Embracing Automation

Embracing Automation

Tonight, guest writer Jennifer Albright shares with readers the ways in which our “new normal” can bring about some positive change with embracing automation.

Embracing Automation in a Post-Pandemic Dealer World: Creating a Smoother Tech Implementation Experience.

As much as I think we are all tired of hearing phrases like “unprecedented times”, “pivot”, and worst of all, the dreaded “new normal”, the past 2 years have put a spotlight on how critical technology and adaptability are in the dealer world. Equipment dealers are as much about relationships as they are about selling and servicing equipment, so the idea of introducing a lot of technology may at first seem counterintuitive. But regardless of whether it’s the result of folks working from home during the pandemic or customers becoming more tech-savvy in general, we’ve reached the point where it isn’t as much of a choice as it is an inevitability. When done right, software streamlines back-end processes which can free up capital and reduce or refocus headcount, reduce opportunities for fraud, and can improve the customer experience making it easier to do business with you, thereby strengthening your relationships with your customers. A real win-win.

In my experience, dealers have often avoided implementing new technology…it’s time consuming, it’s disruptive, it can be expensive, and for many, change can be scary. However, the cost of not embracing technology at this point is exponentially more than the cost of the software itself. Yes, of course it’s time consuming and disruptive even under the best of circumstances, but there are many steps that can be taken in order to make it a better experience for all involved.

The Problem is a simple question…. Where to begin?

First, define what you’re trying to accomplish. You can opt to start small and automate a stand-alone process, or you can go all out and introduce or replace an ERP system. Regardless, you’re going to want to choose the right tech and the right partner for the job which starts with a formal RFP process. Use your selection criteria to create an RFP that can be sent to all participating suppliers, and create a scorecard by which your selection team will use to rate the responses.

The next step is one that is often overlooked, but is absolutely critical. Map your current processes and define where you want to be through the use of the new technology. By skipping this step, many dealers wind up simply forcing bad processes into the new system which is a recipe for failure. This exercise provides the GPS coordinates for where you are and where you want to be.

Involve your key stakeholders – don’t let system selection happen in a vacuum, seek input from the folks who are actually doing the tasks in question to shape your selection criteria. Far too often I see dealers excited by a slick sales pitch or demo and make decisions without comparing apples to apples, involving the right people or asking the right questions, which can of course cause issues when it comes to actually living with the new tech that they’ve bought. Technology shouldn’t be an impulse buy, but rather a business decision that has been reached through a thorough and structured approach. The preparation takes longer but it is well worth the time spent.

Once you’ve gathered the right people and created your RFP and decision criteria, reach out to the suppliers you wish to include in the bid process with your RFP documentation. Establish a single point of contact internally so that all suppliers are receiving the same information. Allow each supplier the same access to your team in the form of a demo and Q&A, and review their product using the scorecard that you’ve created. Taking this type of structured approach allows you to come to a decision based on facts and data as opposed to emotion.

Pro tip – be sure to also review the suppliers’ contracts prior to making a final decision. This way you don’t award the business to someone only to find that their terms and conditions won’t work for you.

Once you’ve decided on a tool and signed all of the paperwork, the hard work begins – or the fun, depending on how you look at it. Having an internal project manager is critical, as this person will herd all of the cats, ensure that everything is handled on time, and keep the project within budget. I’m often asked why the dealer needs a project manager when the software provider assigns one to the implementation. The thing is, those folks typically know their product but they can’t know your business like you do. This is where the input from your stakeholders is especially important, as they’ll be able to ask the right questions to ensure that the software is configured to meet your needs as a dealership.

Another critical aspect of the project that can’t be ignored is testing. Test every common scenario that your folks would face when using the software that you can think of. Don’t assume that everything will work the first time – the purpose of testing software is to try to break it. The more you can do to ensure that everything works prior to go-live, the less frustration your people will feel when trying to adapt to using it.

Last, but certainly not least, overcommunicate. Communicate early and often. Talk with your people about the purpose of the new tech and listen to their concerns. Reinforce what efficiencies they’ll gain, learn what frustrations they might feel, and listen. Given the long tenure of so many dealer employees, change can be challenging. While everyone can’t always have a say, most people just want to be heard. When people feel heard, they tend to be more accepting of change even if it isn’t what they wanted. Train, and provide ongoing training opportunities to ensure that folks are using the new technology correctly – and that new employees are learning to use it correctly versus falling victim to the telephone game.

New technology can open up a whole new world of efficiency and opportunity for dealers. There are so many tools created specifically for our industry, it’s pretty exciting to see how many companies are dedicated to our success. While it may not be a quick process, taking the time to define your needs and processes, assemble the right team, assign the right resources, test, and communicate will make your next implementation a smoother one.

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.

Maximizing Profits Through Spend Management

Maximizing Profits Through Spend Management

Tonight, we are pleased to introduce our readers to our new guest writer, Jennifer Albright. In her first post, Jennifer educates readers on maximizing profits through spend management. But first, allow us to introduce Jennifer Albright in her own words:

My start in Procurement began unexpectedly with a temporary position, evolving into a career spanning over 20 years and becoming a true passion. I’ve worked in industries ranging from manufacturing to high tech to heavy equipment including 11 years with a large heavy equipment dealer, all of which have reinforced the fact that best practices are truly universal and the biggest strength of any organization is its people.

I enjoy bringing value through the details – working with systems, analyzing data, reviewing contracts – but my true passion is people, building relationships and figuring out what motivates people in order to bring about positive organizational change and millions in cost savings.

Education

  • Certified Professional in Supply Management – Institute for Supply Management
  • Certified Purchasing Manager – Institute for Supply Management
  • Six Sigma Green Belt
  • EdM – Education – Boston University
  • B.A. – Psychology – Rutgers University

Many dealers have yet to embrace spend management as the strategic opportunity that it is; it’s only natural put the focus on sales since that’s the obvious profit generator. The thing is, there are two ways for any business to increase profits – sell more and spend less. I’m not knocking our sales friends, but the savings a dealer can experience through effective spend management can make all the difference in the world during an economic downturn, global pandemic, the off-season, or any time when sales are more of a challenge – and when times are good it can make profits even higher.

If we look at dealers through a spend lens, they typically fall into one of the 4 stages outlined below:

We’ve been fortunate to work with a number of dealers in Stages 4+, and many who are in Stages 2 and 3 who are typically surprised by the magnitude of opportunity within their dealerships. We often hear things like, “I care about selling iron, not what we spend on copy paper” – but it’s so much more significant than paper.

Okay, so how significant?

The Center for Advanced Procurement Strategy (CAPS) is a nonprofit research center at Arizona State University, dedicated to supply management research. They have done extensive research on savings opportunities to be gained through a “mature procurement organization” – meaning, a company who embraces best practices in procurement and spend management.

They were able to quantify addressable spend – meaning, the spend you have control over – as a percentage of gross sales. They went on to define the percentage of savings a company should be able to save through the use of best practices. My colleagues and I have taken their numbers for Industrial Manufacturing and refined them further to find more specifically how the CAPS findings apply to the heavy equipment distribution sector. Don’t hesitate to reach out if you’d like to learn more about this research, I’m happy to share as many nerdy details as you’re interested in hearing.

Bottom line – dealers who embrace spend management as a strategic business function can aim to save 1% of gross sales annually. The average dealer size in North America is approximately $75M – which means a potential savings opportunity of $750K. By focusing solely on sales, the average dealer is letting up to $750K slip through their fingers each year. And the bigger the dealer, the larger the opportunity.

At this point, if you’re in Stage 2 or 3 I hope you’re wondering where to start.

First stop – look at your spend. Who are you buying from? How does your category spend shake out – meaning, do you have 42 office supply vendors when 1 or 2 would do the job? The same goes for tools, furniture, shop supplies, tires, and nearly everything else you buy. Supplier consolidation means higher volume with your chosen suppliers, which leads to larger discounts and other perks with the suppliers you choose to work with, which leads to stronger relationships with those supplier partners. Then, when the next Big Thing happens (hopefully not a pandemic!) you’ll have key partners in place to support you.

Next, look at your processes – you’d be surprised by the cost of waste. As dealers grow and especially as they add new locations, it becomes easy for processes to splinter and to find that you have many ways of doing the same task and that most are likely not as efficient as they could be. Anything from how you process parts orders to how you pay your suppliers, the layout of your facility, closing work orders or processing warranty claims – if you haven’t stepped back and given your processes an objective look, now is the time.

Embrace technology – while this industry is built on relationships and handshakes, many of our customers are becoming more tech savvy. If the pandemic has taught us anything it’s that dealers need to follow suit if they haven’t already. There are so many incredible systems & tools designed specifically for the equipment industry that can save time, streamline processes, and ultimately save money – which means increased profits, and in many cases makes it easier for your customers to do business with you. If you haven’t gotten out there and looked lately, take a moment to see what’s available.

Last but most certainly not least, hire a procurement manager. It may sound excessive for a small dealer, but keep that 1% savings opportunity in mind. This person may initially need to wear multiple hats but an experienced professional will more than pay for themselves a lot faster than you might think.

It’s an exciting time to be part of the equipment industry. By embracing these types of opportunities to improve profitability, dealers can ensure that they will be able to weather whatever storms may come next.

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.