Preventative Maintenance
This week, our guest writer Dale Hanna delivers another powerful blog post, this time on the multiple benefits of preventative maintenance.
Service revenue has been the most important contributor to the bottom line for many dealers. When a strong demand for equipment coupled with a shortage of new equipment, service becomes even more important. That is the world we live in today.
Preventative Maintenance Contracts – A Necessary Hero
PM contracts/agreements is a part of the services provided and has its unique importance. In this two-part series, I would like to discuss the impact of PM contracts/agreements we do not usually think about, and, in the next blog, how to leverage technology to maximize the value of PM contracts/agreements.
Not All Revenues Are Created Equal
The valuations of software companies have increased substantially. In recent years, the driving force has been the introduction of SaaS (Software as a Service). The secret sauce here is the recognition that not all revenues are created equal. The differentiator is the predictability of revenue. Predictable revenue is worth multiple times more than the revenue that has to be earned in the future.
PM contracts/agreements make this portion of the service revenue predictable, not to mention that it also makes your connection to your customers predictable.
It actually gets better from here. One of the biggest problems in any service organization comes from the reactive nature. In the break/fix world, service work can be feast-or-famine. We do not know what will break today and it can be very hard to balance the workload and keep the customers happy. By comparison, we have flexibility in performing PM contracts/agreements/agreements. As long as we stay in the acceptable range, we have the leeway in determining when the work will be done. This will increase technician efficiency, technician job satisfaction, and overall Service department profitability.
PM contracts/agreements generate revenue, and the unique nature of PM contracts/agreements make this revenue better in more ways than one.
It Is Not Just the Revenue from PM Contracts/agreements
The revenue generated by the PM contracts/agreements should never be limited to the PM’s. With the right strategy and tools, a machine monitor specialist can generate more than $5,000,000 service revenue in year.
When we combine fault code monitoring, preventative maintenance, inspection and fluid analysis (commonly known as condition monitoring), we are in a position to create high valued, pro-active service opportunities for our customers. In the end, it is the uptime without drama that is the holy grill.
Fault codes are available on many new machines. More manufactures are providing fault codes for their machines, and, with each introduction of new models, more fault codes also become available every day. Not all fault codes have the same level of urgency, many can be addressed at the time of PM services with parts pre-ordered and enough time scheduled. If you sell and service multiple lines, fault codes may not come in the same format from different manufactures. This can be daunting to manage manually but effectively handled by the proper applications to keep your machine monitor specialist working efficiently.
Inspections are critical. With electronic inspections, problems discovered can be transmitted real time and organized by priorities. Pictures and videos in modern electronic inspection apps increase communication efficiency dramatically. Many problems found during inspection can also be scheduled to be addressed during the next PM service.
Fluid analysis reports are vital. The challenge is to be able to take the right actions, especially if you are watching over hundreds, thousands or even tens of thousands of machines. Reading one report at a time will not come close to getting the job done. Luckily, more and more labs are starting to provide API’s (Application Programming Interface) to deliver the fluid analysis data to their customers. API’s (Application Programming Interface) are ways for your computer to talk with the lab’ computer the get fluid analysis data electronically. The data received in this form can be stored in organized databases to be used easily.
We can have all the fault codes, PM service alerts, findings from inspections and fluid analysis in one place to efficiently service our customers in a pro-active and effective way. These are not just revenue opportunities beyond PMs, but planned revenue opportunities beyond PMs, a higher valued revenue.
When You Change the Game in Customer Experience
If we look one step further, how do we increase market share in today’s competitive environment? While the advancements in machines are amazing and will continue to be, dealers are noticing brand differentiation becoming more and more of a challenge. We see the battle of the future being fought on customer experience.
What defines the core of customer experience when there is more work than people? To help customers increase uptime at a reasonable cost. Whoever can do this the best will have the strategic advantage. How do we deliver the best customer experience based on this definition? The PM contracts/agreements might just be the right area to focus on.
PM contracts/agreements, like anything else, will not solve all the problems, but it is a necessary hero to drive high quality revenue and customer satisfaction.
Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.
Is the Preventative Maintenance Business Part of Your Business Plan?
Is the Preventative Maintenance Business Part of Your Business Plan?
Guest writer Bill Pyles writes this week’s blog post on preventative maintenance: is the preventative maintenance business part of your business plan?
I sure hope the answer is a resounding yes! The PM business adopted by OEM equipment dealers goes back to the 1980s and is a win-win for both dealers and contractors. A properly maintained machine, that’s documented, is worth more when the time comes to replace it.
I can still remember the day the subject of our dealer doing in the field PMs was brought to the table. I had a strong objection that contractors would not pay the dealer to do their PMs. PMs were perceived by many as a necessary evil not requiring a higher-level tech from a dealer. By the way, this type of thinking was also applied to undercarriage management; more on this in another blog.
Not taking the PM program seriously can lead to unplanned downtime and poor machine availability, which could be a perceived reflection of the equipment and the dealer. A machine model with poor availability will more than likely not be considered when replacement time comes.
PMs were something the contractor would take care of on the weekend or after hours. Unfortunately, too often, due to the demands of the job the machine was on would delay getting a PM completed on time. I have seen engines go 300 to 400 hours past due on a PM service. Unfortunately, the additional wear caused by the contaminated fluids and excessive hours cannot be put back into the engine. And if this trend continues, the engine is certain to fail at an earlier hour meter reading than expected. Times this scenario over the entire fleet and you’ll quickly realize that PMs are critical to your operation and machine availability. This applies to contractor’s and dealer’s rental fleets.
So how do we make sure your PM program is on track? The first thing you’ll need is a good PM scheduling tool. It will take some time to load all the equipment into a scheduling tool, but it’s time well spent. A good scheduling tool will keep track of the machine hours, create alerts, list the items to be serviced on each PM along with a parts list when a machine is coming due as well as keep maintenance history and oil sample reports in one convenient place. It will also interact with your telematics to keep hours current. A good place to start is to flag the machine when it’s within 40 hours of being due. This should provide ample time to schedule the PM due. I would also flag a machine over 40 hours due as a past-due PM for tracking purposes. Your goal should be 95% or higher for on-time PMs.
Next, you’ll need a dedicated PM vehicle. If you try to do PMs out of a service truck, hauling buckets of oil, you’ll have issues capturing the drain oils for proper disposal. The size of the truck will depend on the number of machines you’ll be servicing. Your vehicle could be a smaller truck with a lube skid. A lube skid works well in a rental operation with smaller machines, skid steers, small rollers, loader backhoes, etc.
If you have a medium fleet of small to larger equipment you may want to look at a dedicated PM truck. These trucks can be custom-made to provide you with adequate new fluids as well as waste oil tanks. Oil recovery systems that pick-up waste oil quickly and efficiently and metered oil reels to quickly refill lubricated compartments. Be generous with external lighting around the outside of the truck; required for doing PMs at night. Be sure to add an air compressor to blow out radiators and some air filters. Work with a reputable truck vendor for building a truck that will fit your needs. I’ve worked with a few truck vendors thru the years and the one I could always depend on was Nichols Fleet Equipment in Chattanooga Tennessee. Experience does count!
So now we have a scheduling tool and for the vehicle to do the PMs we’ll need to add the PM Tech. This person does not need to be your number one technician, nor should this person be right out of technical school. The PM tech needs to understand all the items that make up the various levels of PMs. A 500-hour PM is much more than changing the engine oil, and fuel filters and looking at the air filter, lots more! The tech needs to understand how to properly take an oil sample. I suggest taking all the oil samples at each service. Some suggest taking an oil sample only when the fluid is changed. I do not see much value in taking the first hydraulic oil sample at 5,000 hours. An incorrectly taken oil sample will result in erroneous results. Erroneous results lead to bad decision-making and could result in catastrophic downtime. Taking oil samples at the time of a PM service will create a history of the components of the machine that will show trends, good trends when the oil sample report comes back with no alerts, and bad trends, for example when sodium in the engine is trending upwards. Sodium in engine oil could be an indication of a small coolant leak into the engine. You can schedule the machine down, fix a minor problem and go back to work. Or you can ignore the sodium in the engine and have unplanned downtime, a possible engine failure event that usually happens on an important time-sensitive job. Be sure to have someone on staff that can interpret oil sample reports!
Most equipment OEMs market their brand of fluids. This presents a problem if you have a large mixed fleet. Substituting Cat Drive Train oil for hydraulic oil is not recommended. Mixing different types of hydraulic fluids can cause serious damage to the hydraulic system. Mixing different types of long-life coolants can cause problems. When setting up your PM vehicle be sure to review the correct fluids needed for your fleet. You do not need to use the OEM recommended fluids if the fluids you are using meet the OEM spec. I suggest using quality fluids and fuel to maximize your PM intervals. You will notice most OEM PM intervals are “recommended” intervals. If you have a machine working in a quarry, transfer station, or any other domiciled location, you can extend the PM interval if the oil samples indicate no issues. Remember, the oil does not wear out, rather the additives deplete causing the fluid to not perform as it should. A good oil sampling program keeps your fleet in good operating condition.
Your PM tech should do a walk-around inspection and a safety inspection during each PM interval. Therefore, the PM tech must be familiar with the machines he or she is servicing. The inspection form can be custom-made and part of your PM scheduler or work order system. The intent is to keep small problems small, document all machine issues and follow up with corrective action. If there is an issue that can wait till the next PM, it should be noted in the scheduling tool and pop up as a reminder at the next PM interval. Pictures are very helpful in documenting machine issues or damage. I recommend the PM tech also take pictures of the filters replaced during the PM service clearly showing the date and hours the new filter was installed. And while we are talking about filters, I do suggest using genuine OEM filters. Experience has shown me that many filters look the same on the outside but are a world different on the inside. Installing an aftermarket filter with the wrong micron rating will allow larger wear particles to pass through damaging critical components. OEM filters are specifically designed for your equipment!
The PM tech should also look at and document all machine fault codes. Then the codes should be cleared allowing the tech to determine if the fault codes are active or logged. Reacting to an insignificant code could prevent the machine from going down hard tomorrow. It may be a good time to do a forced regeneration to keep your diesel particulate filter operating normally.
Bottomline, be sure to put a person who is knowledgeable of your equipment, fluids and coolants, oil sampling and oil sample interpretation, and a repair before failure attitude in charge of your PM program. Set machine availability goals to measure the effectiveness of your PM program. Set on-time PM goals. Keep electronic records and make them available to a potential buyer of your used machine. This is especially important for a dealer’s rental fleet. It would send the wrong message if a potential buyer of a dealer’s rental equipment asks to see the PM history and oil samples and there are none or hit and miss.
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Intellectual Capital
Intellectual Capital
In this week’s Lifelong Learning post, Founder and Managing Member Ron Slee continues to look at employees as assets. Read on to learn about Intellectual Capital.
In an earlier post on Lifelong Learning, I posed a question to you – “Are your employee’s assets or expenses?” I hope every one of you said they are assets. Today I am wanting to look at your employees from a different perspective. I want to look at your employees as an “Asset on your Balance Sheet.” Imagine if you took all of the knowledge, skills and experiences of your employees and were able to put it into a container?
Look at the skills required to operate your business.
Selling. Leading. Buying. Repairing. Maintaining. Data Storage. Warehousing. Shipping. Receiving. Transportation. Ordering. Purchasing. Stocking. Paying Bills. Payroll. And there are many more.
On top of that you have the specific skills within each discipline. Take selling as an example. The function requires Research, Goal Setting, Asking Questions, Overcoming Objections, Explaining Benefits, and Closing the Sale. Each job function can be dissected into the differing skills required to perform it. That is one of the byproducts of our Job Function Skills Assessments. Most of us view a job simply as that. I would ask that you look at it in a different manner. Each job is a composite of a lot of different items. Let me go in a different direction for a moment. Let’s look at the job of a surgeon. What is it? Is it simply using a scalpel and cutting. Or are the years of training given to the surgeon expecting that they will see with trained eyes and identify problems inside our body and then knowing what to do about it? Of course, it is the latter, isn’t it?
So, when people take our assessments, they are taken aback at some of the questions. A typical comment coming back to us after the employee completes their assessment is that I wasn’t aware that was part of my job. If we look at the telephone and counter selling job function, most of the employees have done it for a long time. They typically are on autopilot. However, they are often extremely busy. They don’t have time for many niceties. That is a shame. That is a result of not having enough people to do the job properly. That is the negative result of sales per employee. (Too many “bosses” think that a high sales per employee is a good thing. That is totally wrong. Completely wrong) Customer retention. Customer loyalty. They are critical measures of your success as a business. Market share is another.
Well in the parts business over the past forty years market share in parts and service has dropped by more than 50%. Many of you will argue with me as a result of your sales revenue continuing to go up. Perhaps many of you will point to the proliferation of competitors as the cause of this reduction. I will respectfully disagree. This drop in market share is a direct result of too few people serving customers doing too much work.
Look at your service department as a good example. Surveys done by industry associations point out that 15% of the customers who purchase labor from an equipment dealer “defect” each year. Let me express that another way for you to better make my point. 15% of your service customers STOP buying labor from you on an annual basis. That means that you lose 50% of your customers over a five-year period. Don’t believe me? Check it out. Get a report in name sequence. Alphabetically. Compare the list from five years ago in a calendar year to the current year. In our case today compare 2021 to 2016. That is a gap of five years. Get the total number of customers in 2016 and compare that to 2021. In many cases the number will be very close to the same. Now go through and compare the two lists side by side. Name by name. How many names purchased labor in 2016 that did not purchase in 2021. I suspect you will find the number to be a very sobering illustration of the point I am trying to make with you.
In parts it is not as stark a defection rate but it is equally as disturbing.
Your employees are assets for your business. They are the people that create the glue, that bond your customers to your business. Too many of you view, these employees, your heroes, simply as tools in a toolbox. Nothing could be further from the truth. The sales per employee metric is given lip service. It is not the trigger that it should be used to hire people. In the 1980’s the sales per employee number, widely accepted in the industry was $600,000/parts employee/year. That number did not include the Parts Management nor the Product Support Sales team. For many of the dealers with which I have worked over the past five years that sales per employee number exceeds $1,000,000/employee. That means that the people working on your counters and telephones serving your customers are overworked. From the 1980 metric 5 people were required to do $3,000,000 per year. That job today it is being done by 3 people. How can this be allowed to happen?
There is a very old expression. “You reap what you sow” The market share reduction is a direct result of this excessive sales per employee. It is a result of the employee NOT being viewed as an asset but as simply a tool to be used. This is wrong. It needs to change.
The time is now.
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Friday Filosophy v.10.07.2022
Friday Filosophy v.10.07.2022
John Maynard Keynes, 1st Baron Keynes, CB, FBA; (5 June 1883 – 21 April 1946) was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in mathematics, he built on and greatly refined earlier work on the causes of business cycles. One of the most influential economists of the 20th century, he produced writings that are the basis for the school of thought known as Keynesian economics, and its various offshoots. His ideas, reformulated as New Keynesianism, are fundamental to mainstream macroeconomics.
During the Great Depression of the 1930s, Keynes spearheaded a revolution in economic thinking, challenging the ideas of neoclassical economics that held that free markets would, in the short to medium term, automatically provide full employment, as long as workers were flexible in their wage demands. He argued that aggregate demand (total spending in the economy) determined the overall level of economic activity, and that inadequate aggregate demand could lead to prolonged periods of high unemployment, and since wages and labor costs are rigid downwards the economy will not automatically rebound to full employment. Keynes advocated the use of fiscal and monetary policies to mitigate the adverse effects of economic recessions and depressions. He detailed these ideas in his magnum opus, The General Theory of Employment, Interest and Money, published in late 1936. By the late 1930s, leading Western economies had begun adopting Keynes’s policy recommendations. Almost all capitalist governments had done so by the end of the two decades following Keynes’s death in 1946. As a leader of the British delegation, Keynes participated in the design of the international economic institutions established after the end of World War II but was overruled by the American delegation on several aspects.
Keynes’s influence started to wane in the 1970s, partly as a result of the stagflation that plagued the Anglo–American economies during that decade, and partly because of criticism of Keynesian policies by Milton Friedman and other monetarists, who disputed the ability of government to favorably regulate the business cycle with fiscal policy. However, the advent of the global financial crisis of 2007–2008 sparked a resurgence in Keynesian thought. Keynesian economics provided the theoretical underpinning for economic policies undertaken in response to the financial crisis of 2007–2008 by President Barack Obama of the United States, Prime Minister Gordon Brown of the United Kingdom, and other heads of governments.
When Time magazine included Keynes among its Most Important People of the Century in 1999, it stated that “his radical idea that governments should spend money they don’t have may have saved capitalism.” The Economist has described Keynes as “Britain’s most famous 20th-century economist.” In addition to being an economist, Keynes was also a civil servant, a director of the Bank of England, and a part of the Bloomsbury Group of intellectuals.
The Time is Now.
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Preventative Maintenance
Preventative Maintenance
This week, our guest writer Dale Hanna delivers another powerful blog post, this time on the multiple benefits of preventative maintenance.
Service revenue has been the most important contributor to the bottom line for many dealers. When a strong demand for equipment coupled with a shortage of new equipment, service becomes even more important. That is the world we live in today.
Preventative Maintenance Contracts – A Necessary Hero
PM contracts/agreements is a part of the services provided and has its unique importance. In this two-part series, I would like to discuss the impact of PM contracts/agreements we do not usually think about, and, in the next blog, how to leverage technology to maximize the value of PM contracts/agreements.
Not All Revenues Are Created Equal
The valuations of software companies have increased substantially. In recent years, the driving force has been the introduction of SaaS (Software as a Service). The secret sauce here is the recognition that not all revenues are created equal. The differentiator is the predictability of revenue. Predictable revenue is worth multiple times more than the revenue that has to be earned in the future.
PM contracts/agreements make this portion of the service revenue predictable, not to mention that it also makes your connection to your customers predictable.
It actually gets better from here. One of the biggest problems in any service organization comes from the reactive nature. In the break/fix world, service work can be feast-or-famine. We do not know what will break today and it can be very hard to balance the workload and keep the customers happy. By comparison, we have flexibility in performing PM contracts/agreements/agreements. As long as we stay in the acceptable range, we have the leeway in determining when the work will be done. This will increase technician efficiency, technician job satisfaction, and overall Service department profitability.
PM contracts/agreements generate revenue, and the unique nature of PM contracts/agreements make this revenue better in more ways than one.
It Is Not Just the Revenue from PM Contracts/agreements
The revenue generated by the PM contracts/agreements should never be limited to the PM’s. With the right strategy and tools, a machine monitor specialist can generate more than $5,000,000 service revenue in year.
When we combine fault code monitoring, preventative maintenance, inspection and fluid analysis (commonly known as condition monitoring), we are in a position to create high valued, pro-active service opportunities for our customers. In the end, it is the uptime without drama that is the holy grill.
Fault codes are available on many new machines. More manufactures are providing fault codes for their machines, and, with each introduction of new models, more fault codes also become available every day. Not all fault codes have the same level of urgency, many can be addressed at the time of PM services with parts pre-ordered and enough time scheduled. If you sell and service multiple lines, fault codes may not come in the same format from different manufactures. This can be daunting to manage manually but effectively handled by the proper applications to keep your machine monitor specialist working efficiently.
Inspections are critical. With electronic inspections, problems discovered can be transmitted real time and organized by priorities. Pictures and videos in modern electronic inspection apps increase communication efficiency dramatically. Many problems found during inspection can also be scheduled to be addressed during the next PM service.
Fluid analysis reports are vital. The challenge is to be able to take the right actions, especially if you are watching over hundreds, thousands or even tens of thousands of machines. Reading one report at a time will not come close to getting the job done. Luckily, more and more labs are starting to provide API’s (Application Programming Interface) to deliver the fluid analysis data to their customers. API’s (Application Programming Interface) are ways for your computer to talk with the lab’ computer the get fluid analysis data electronically. The data received in this form can be stored in organized databases to be used easily.
We can have all the fault codes, PM service alerts, findings from inspections and fluid analysis in one place to efficiently service our customers in a pro-active and effective way. These are not just revenue opportunities beyond PMs, but planned revenue opportunities beyond PMs, a higher valued revenue.
When You Change the Game in Customer Experience
If we look one step further, how do we increase market share in today’s competitive environment? While the advancements in machines are amazing and will continue to be, dealers are noticing brand differentiation becoming more and more of a challenge. We see the battle of the future being fought on customer experience.
What defines the core of customer experience when there is more work than people? To help customers increase uptime at a reasonable cost. Whoever can do this the best will have the strategic advantage. How do we deliver the best customer experience based on this definition? The PM contracts/agreements might just be the right area to focus on.
PM contracts/agreements, like anything else, will not solve all the problems, but it is a necessary hero to drive high quality revenue and customer satisfaction.
Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.
Bite-Sized Pieces
Bite-Sized Pieces
Curriculum designer Caroline Slee-Poulos joins us for this week’s instalment on Lifelong Learning: Bite-Sized Pieces.
I don’t know about all of you, but I do know that when I was growing up my mom always made sure to correct me when I tried to eat extra-large bites of food. I was often guilty of this when it came to twirling my pasta. Anyone else?
It isn’t just food that matters when it comes to bite-sized pieces: it’s learning, too. While there is some data on the human attention span to indicate that we can maintain focus, or concentration, is around 45 minutes. In fact, prevailing practices in education suggest that all students should take a “brain break” at that point in a lesson. Yes, this even applies to adult students. You can read about this here.
This is the “why” behind our class structures. Rather than a long learning segment, we stick with the shorter, bite-sized pieces. Our students spend approximately 15 to 20 minutes of learning before each quick check for understanding. This built-in brain break means each individual has a clear moment in the class to pause and do something else.
For the students who look back at their time in classrooms as an unpleasant memory, this offers a chance to reset what learning means.
Isn’t it time for you to invest in yourself with Learning?
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Friday Filosophy v.09.30.2022
Friday Filosophy v.09.30.2022
David William Donald Cameron (born 9 October 1966) is a British politician and lobbyist who served as Prime Minister of the United Kingdom from 2010 to 2016. He was Member of Parliament (MP) for Witney from 2001 to 2016 and leader of the Conservative Party from 2005 to 2016. He identifies as a one-nation conservative, and has been associated with both economically liberal and socially liberal policies.
Born in London to an upper-middle-class family, Cameron was educated at Heatherdown School, Eton College, and Brasenose College, Oxford. From 1988 to 1993 he worked at the Conservative Research Department, latterly assisting the Conservative Prime Minister John Major, before leaving politics to work for Carlton Communications in 1994. Becoming an MP in 2001, he served in the opposition shadow cabinet under Conservative leader Michael Howard, and succeeded Howard in 2005. Cameron sought to rebrand the Conservatives, embracing an increasingly socially liberal position, and introducing the “A-List” to increase the number of female and minority ethnic Conservative MPs. Following the 2010 general election, negotiations led to Cameron becoming prime minister as the head of a coalition government with the Liberal Democrats – the youngest holder of the office since the 1810s. His premiership was marked by the ongoing effects of the late-2000s financial crisis; these involved a large deficit in government finances that his government sought to reduce through austerity measures. His administration passed the Health and Social Care Act and the Welfare Reform Act, which introduced large-scale changes to healthcare and welfare. It also enforced stricter immigration policies, introduced reforms to education and oversaw the 2012 London Olympics. It privatized the Royal Mail and some other state assets, and legalized same-sex marriage in England and Wales.
Internationally, Cameron’s government intervened militarily in the First Libyan Civil War and authorized the bombing of the Islamic State. Domestically, his government oversaw the referendum on voting reform and Scottish independence referendum, both of which confirmed Cameron’s favored outcome. When the Conservatives secured an unexpected majority in the 2015 general election, he remained as prime minister, this time leading a Conservative-only government. To fulfil a manifesto pledge, he introduced a referendum on the UK’s continuing membership of the EU. Cameron supported continued membership; following the success of the Leave vote, he resigned as prime minister and was succeeded by Theresa May. Cameron has been the president of Alzheimer’s Research UK since 2017.
Cameron has been praised for modernizing the Conservative Party and for decreasing the United Kingdom’s national deficit. However, he has been criticized for his decision to hold the referendum on Britain’s membership of the EU, which led to political instability in the UK during the late 2010s. He has also been accused of elitism and political opportunism. After leaving office, he was implicated in the Greensill scandal after lobbying government ministers and civil servants on behalf of Greensill Capital.
The Time is Now.
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When And Where Should You Spend Money?
When And Where Should You Spend Money?
Guest writer Jennifer Albright addresses the money issue head-on by asking the question “When and Where Should You Spend Your Money?”
As a supply chain professional, I pretty much had to buy this when I saw it on the sale table at a local museum. This topic actually comes up quite often in our consulting life – advising dealers on when to cut corners and when to spend. It could be anything from office supplies to personnel to software and anything in between, the dealers we work with are constantly asking us when and where to invest their time, money, and people.
While the answers will vary from dealer to dealer depending on a number of factors – company size, years in business, geography, the commodity in question, and many others, there are a few constants that are always worth the investment.
People.
It is always worth investing in people. Hire the best folks you can, and invest in training and development. Your people are your brand, and they will make or break your dealership. Whether someone is answering the phone, turning wrenches, selling equipment, or paying the bills, invest in your people. While salaries can take a chunk out of your operating budget, it’s a lot less expensive to pay for a highly skilled employee than to train up someone with less experience or to clean up after someone who was in over their head – and much less than the cost of turnover.
Planning
This is another area where investment pays big dividends. Budgetary planning helps keep everything in check. We’ve worked with a number of folks who overspent in one area when they really needed investments in another and regretted it after the fact because they hadn’t taken the time to budget or plan for the expense. Facility planning, especially during times of growth, is huge. I can’t tell you how many times we’ve spoken with dealers who rushed through facility planning and had outgrown the new building before construction was even completed, or hadn’t taken the time to design the space appropriately and it didn’t fit their needs well despite appearing to be large enough on paper. Planning takes time which can be frustrating, and can seem expensive in terms of hiring design firms, financial folks, or investing in software, but it is well worth it.
Technology.
There are so many choices available right now in every area of dealer business and many of them can bring efficiency and in turn savings to the dealership. If nothing else it can be a bigger challenge to weed through all of the options and decide which technology tools best fit your dealer size, complexity, and will address your biggest challenges versus chasing each shiny new tool that catches your eye.
Priorities.
At the end of the day, it’s about priorities and risk. Looking back at our raccoon friend Reuben in the photo, there will be times when a cheap plastic sword will serve your purposes because it’ll get the job done 90% of the time and you can have a plan B to handle exceptions. In other situations, investing in a metal sword may be the best tool for the job or the risk involved with the plastic sword failing is too great. By investing in your people, focusing on planning, and leveraging technology where it makes sense, you’ll be in a much better position to make these spend decisions effectively.
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Operating and Financial Forecasts Using Artificial Intelligence
Operating and Financial Forecasts Using Artificial Intelligence
Guest writer Steve Clegg brings technology to the table in his blog post for this week, “Operating and Financial Forecasts Using Artificial Intelligence.”
Operating and Financial Forecasts Using Artificial Intellignence
Forecasting your operating and financial results is an important part of any business. Whether you are a startup or an established company, accurate forecasting will help you make informed decisions in your day-to-day operations.
Operating forecasts drive your financial forecasts—not the reverse—and allow you to predict key metrics like customer retention and customer transactions, resulting in reliable forecasts for revenue, expenses, and profits, so that you can take advantage of any growth opportunities as they arise. By understanding how you can improve outcomes in these areas, you create a business strategy that helps you maximize your profitability and meet the expectations and needs of your customers. With the use of Artificial Intelligence, forecasting and managing your growth is simplified.
Let’s look at some of the most important things that you need to understand about operational forecasting.
The determination of the key operating metrics that drive your financial performance is often very difficult to understand. As a result, many businesses are reactive versus proactive because of everything that can impact a business, including competition, service expectations, distance, seasonality, technology, and the economy.
It is important to remember that successful businesses focus on what really matters. They make choices to identify who their customers are, what products and services are most profitable, and the markets and industries that make the most sense to target. With this approach you can improve your product and service offerings to exceed the expectations of your target customers.
Identifying which customers, industries and geographic markets are important to your business is the first step in managing your future. You can then use this data to segment customers by type, provide them with the products and services that they are most likely to purchase, and deliver the customer engagement they expect. This approach will help you improve customer satisfaction and keep your customers coming back. Retained customers double their purchases every year that they stay with you.
How do you create and maintain reports that track your performance and accurately forecast your next 12 months?
AI technology has come to the rescue. These plans can be easily created and updated using Artificial Intelligence which will provide a detailed plan to help you, identify what drives your business, and set clear goals and targets. With a clear plan and outline for how you intend to achieve your goals you can stay on track, overcome obstacles and manage your employees and resources to determine which operating, sales and marketing programs are working. AI allows you to be proactive by knowing the future versus being reactive and a victim of the past.
By using AI, you are able to make data driven decisions that are proactive, rather than emotional reactive decisions, based on misguided opinions or guesses. It also provides you with valuable feedback that you can use to measure the effectiveness of each decision and accurately forecast and improve future performance.
Tracking your operating results and forecasting them correctly is a critical step in ensuring that you meet all your operating and financial goals.
Zintoro.com is an online artificial intelligence tool that automates forecasting and tracking of your key operating and financial metrics and determines what is really driving results by branch, department, product line and customers. Zintoro.com tracks historical results and provides 12 month rolling forecast with a >95% accuracy for forecasting your customers, transactions, and revenue.
The first step in creating a good financial forecast is to understand the key operating metrics that matter most to your customers and your organization. By constantly using these metrics, you will be able to make better business decisions that maximize your organization’s financial performance and meet the expectations of your customers.
Let’s look at an example of a key business metric that Zintoro.com uses as the foundation for preparing an operational and financial forecast for your business: Your Customer Retention Rate
The retention rate tells you the number of customers who return to purchase your products or services over a specific period. For example, if you have a rolling 12-month retention rate of 70% this means that 70% of your customers will continue to do business with you after their first 12 months. A high retention rate indicates that your customers are happy with your products and services and will return to buy more. If you have a low retention rate this indicates that your customers are not satisfied and continue to look for alternatives to meet their needs. Understanding the retention rate can help you make important changes that improve your customers’ experience and ultimately improve their satisfaction and loyalty to your brand.
Customer retention is your primary growth engine, because each year a customer is retained their transactions and revenues will double for up to three to five years. With a successful sales and marketing program, transactions and sales will double again.
A successful financial forecast is based on your ability to retain customers, which helps you identify business opportunities, achieve your growth goals, and make smart business decisions that contribute to your overall success. The financial forecast, which is determined by your customers forecasted transactions and their retention, helps you manage your costs and avoid unexpected expenses that can negatively impact your bottom line.
Zintoro.com automates the process and identifies your key metrics that drive your business and which customers you are at risk of losing. Stop guessing and start anticipating the future.
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The Challenges We Face
The Challenges We Face
Today, founder Ron Slee continues our series on Lifelong Learning with this blog post: The Challenges We Face. Education should lead to learning, shouldn’t it?
You are seeing it everywhere these days. The progress that has been made in education has not been very good. Through the pandemic and all the arguments about going to school or going virtual with reading, writing and arithmetic measures are all pointing out that things are not very good.
The New York Times reporting on September 1st, 2022 that the performance of 9-year-olds in math and reading dropped to the levels from two decades ago. For the first time since the National Assessment of Educational Progress test began tracking student achievement in the 1970s, 9-year-olds lost ground in math, and scores in reading fell by the largest margin in more than 30 years.
What makes this more troublesome is that “Student test scores, even starting in first, second and third grad, are really quite predictive of their success later in school, and their educational trajectories overall” said Susanna Loeb, the director of the Annenberg Institute at Brown University, which focuses on educational inequality. This holds serious implications for our society. Over the past decade or so, student scores had leveled off rather than gained, while gaps widened between low-and high-performing students.
One last comment comes from Dr. Ho, a professor of education at Harvard and an expert on education testing. He tells the story of a “decade of progress” followed by a “decade of inequality.” He continues “Now we have our work cut out for us.” There are people now calling for a “Marshall Plan” for education. Janice K. Jackson, who led the Chicago Public Schools until last year and is currently a board member of Chiefs for Change. She is saying “no more of the arguments, and the back and forth and the vitriol and the finger pointing. Everybody should be treating this like the crisis it is.”
For some time, the world looked to America for ideas and concepts in educational success. That is no longer true, if it ever was. From the 1930’s. when the President of Harvard dramatically increased the learning options, from the basic “Science and English curriculum,” and dramatically increased the monies coming into the University, we have seen a decline in the University creation of “work ready” graduates for our society. Today we have over 11,000,000 open jobs in the USA. Companies are looking to hire 11,000,000 people. Although answering the question of how many people are unemployed is tricky to answer, Heather Long published a report in February in 2021 that provided the official number of unemployed people in the United States as 10.1 million. This from a report the Labor Department puts out every Friday. But there are other numbers to consider. Unemployment payments have been going out regularly to 20 million people. Perhaps these people are unemployable. By Colleague Ed Gordon continues to tell me that by 2030 50% of the American Workforce will not have the skills required to be employed. If he is correct, we as a society are in a very serious situation. The Challenge is Real.
In 1965 the federal government began guaranteeing student loans provided by banks and non-profit lenders. They created a program that is now called the Federal Family Education Loan program. The American public has been bombarded for many decades that the path to success in the US is to have a University Degree. The message was very successful. In 1980 there were 3,231 higher education institutions in the United States. By 2016, that number increased by more than a third to 4,350 (how government guaranteed student loans killed the American Dream for Millions by Daniel Kowalski). According to Forbes, the average price of tuition has increased eight times faster than wages since the 1980s. In 2018 the Federal Reserve estimated that there was $1.5 trillion in unpaid student debt.
If after reading this far you don’t sense a problem then I have done a very poor job of communicating.
Career and Technical Education as we now know it has its roots in the founding of the United States. There were a series of stages through which learning progressed; The Awakening (1776–1826) which provide a right to a free public education, primarily to boys. Independent Action (1826–1876) when public education joined with the workforce to provide a continuous stream of workers for different jobs. The Vocational Education Age (1876-1936) the first manual training school, established in St Louis, Missouri, in 1879. Coming of Age (1926-1976) the first mass acceptance of career and technical training. Technical Schools are thought to produce job ready skills for work that is demand. They don’t cost nearly as much as university.
Mike Rowe says “We are lending money we don’t have to kids who can’t pay it back to train them for jobs that no longer exist. That’s nuts.” Since 1980, the cost of going to college has risen by 260%. If you attend a technical college, then the cost of your entire education is the equivalent of one year at another institution. Today only 19% of college enrollees can earn their degree in four years or less. (Trade School vs College: The Big Pros and Cons for each June 24 2019 by Louise Gaille). Further, there are several trade schools operating right now in the US which offer vocational opportunities online.
An article was written in the Samuel Centre for Social Connectedness by Jeremy Monk in March of 2018. He starts the article recounting an information session at a local technical and career education center. He tells us he attended a school known for its academic rigor and high ranking. Most students laughed at the idea of attending a vocational school. A school counsellor told those going to the information session the following story.
You are rushed to the hospital one evening and told you need emergency surgery for a rare infection. The only doctor who knows how to perform this surgery is at his country house and it will take an hour for him to get to the hospital. The doctor gets in his fancy car and starts the trip. Twenty minutes into the trip something happens to his engine and his car stalls on a rural highway. The doctor calls a local mechanic who rushes over, and in a few minutes diagnoses the problem and fixes the problem. The doctor makes it to the hospital and performs the surgery successfully. The school counsellor then asks the question.
Who do you thank – The Doctor or the Mechanic?
While University education has been promoted at most levels of society career, vocational and technical education has become increasingly stigmatized. Finding for technical education programs have decreased and vocational credit offered in high schools have dropped. Career, Vocational and Technical Education has been portrayed as a Plan B, a “Silver” medal compared to a university education. Recent data from the Federal Reserve Bank of New York showed that nearly 44 percent of recent college graduates were employed in jobs not requiring university degrees in 2016.
Germany continues to show us how to proceed. They have a greater percentage of young people opting for non-university post-secondary education. There is also much greater respect for these students. Similar social and education programs are dominant in Scandinavia. In Finland, which is often referenced as the jewel of all national education systems nearly 45% of students choose a technical path.
The evidence is clear. The facts are compelling. Society is showing this in how the “white” collar and “blue” collar job status is viewed. This has created a social hierarchy. It isolates people and further divides us. We face some very serious challenges. Don’t forget the doctor would still be on the side of the road waiting if it had not been for the mechanic.
The Time is Now.
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Friday Filosophy v.09.23.2022
Friday Filosophy v.09.23.2022
Alexander Boris de Pfeffel Johnson; born 19 June 1964) is a British politician who has served as Prime Minister of the United Kingdom and Leader of the Conservative Party since 2019. He announced his pending resignation on 7 July 2022 and will remain as prime minister until a new party leader is elected. He served as Secretary of State for Foreign and Commonwealth Affairs from 2016 to 2018 and as Mayor of London from 2008 to 2016. Johnson has been Member of Parliament (MP) for Uxbridge and South Ruislip since 2015, having previously been MP for Henley from 2001 to 2008.
Johnson attended Eton College and read Classics at Balliol College, Oxford. He was elected president of the Oxford Union in 1986. In 1989, he became the Brussels correspondent—and later political columnist—for The Daily Telegraph; and from 1999 to 2005 was editor of The Spectator. Following his election to parliament in 2001, Johnson was a shadow minister under Conservative leaders Michael Howard and David Cameron. In 2008, he was elected mayor of London and resigned from the House of Commons; he was re-elected as mayor in 2012. In the 2015 general election, Johnson was elected MP for Uxbridge and South Ruislip. The following year, he did not seek re-election as mayor. He became a prominent figure in the successful Vote Leave campaign for Brexit in the 2016 European Union (EU) membership referendum. Theresa May appointed him foreign secretary after the referendum; he resigned the position two years later in protest to the Chequers Agreement and May’s approach to Brexit.
In 2019, Johnson was elected Leader of the Conservative Party, defeating Jeremy Hunt. He re-opened Brexit negotiations and in early September controversially prorogued Parliament; the Supreme Court later that month ruled the action unlawful. After agreeing to a revised Brexit withdrawal agreement, which replaced the Irish backstop with a new Northern Ireland Protocol, but failing to win parliamentary support for the agreement, Johnson called a snap election for December 2019 in which he led the Conservative Party to victory with 43.6 per cent of the vote, and the party’s largest seat share since 1987. On 31 January 2020, the United Kingdom withdrew from the EU, entering into a transition period and trade negotiations leading to the EU–UK Trade and Cooperation Agreement. The COVID-19 pandemic became a major issue of his premiership; the government responded by introducing various emergency powers and measures across society to mitigate the pandemic’s impact, and approved the rollout of a nationwide vaccination program.
In December 2021, a controversy known as “Partygate” began which concerned Johnson and other government officials attending social gatherings at which some attendees breached COVID-19 regulations; Johnson received a fixed penalty notice, becoming the first prime minister of the United Kingdom to be sanctioned for breaking the law while in office. The publishing of the Sue Gray report and a widespread sense of dissatisfaction led in June 2022 to a vote of confidence in his leadership among Conservative MPs. While the parliamentary Conservative Party was found to have confidence in him, the result was regarded as having left Johnson politically weakened. In July 2022, revelations over his hiring of Chris Pincher as Government Deputy Chief Whip led to a mass resignation of ministers from his government and to Johnson announcing his forthcoming resignation as party leader. He remains in office in a caretaker capacity pending a leadership election.
Johnson is a controversial figure in British politics. Supporters have praised him as humorous, witty, and entertaining, with an appeal stretching beyond traditional Conservative Party voters. Conversely, his critics have accused him of lying, elitism, cronyism and bigotry. Johnson’s political positions have sometimes been described as following one-nation conservatism, and commentators have characterized his political style as opportunistic, populist, or pragmatic.
The Time is Now
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