politicians will be in the feel good best this political season

The total unit sales in the United States are still less than 50% of what they were at their peak. The customer fleets and rental houses are almost at the complement of units now. So where is the boom going to be coming from in the US? It sure won’t be housing will it? And as long as housing operated with depressed prices the pent up work force movement will not be released.

The only answer is that the market is what the market is and get over it. Get one with it and make the best of it. The happiest people normally DON’T HAVE the best of everything but they do MAKE THE BEST of everything. The time is now.

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You CAN make a difference

A number of years ago, 2005 to be precise, Ken Blanchard and Barbara Glanz published a short book called “Johnny the Bagger.” It is based on a story than Ms. Glanz used in her talks. Her signature, for her customer service talks, was a room surrounded on all sides by colorful posters. She told stories about customer service examples in business and had highlights on the colorful posters.

One of the stories started with her receiving a call from a front line employee from a supermarket. She had spoken to the supermarket in the previous month. The call came from a 19 year old bagger named Johnny. Johnny told her he had Down’s Syndrome, he was proud of it, and that he didn’t think that he could do much to impact customer service. Then he told her about an idea he had.

He said that when he would come home from work he would think of saying he liked and if he couldn’t think of one he would make one up. With the help of his father he would write the idea on a piece of paper 6 times and each night they would print off 50 copies. He cut out each quote and wrote his name on the back.

When he got to work he put the slips in a bag where he worked and put one in teh customers each bag after he had finished packing up the groceries for them. Isn’t that fantastic? My wish for each of you is that you have a wonderful weekend and that you can each find such an idea to influence the people in your world on a daily basis.

A month later the Store Manager called Barbara. He told her a story. He was making his rounds one day and noticed that one of the lines at the checkout stand was three times longer than any other. He called for more cashiers. But no one moved from the line. He started asking and they told him they wanted to get Johnny’s thought of the day. Well as you can imagine the concept spread and before you knew it customers were being pinned with flowers that could not be sold. A Snoopy decal was used at the meat stand. All kinds of things happen.

It is many times the smallest things that can sometimes make the largest impact. Are you able to think of something that would influence your world as significantly? The time is now.

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Tablets, PDA’s and Laptops

Over the years we have collected labor to apply to work orders in a myriad of manners. We started from an attendance time card which the mechanics completed at the end of the day telling us what times they worked on which jobs. Then we moved to individual job time cards while still retaining an attendance time card for payroll. Then some of the companies got racy and had only one time card which fed work in process but was data entered to the payroll system. Can you imagine? Then we had one card feed both systems – think of that some efficiencies arriving. Finally technology showed up and we had scanning devices either hand held or bar code scanners to record time. A long road travelled over forty years.

The objective is still the same isn’t it? We need to collect time against a job so that we can update standard job times, record time to create an invoice for the customer and provide an entry into the payroll for the technical so they can be paid.

So now we have laptops and tablets and PDA’s. And each of these devices can be used to collect labor information.

So why not take the leap and get labor entered by the technician and give them a device with which they can place their own parts orders? I have no idea why we can’t get this done. So contact your business system supplier and tell them you want the technician to be able to use a laptop or a tablet, an iPad, Galaxy or any Android device or a Thinkpad Tablet, like I use, any of which can be connected to the internet to have access to the electronic parts catalogues and service documentation. They can get that done for you. Then both you and the technicians will be much further ahead than with what you are using today. The time is now.

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The Most Important Part

The first article I wrote for an Industry publication I called “The Only Part That Matters.” This is of course the part that you don’t have available.

I was referencing the fact that too often we are driven by metrics. Off the shelf availability has to be more than 90% of some such number. That is all well and good – but what about the 10% that you are programming yourself to accept?

Early in my career I got a call in the wee hours on a Sunday morning. It was the Vice President of Parts and Service. There was a Department of Defense station in the Arctic that needed a part for their source of power – a Caterpillar Engine. Of course we didn’t have the part. We found the part in Europe. We sent an employee on a plane to go and get it, bring it back, and then we shipped it to the customer. That gentleman’s name was Rod Boileau and although most of you won’t know Rod he is one of the men that I blame for continuing to be in this Industry some 42 years later. He provided a lesson I have never forgotten. He said “if the part you don’t give me keeps my machine down – you have given me zero.” And this simple example made his point. No part – no power – no power death.

Ever since I have been harping on the fact that no matter what you goal is for off the shelf service you are programming yourself to accept to tolerate a level of shortages. That is why my first rule in the parts business is to find every part every day before you go home. No it is not acceptable to place the part on a backorder at a supplier but you need to know that the part is available and can be shipped that day. That is parts availability. The time is now.