And the answer is always???

I believe that I possess exceptional root cause analytical skills and I will attempt to illustrate these in this posting.

I had the opportunity to perform a fixed operational audit on a foreign Original Equipment Manufacturer retail facility in the Near North of Ontario a few years ago and utilizing my analytical matrix I was able to observe the following aspects of the retail operation. And just so you know I always start with the business processes because they are the root cause of financial success or failure to meet expectations which I look at last!!!

Why? I believe in the work of W. Edwards Deming the Six Sigma Process Improvement Guru who simply stated that:

“85% of reasons for failure to meet client expectations are directly related to deficiencies in SYSTEMS AND PROCESSES………. rather than the EMPLOYEE?”

First thing of significant notation is that this retail facility was a brand-new state of the art signature franchise which had just opened a couple of months before my visit after being located in a smaller outdated facility for eight years in the same community.

It is one thing to have a state-of-the-art facility but something completely different to have a state-of-the-art fixed operations business model. As a physical facility it already possessed the best of the best in terms of size, layout, décor, equipment, drive thru, computers, etc.

Upon arriving I immediately began to sit down and interview in a soft and non-threatening way through intelligent listening, every single person in fixed operations, followed by the sales department and administrative support personnel to get a sense of their needs, concerns, perspectives and suggestions for parts, service or department process improvement.

Based on this feedback and a meeting with the OEM district service consultant as well as the district business manager for the dealer management system (DMS) there appeared to be some significant challenges that required urgent attention!!!

Appointment and Work Order Processes

Appointment coordinator is new and untrained with no understanding of the requirement for diagnosis time

Appointment coordinator does have access to VIN inquiry, but utilization is random

Appointment coordinator and technicians are utilizing available OEM supplied systems

Work orders requiring diagnosis are scheduled randomly by the DMS

Work order completion is based on the technician’s diagnosis

Utilization of the 15-step process to create excellent work orders is unknown to entire departments

Technicians are inconsistent in appropriate documentation of the 3 C’s (Concern, Cause, Correction)

Technician documentation does not demonstrate a strategic diagnostic approach

Jobs aids or related worksheets or Product Quality Reports (PQR) are not consistently referenced nor attached to the work order.

A random sample of one work order revealed no technician was logged on the work order. There were two outstanding recalls not added to the work order which consisted of a simple A service request with winter tire changeover to existing rims, windshield wiper blade change and a concern about wind noise at highway speeds requiring a test drive and diagnosis time??? A multi point vehicle inspection checklist was only partially filled out??? Both the service consultant and the technician simply checked the no recall box?

Customer Concerns, Comebacks and Customer Satisfaction Indexes

Only the retailer and the service team leader are truly aware of retail CSI scores

There is no specific designated person in charge of OEM customer concerns

Therefore, customer concerns are not being addressed

OEM customer concerns remain open indefinitely

Accountability with the OEM is a significant brand critical standard requirement

OEM customer concerns indicate workshop is overbooked especially in tire changeover season

Customers are waiting far too long for their vehicles to be serviced if they prefer to wait

Appointment coordinator position suffers from constant turnover and current employee is untrained and does not understand due process and due diligence

Parts Team Leader is an ineffective and inefficient one man show which is causing delays in parts pricing for estimates, timely parts availability for the technicians and workshop delays. Telephone handling availability is also a challenge for retail and wholesale parts sales.

Parts Team Leader is new with no OEM experience. He also has received no training in his role and responsibilities nor the dealer management system. Parts ordering, availability and pricing is behind leading to lower gross sales dollars

Retail team is not truly aware of CSI scores and acting appropriately

Service Team Leader was brand new as well

There is no existing customer concern escalation process or comeback tracking to hold service consultants and technicians accountable for their actions or lack thereof.

90% of the OEM customer concerns were tracked to one service consultant.

Technical Diagnostic Process

There is more than one OEM scan tool for every four technicians

There are no generic or obsolete scan tools being utilized

There is no off-site Bodyshop

Diagnostic trouble codes (DTC) lookup is being utilized but not by all technicians

Technicians were frustrated with the little box popup for messaging in their systems

Technician participation in OEM training is only 50-75%

Only one technician has achieved the complete mastery level of training

eLearning module completion is only 50-75% as well

PDI training module completion is only 50-75%

New vehicle model training is 75-100%

Five step diagnostic strategy training is N/A

Yet technicians are being paid appropriately for diagnosis???

Non-stock parts availability causes work orders to be closed

Back order parts cause work orders to be closed

There is a constant shortage of stock parts

Vehicle Pre-Delivery Inspection Processes

No battery charging process in place for retail lot inventory vehicles

PDI checklist utilized but no documentation for good battery testing or results

Road-tests/Re-PDI were being performed

OEM scan tools not being utilized and therefore no relearn procedure to ensure every new vehicle has the latest updated software

Tire pressure records not being utilized

VIN inquiries not being consistently utilized for outstanding campaigns, special policies and stop sale bulletins

PDI are completed by licensed technicians

Vehicle storage location is retailer lot

Wheel protection removed on all PDI’s.

Wheel lock nuts are required on all new lot inventory vehicles but there is no stock???

Paint protection removed on all PDI’s

Technical Team Leader

There is a shop foreman in place who is a very experienced technician who wishes to share his experience and help his team

Shop foreman has clear concise job description indicating his Quality Assurance role

Pay structure is not currently consistent with this role and is under negotiation

Shop foreman has high effectiveness and efficiency as a technician and leader

Applied versus unapplied time is tracked by the dealer management system

There is no Escalated Client Concern aka comeback tracking system in place which is reflected in OEM customer concerns not be addresses and left open

Dealer Management System, Computer/Internet Tools and Resources

A popular, reliable and well supported dealer management system is in place

Latest version of dealer management system

One computer per service consultant

One computer per technician

Latest version of all OEM software, tools, and equipment

There were database concerns related to employee name files and codes as well as confusion about in-service dates, warranty start dates and delivery dates

Basic reporting on all aspects of fixed operations was available

As always there were challenges with the client vehicle database for client retention and client experience management

Technical Shop Tools and Equipment

No complete equipment inventory list including make, model, serial number and last date of inspection of all shop tools and equipment found

Partial proof of inspection on some tools and equipment only because it was brand new and recently installed or re-installed in the new facility

Special tools and equipment tool cabinet was in good order and kept in parts department

Hunter GSP9700A dynamic wheel balancer on site but less than 50% of technicians trained on it

On car brake lathe on site and utilized

Compression & leak down tester provided by the dealer

Spark & NOID light provided by each technician

Wireless chassis ears were available

Hunter alignment machine available and in use – serviced every 6 months

Digital multimeter (DMM) testing available and utilized

Bartech 300 Pro scan tool available and up to date

OBD II SST troubleshooting tech tools available

Bench grinder was deemed unsafe due to lack of rests and eye protection

Leadership, Personnel and Training

Service Team Leader was new and just getting oriented to the needs of the business

Appointment Coordinator was new and untrained

Service consultants were experienced though only one was confident competent effective and efficient. The second consultant was responsible for 90% of the complaints to the OEM and those were left unaddressed.

Parts Team Leader works alone 6 days a week and takes care of technicians, retail and wholesale parts. He had received no training on the significant aspects of the dealer management system and the parts markup matrix and parts pricing was not up to date as well as challenging with retail pricing for oil being charged out by single litre bottle pricing when it is purchased in bulk as one specific example.

Another parts concern was the purchase of bulk windshield washer fluid versus 5 litre jugs???

The working relationship with the Sales Team Leader and the Used Vehicle Sales Team Leader were acrimonious, disrespectful, and uncooperative. I witnessed a number of incidents of serious concern in regards to the behaviour of these team leaders towards the service and parts team and one used vehicle incident of unethical immoral and negligently dangerous behaviour regarding a used car front subframe on a front wheel drive vehicle with rust perforation through and through!!!

Service, parts, and technical compensation plans were reviewed.

Appointment coordinator was paid hourly with a monthly bonus based on shop utilization.

Service Consultants were paid a flat monthly salary plus profit sharing based on client pay hours per work order, client satisfaction index, service policy, parts to client pay labour ratio and a client pay target bonus. A service consultant would have to be excellent in all categories in order to earn a reasonable income!

Training was sadly lacking across the whole fixed operations department from the technicians to the service consultants, to the appointment coordinator to the Parts Team Leader.

Environment, Health & Safety Analysis

There is an employee policy and procedures manual which is just a series of printed statements stapled together. It covers topics in order:

  1. Payroll policy
  2. Attitude

Tim’s Top Tip: You cannot coach to attitude??? You must coach to specific behaviours!!!

  1. Parking
  2. Lunchroom environment and cleanliness
  3. Employee purchases
  4. Telephone Calls
  5. Driving customer and company vehicles/other lot damage
  6. Sales Commission Pay Plan Agreement
  7. Termination
  8. Group benefits
  9. Retirement – mandatory
  10. General Health and Safety statement
  11. WHMIS – two-page description only
  12. Sexual Harassment – 3-page description
  13. Employee purchase plan
  14. Social responsibility regarding alcohol mostly, specific to company events

There were no records found of scheduled or completed training on environment, health, and safety

No WHMIS binder with all chemical products available in the parts department that were CURRENT

No transportation of dangerous goods (TDG) training record of scheduled or completion i.e. airbags

No proof of new Workplace Harassment and Violence policy and no record of scheduled or completed training on this new policy

There were concerns expressed about safety shoe purchases and employer subsidy

There were concerns expressed about the showers in the technicians change room and about the eye wash stations.

There was no evidence of weekly inspection reports on all aspects of the workshop

Financial Analysis

If you have read this far then the next few financial results will not be surprising in the least and for the sake of professional courtesy, I will not disclose the actual dollars amounts simply the percentage differences month to budget and month to previous year.

Category                                              Current Year               Previous year & month

Client pay labour sales                         = 38% below budget   38% below previous yr

Client pay hours                                   = 38% below budget  

Client pay work orders                         = 13% below budget   13% below previous yr

Warranty Labour                                 = 8% below budget    15% below previous yr

Internal Labour                                    = 13% below budget   9% below previous yr

Total Labour Sales                               = 32% below budget   37% below previous yr

Total Labour Hours                              = 33% below budget  

Shop Utilization                                   = 32% below budget

Parts to Labour Ratio                           = 6% below budget

Hours Per Work Order                         = 29% below budget   28% below previous yr

C.P. Effective Labour Rate                   = 11% above budget

C.P. Labour Gross Profit                       = 5% below budget

C.P. Parts Gross Profit                         = 2.7% below budget

Shop Supplies                                       = 3% above budget

Policy                                                   = 100% above budget

Personnel                                              = 19% below budget           41% below previous yr

Total Profit                                          = -112% below budget


THE GOAL is always to create confident competent effective efficient and productive team members that leads to excellent job performance and increased profits

Hire new parts consultant, initiate immediate parts training and completion

Initiate and incent technicians to complete all OEM technical training requirements

Create and implement an Escalated Customer Concern tracking method and start closing OEM concerns

Initiate and complete appointment coordinator training!

Initiate and complete retraining for one Service Consultant or consider replacement

Initiate and complete Parts Team Leader training!