Preventative Maintenance Agreements: A Great Thing Deserves Great Execution

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Preventative Maintenance Agreements: A Great Thing Deserves Great Execution

Guest writer Dale Hanna continues his writing on preventative maintenance with this week’s blog post – “Preventative Maintenance Agreements: A Great Thing Deserves Great Execution.”

In our last blog, Preventative Maintenance Agreements – A Necessary Hero, we spoke about the important contributions PM agreements can make to dealer bottom line.  They can drive high quality revenue, income and customer satisfaction.

They key word is “can”.  As with all great things, they are only as good as the execution.  In this blog, we will focus on four areas of PM agreements and how we might increase the efficiency we deliver the services to our customers.  This has always been vital, and especially now with the significant labor shortage.

Do Not Miss a PM Service and Do Not Lose Sleep Over It

There is nothing more stressful than missing a PM service on a customer’s machine under a PM agreement.  There is nothing more annoying than trying to call customer multiple times to get the hour reading.  How do we do better?

For newer machines, more and more of them are coming with factory installed telematics devices.  Factories provide software system that can usually alert you about PM coming due or past due.  The common problem here is when you have PM agreements on multiple brands.  Each factory system works differently, and you will likely need to log into multiple different systems.  Through a technology called API (Application Programming Interface), computers can talk with each other.  Most factory systems offer APIs for you to use.  If you have the right software system, hours, and other information, from all the brands you carry can flow into one system and all assets can be managed the same way.

How about the machines that do not come with factory installed telematics devices.  Aftermarket devices are available, and the data can flow into the same aggregating system mentioned above.  The cost of the aftermarket system is low comparing to the cost of doing everything manually.

Now you have all the PM information in one place, issuing alerts, and potentially managing workorders from one system, will drastically increase your efficiency.

 Fault Codes, When It Rains, It Pours

Fault codes are great, they give us valuable information to keep the machines from suffering major failures.   The three common problems are there are too many fault codes to be handled manually, some of the fault codes are not useful but take up bandwidth, and the formats are different from different manufactures. 

Here are what some of the tech savvy dealers are doing to maximize the benefit efficiently.

  1. Using APIs to get all the fault codes from different manufactures into one place.
  2. Translate the different priority systems from different manufactures into a unified system, such as Red, Yellow, Green, Gray or 1,2,3,4.
  3. Map the messages into the same format.
  4. Triage the codes efficiently using knowledgebase,
  5. Create workorders immediately or with a PM workorder based on severity and usage.

Inspections, You Can’t Fix What You Do Not Know 

Fault codes can’t tell you everything that can go wrong with a machine.  For example, they can’t tell you a belt is about to break, or a hose is about to leak. 

Inspections fill in the gap.  To do so efficiently, the inspections need to be electronic instead of paper based.  Paper inspections can days to get to the office.  They can be hard to read, and it will be hard to attach pictures and videos.  As the saying goes, a picture is worth a thousand words. 

Electronic inspection results, including pictures and videos, show up in the office real time as long as there is Wi-Fi or cell connection.  SN or VIN can be scanned in accurately and linked to customers stock unit ID. 

With an all-in-one system, the inspection results can be viewed and managed with PM’s and fault codes.  Workorders can be issued to handle one, some or all the problems.  The addressed and unaddressed problems are always tracked so the status is clear, and nothing is forgotten. 

The Devil Is in the Fluids 

The last piece of the puzzle is fluid analysis.  As we all know, it is a requirement for most warranty to be valid. 

Fluid analysis results are still predominated delivered via lab’s own websites or through PDF’s.  One of the biggest complaints we hear in the field is that the information is hard to aggregate and use efficiently, even though the information itself is very useful. 

As the world moves forward, more and more labs are offering APIs, just like how other information, such as fault codes, hours, etc. are delivered.  Again, we can use the same all-in-one system to aggregate the fluid analysis data with PM alerts, fault codes, electronic inspection.  This way, PM agreements can be managed well, and other services can be delivered efficiently and giving customers the best experience possible.  A triple win for you. 

PM agreements are a necessary hero to drive high quality revenue and customer satisfaction.  It will only work well if it is executed well.  The only way to do so in today’s labor shortage and data explosion world is to leverage the right technology.

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Is the Preventative Maintenance Business Part of Your Business Plan?

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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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Preventative Maintenance

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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.

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Bite-Sized Pieces

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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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When And Where Should You Spend Money?

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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

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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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Managing for Success

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Managing for Success

Guest writer Arlen Swenson takes readers through what makes or breaks a product in the market with his blog post, “Managing for Success.”

Managing for Success

Most of us look for ways to be successful in our work and business careers, but what are the basics of getting there and then exceeding and continuing with that success? In most cases it depends on your approach to each situation and whether you solicit and gain input from others. 

Certainly, you may already have good knowledge on a variety of subjects and management techniques, however it is always good to verify and insure you are up to date and aware of changes in the markets you serve and possible new areas of growth opportunities. 

Checking new areas of growth opportunities is what I call developing a Pathfinder’s Mentality. In its simplest form is having an inquisitive mind about what is happening in your business and what changes or opportunities that might be available if better understood. 

A more formal approach is forming an actual Path Finder Group charged with exploring identified business and market opportunities.  The role of the group is to investigate those opportunities to determine possible fits and what would be required to attain those opportunities. Many times, it starts with looking at a product your company already produces but is not selling at the level required or examining new end-user markets that could be available to you. 

The role of the Path Finder Group (PFG) is to study products and their use in various markets and determine what those markets are expecting of your product including comparison to existing competitive products and their strengths and weaknesses. To be accurate requires the PFG to go the field and study your product and competitive products in actual applications and hear from the voice of those users their opinion of the product’s strengths, weaknesses, and suggested improvements.   

Depending on the geographical size of the product’s market and complexity may require several months of study by the PFG to develop an accurate picture of the best path to improving your product’s success in the marketplace. In the process the PFG will become experts in the product and obtain the voice of the customers using the product and developing detailed knowledge of the strengths and weaknesses of both the product and markets it serves. 

Certain discovery of basic market needs that your product needs improvement on would be communicated immediately to determine if basic design changes should be made now as part of the process.  As the PFG develops its knowledge of product and market uses, actual testing of their discoveries should be field tested to determine the effectiveness of those discoveries if those discoveries would be implemented. 

This requires the PFG conduct a firsthand study of their discoveries with the product in actual use in the hands of customers.  

It requires hearing directly from the end user their recommendations and/or questions about your product and its proper application.  In other words, why should your product be selected versus a competitive choice or a different method? 

Gaining accurate data will require a formal approach to hands-on study. 

  • How does your product compare to competition such as: size, operating ease, cost effectiveness, safety, reliability, serviceability, repairability, owning/operating cost, fuel economy, meeting OSHA standards, availability of parts and repairs, return-on-investment, customer support, customer knowledge of your product, customer misconceptions about your product, competitive mis reputations about your product, customer lack of knowledge about your product and various other market considerations. 

All of this and more must be understood to determine the best steps to gain success with the product. 

The PFG is charged with finding the right path to improve the product’s success in the marketplace.  

The time to complete PFG study and recommendations may take several months and require detailed study and changes to the product or going to the market approach.  However, sometimes proper solutions found by the PFG can be quickly implemented and they are economically viable. 

At the conclusion of Path Finder’s Group’s market/product study a detailed report would be provided to management for approval of changes recommended to improve the product’s success. 

The recommendation could include moving in a different direction, changing the design of the product, changing distribution of the product, expanding the product line offering or even elimination of the product. 

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Performance vs. Potential…Is There a Difference?

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Performance vs. Potential…Is There a Difference?

Our new guest writer Seth McColley is a HR professional with more than 25 years of diverse, action-packed experience across a number of industries such as telecommunications, restaurant/hospitality, distribution, software, retail and construction/heavy equipment. He has worked for some of the largest Fortune 500 companies and been able to apply those learnings to help smaller companies “level up” and grow. He understands that we are not defined by the titles we hold or our position on the organization chart, but rather our relationships and how we can serve others. In his inaugural blog post, Seth asks “Performance vs. Potential…Is There a Difference?”

Seth is a firm believer that people are any organization’s greatest asset, but employees need to be led, not managed. Our professional networks need to be cultivated, not manipulated. If we are the sum of all of our experiences, the connections we make and the relationships we build make us the incredible people that we are today and that we will become tomorrow. 

Seth launched his first podcast, “6 Degrees or Less”, in February 2019, with a sole focus on the art and power of networking, or “relationships” as he calls it. It’s connected to the idea, six degrees of separation, that every single one of us is no more than six steps away from being connected to one another. He uses this platform to help break down stereotypes and misconceptions about what networking is (and isn’t) and to help listeners improve their networking skills to build more meaningful, effective professional relationships. On each episode, guests from different backgrounds, with different dreams, and on different journeys will share their stories and lessons learned. If our network is the lifeblood of our careers, the professional connections that we make will significantly affect the impact of our careers. 

Seth is a solid ENFP (Myers-Briggs Type Indicator) and his five Strengthfinders strengths are – Empathy, Adaptability, Context, Harmony and Ideation. He earned his BA in Psychology from the University of Texas at Austin and his MBA from the University of Phoenix in Seattle. He is actively involved with both Dallas HR and the Oklahoma City Human Resources Society (OCHRS). He currently lives in Edmond, OK with his wife and son (5), while his daughter (19) attends Southern Methodist University in Dallas, TX.

Is there a difference between performance and potential? 

The answer is a resounding yes, particularly when you’re talking about talent and employee development. The mistake that many (if not most) organizations make is that they’re confusing one for the other or even worse, lumping them into the same group (and usually calling them high potential or HiPo). 

Having supported sales organizations a few different times in my career, I’ve seen this play out more times than I can count. The conversation goes something like this:

Sales Director: “I’ve got an open Sales Manager spot to fill and I think Bobby is the right guy for the job.” 

HR Manager: “Oh? Tell me more. Why do you think Bobby is a good fit for this role?”  

Sales Director: “Well, for one, he’s got the best sales numbers in the entire division! Did you take a look at the TPS reports last week? The guy’s been killing it for the last three quarters. He’s a perfect fit!” 

HR Manager: “Of course I looked at the TPS reports. I know he’s the best salesperson on your team, but what makes him the most qualified for the Sales Manager role? Has he ever led a team before? Has he ever managed anyone?” 

Sales Director: “What’s it matter? Bobby is the top salesperson on my team. He’s a natural leader!” 

Has anyone else ever had this conversation? Does this sound familiar? 

Abraham Maslow once said, “If you only have a hammer, you tend to see every problem as a nail.” 

One of the biggest mistakes that an organization can make, when it comes to their talent, is mistaking high potential for high performance. A blog post from Software Advice, gives managers some tools to help identify, assess and develop high potentials and high performers.  

Check this out…  

“High performers stand out in any organization. They consistently exceed expectations, and are management’s go-to people for difficult projects because they have a track record of getting the job done. They’re great at their job and take pride in their accomplishments, but may not have the potential (or the desire) to succeed in a higher-level role or to tackle more advanced work. 

High potentials are birds of a different feather. Malcolm Munro, founder and CEO and President at Boss Builders, says that “High potentials have demonstrated initial aptitude for their technical abilities and…have future potential to make a big impact.” In short, they can do more for the organization – possibly much more (with the caveat that high potentials who are consistently low performers are rarely strong candidates for management roles). 

High potentials can be difficult to identify, for two reasons.  

  • First, high performance is so blindingly easy to observe that it drowns out the less obvious attributes and behaviors that characterize high potentials–like change management or learning capabilities.
  • Second, few organizations codify the attributes and competencies they value in their ideal employees–which means that managers don’t know precisely what to look for to assess potential. 

As a result, most managers focus exclusively on performance, and that can be a problem. 

Truth. 

I’ve seen high performance get mistaken for high potential, firsthand, and you know what it usually equates to? 

Style over substance. 

When an employee is earmarked as “high potential” it’s often because they’re operating at such a high level at their current job. They may look the part, say the right things, and put themselves in front of the right people; it doesn’t always mean that they’re capable of doing more. Hence, style over substance. 

This is where a sound, solid talent management plan comes into play. The best organizations have people processes that include bench planning, succession planning, talent reviews and the like to help identify high performers, High Potentials, mission-critical roles, potential successors, and then create development plans to help put the right people into the right places. In future posts, I can dive deeper into the mechanics and details of where to begin when it comes to succession planning, how an organization determines which roles are “mission critical” (and why succession planning for those roles is so critical), and what it means to create bench plans and regularly update them. 

Clearly, managing and developing top talent isn’t easy. As HR professionals, the least we can do is get some practical tools into the hands of our managers and leaders so they can start understanding the difference between potential and performance. While these two are certainly related to one another, in and of themselves they are completely separate things.

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Ever Wonder?

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Ever Wonder?

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In this week’s installment on Lifelong Learning, guest writer Mick Vaught challenges readers to truly assess our paradigms and pre-conceived ideas in “Ever Wonder?”

Ever wonder why we tend to remain in our comfort zone and never see a paradigm shift coming around the curve? 

One of my all-time favorite role models growing up was Stephen Covey and his book titled “The 7 Habits of Highly Effective People”. In my opinion, this was his finest publication ever because it really changed my views on many things.  This book was a real game changer for me. Of the 7 habits he prescribed, habit number 5 “Seek first to understand, then to be understood”, was the most useful for me during my journey in the construction industry. I look back now at some of my biggest mistakes in dealing with what I thought was critical in problem solving, only to realize later that I did not understand the root cause of the various issues. 

A good example of what I’m talking about was my preconceived notion of how to correct the overwhelming problem of developing and retaining top notch service technicians. Like many well intended experts, I believed the best approach was to offer better wages and benefits than the competition with hopes that money would be the answer. What I didn’t understand was the critical needs of the service managers, technicians, and most importantly, customers. Over time, I gained a better understanding of the many issues and how to address these issues. Here are some of the initiatives I found to be most appropriate.  

Step 1:  Identify the scope of the current needs, and those in the next ten years.

  • Determine current utilization of techs based on OT and customer service response times.
  • Measure machine populations, aging of company rental fleet, trends of growth and new skills required. 
  • Determine and log the current CSA requirements and new product lines introduced or proposed for the future. 
  • Rank the current staff skill sets by determining specific strengths and weak areas and score each tech on an equal and consistent measure process. 
  • Chart the aging of current techs and estimate potential replacement cycles. 

Step 2:  Analyze the current mix of jobs, and skills required for the work. 

  • Determine % of Level 1 jobs currently being performed through work order analysis.  (Cleaning, Greasing, PM services.)
  • Determine % of Level 2 jobs requiring higher skill levels. (Inspections, Pre-deliveries, basic electrical and hydraulic repairs.)
  • Repeat same review of Level 3 jobs requiring troubleshooting, diagnostics, basic welding, major component R&I and exchange, equipment software usage and understanding. (Tech Tool, Matris, etc) This level will require factory and on-line training requirements for specific areas of knowledge. 
  • Finally, all Journeyman level jobs requiring unlimited skills to be able to perform all troubleshooting, diagnostics, major repairs, component rebuilds, welding, and complete knowledge of equipment software, fault code analysis, Tech. Tool, ,  etc. This level will require completion of all manufacturer online training modules, and attendance at numerous factory training programs. These techs should be targeted to customer jobs as a priority. 

Step 3: Rank the current service staff.

  • Create the same four tier tech classifications to match the service jobs and attempt to match the skills to the job.
    • Level 1 – Apprentice
    • Level 2 – Shop Technician *
    • Level 3 – Senior Technician *
    • Level 4 – Journeyman Technician, Shop / Field **

    *Requires supervisor sign off, and training requirements.

** Requires GM sign off and required training completion and testing. 

  • Pay levels are made consistent with Tech classifications, as an incentive to move up in classifications and knowledge. 

Step 4:  Recruitment

You now know the needs of what tech levels are required to meet the existing needs, as well as future requirements through business growth, changing technologies, retirements, and tech development and promotions. 

Recruiting Apprentices:

Today, tech school students are being drawn to the less “dirty” jobs upon graduation by trucking companies, HVAC companies, Major Rental companies, etc.  Recruitment has become very competitive and many companies start there in high school years by attending college job fairs. 

We need to be active in these recruitment sessions and offer significant incentives to draw the prospect to the construction industry.  The biggest obstacle facing a student after graduation from a tech school is the tuition debt they have incurred, and the expense of buying tools to start work. We will prepare incentives to address these two issues:

  • Tuition Reimbursement Program: 

The student would be reimbursed for his existing tuition debt over a period of employment as a technician with the company.  This four-year program would refund 25% of the student tuition expense every year, with 100% refunded after four years. It would be required that the student achieve a minimum of a Level 3 technician to qualify for 100% reimbursement. 

  • Tool allowance program:

The student would be given a basic tool set and toolbox to start his apprenticeship program. These tools would remain the property of the company until the employee has completed his Level 1 apprenticeship period and was elevated to Level 2, (Shop Tech). The tools would then become the property of the tech.  OR, an upfront $2500 tool bonus that would need to be paid back if the employee left in the first year. Further, a $1000 tool allowance will be given to the tech on an annual basis up to the Level 3 classification, and then receive the standard company tool allowance.  

Recruiting Senior and Journeyman Technicians:

The needs of these techs are different.  They are looking for job security, good pay, good benefits, a clean, safe workplace, nice field trucks, and more quality in the job.  To draw these potential techs to leave their current employment and join our team is more difficult, complicated, and costly. 

  • Address their concerns: 

Recruitment in regions where work opportunities are transitioning, can appeal to the job security concern. For example, the coal fields of KY and WV offer little job security at this time, and in the future. These techs are looking for what they are going to do going forward.  You can offer job security with the vibrant growing markets. You need to heavily advertise in all transitioning areas. 

  • Provide a safe, clean and modern workplace.  It is important that the facilities and shops be kept clean and updated, along with providing the tools necessary to do their jobs. Service trucks are very important to field technicians that view these vehicles as their homes on wheels. This is a very big consideration for a field tech to join your team from another company. 
  • Provide excellent training opportunities.  No tech wants to get to a job and not know what to do. Offering year-round training sessions online and at the manufacturer is a big draw for those who do not have it now. You need to market and sell that. 
  • Have specific guidelines in place to include relocation expenses, temporary housing, storage, and relocation assistance services, as required. 
  • Offer all techs an annual tool allowance, boot allowance, and specialized skills training, such as welding, MSHA certifications, etc. 

Overview:

The company will need to have a structured, consistent approach to the recruit process that will provide for the needed demand in the years to come, and fill the vacancies created by tech aging and retirement.

Balancing the tech skill levels to the work difficulty levels is difficult, but provides the best profitability to the service department, and the best customer support to the end users. 

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Are you afraid of your dealer business system?

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Are you afraid of your dealer business system?

Guest writer Chris Kohart Tackles our reluctance to update the software systems we use in “Are you afraid of your dealer business system?”

Dealerships invest heavily in people and the infrastructure to support the business, so why do so many dealers still utilize antiquated software solutions to manage their operations? Many deployed these “state of the art” business systems more than 25 years ago and still support their operations on these outdated platforms. Technology has transformed our business in many areas, from how our customers want to do business with us to telematics. What makes us believe a 25+-year-old business solution enables us to keep even or get ahead?  Thinking about changes, what was state-of-the-art business technology like in the late 1990s?   Here’s a short list that comes to mind:

  1. Personal Digital Assistants – remember the Palm Pilot?
  2. CD-ROM – remember when they were state of the art for data storage?
  3. Dial-up connectivity –internet access or point-to-point communication with your OEM?
  4. Fax machines – great for expediting signed documents, but remember those 100-line parts orders?
  5. Desktop CRT monitors – mine took up 1/3 of my desk space, and I’m convinced that’s what caused me to start wearing reading glasses

I guess that, excluding a few fax machines still in service, all the above have long been retired from your business and home.  Since software and hardware are many generations ahead of the 1990s, why is your dealership still relying on 25+-year-old first-generation software to operate?  Some dealers probably still remember the pain of training the entire dealership on how to use the system and the extremely high hardware and software costs.  Many of these dealerships are still maintaining nightly or weekly tape backups.  Perhaps it is easier to muddle along using the same solution (quick fact: most of these older “legacy” systems are on life support, and there has been no new development for years).  Think about that every time your dealership pays your vendor’s software license and support invoices.  Most legacy dealer software providers have been sold or merged a few times and probably don’t resemble the company you started doing business with. The newer consolidated entities are trying to maintain the dealers that have not joined modern times by developing middleware that allows the 25+-year-old legacy system to communicate with more modern graphical user interface (GUI) solutions.  It looks great in a PowerPoint sales presentation, but for those utilizing these tools, everyone experiences issues with two or more disparate solutions trying to communicate in real time.  Latency, loss, or corruption of data are prime examples.  Many dealers deploying this hybrid approach experience employee and customer frustration, increased license and operating costs and decreased operational efficiency.  Why would a dealer principal subject themselves, their employees, and their valued customers to this?  

The top reason: is fear of digital transformation. How many ERP projects fail? On average, 55 to 75%.  That’s a scary number, and I understand why it keeps many from moving their dealerships to modern times.  Let’s flip the averages above – why do 25 to 45% succeed?  Three reasons: people, process, and planning.  Let’s briefly break these three down:

People:

We all run lean; it’s the nature of our high dollar – low margin business.  The senior management team must make in the very early stages that your best people (senior, middle-management, and junior) be assigned.  Depending on the size and complexity of your dealership, some individuals will be assigned full-time for the duration while others will be part-time.  Most dealerships should be able to find a balance of experienced forward-looking thought leaders to participate part-time during the project.  The input, guidance, and deep understanding of your dealership’s functional (and cross-functional) areas will be a critical factor in your success.  Please ensure these individuals have your unqualified support and are provided with backup in their departments so staff and business operations don’t suffer.

Process:

Virtually no digital transformation project will be successful without going through the tedious and critically necessary task of mapping every process from levels one through five.  Don’t be surprised if you identify hundreds of processes throughout the dealership; the depth and quality of your process mapping will significantly affect your success or failure.  You will also be able to identify processes solely required by your 25+-year-old system that add no value to your operations; reviewing these processes will allow your team to map processes that make business sense instead of processes created to satisfy the requirements of the software. When you have completed your process mapping and reviews, you have a roadmap for the minimum requirements of a more modern dealer business solution.

Planning:

As mentioned in a previous article, the more steps you take upfront, the more successful your project will be.  Here are a few very high-level areas that you must consider early:

 

  • Perform a complete audit of your current business systems.  This includes your legacy solution and anything else, right down to excel or extensions written in-house, payroll processing, HR management, etc.  Don’t be surprised if your list exceeds 50 disparate solutions; it’s pretty common.  You will most likely discover software being used within the dealership that you’re unaware of.
    • Map every solution to the business area(s) it supports and understand why it is being used.  Is it mission-critical, or did someone start using it, unaware there was a better way within an existing solution?  The more granular your team is in this area, the better.
  • Create a functional requirements document.  Using the above audit, identify your business functions that are not currently being supported (possibly equipment yard management, key reporting metrics and BI, the share of customer wallet) and begin recording this information.
  • Talk to your peers– what are they using, and how does it support their operations?  The goal is to identify those who have made a successful journey and are now running their business without feeling software-based operational or growth constraints.
  • Talk to your OEMs – what dealer business system software do they support in communication (equipment, parts, service) and their sub-functions? 

Once you’ve completed the above, you can evaluate the various solutions providers – many excellent, technologically current dealer business systems are available today.  Take the time to review all of them and weigh the benefits and pitfalls of each solution.  While the ROI may be nebulous, you can take measures to validate many of the productivity and time savings you will gain, not to mention deploying a modern, user (and customer) friendly business system that will continue to update as technology advances. 

Suppose you’re concerned about organizational depth or team availability to carry all of this out internally. In that case, it makes sense to bring in an outside consultant who understands the industry, dealer software, and how to integrate successfully.  It’s a small investment in the success of your project and, ultimately, your dealership’s long-term viability. 

Considering this, why would any dealership still deploy 25+-year-old software to run their business?

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