FADA Shop Trak Program
|Topics: Florida Automobile Dealers Association, Shop Trak
Florida Automotive Journal
On Tuesday, November 17th, the Florida Automobile Dealers Association, (FADA), members attending their 50th anniversary convention at the Diplomat Hotel and Country Club had an opportunity to hear about a Shop Trak program. National Automobile Dealers Association's (NADA) Director of Research, Paul E. Herzog began the program by saying that FADA President Dexter McCaskill's impressive introduction was merely an "elongated way of saying I'm an economist." There are some people, he went on the say, who think, "an economist is a guy who would marry Raquel Welch for her money."
As soon as the laughter died down a bit, Herzog started his explanation of the beginnings of Shop Trak. Making clear the fact that Shop Trak is a total system, Herzog said the program is actually an outgrowth of a study conducted for NADA by the Management Information Corporation. NADA had certain questions about warranty and service which required careful study and analysis to be answered.
One of the first facts found by the study group was that the average mechanic is capable of 10.8 hours of work in an 8 hour day. Why then, they asked, is there so much dissatisfaction with service departments of dealerships; why do most dealers lose 8 cents on each dollar's worth of labor in service? Herzog described the service department as a historically losing operation, partly due to the fact that it has operated in the same basic manner for the past 35 years. Perhaps, he said, a few new power tools have been brought into the shop, but not much else.
He attributed this lack of improvement to the fact that there is little incentive to get into the service business on the part of dealers. This, Herzog admitted is understandable. "You fellows are the greatest merchants in the United States." Twenty million new and used cars will be moved by the dealers in the coming year, so, Herzog questioned, how can you really be interested in service.
He answered his own question with an explanation of the word "consumerism." Briefly, the term, as Herzog uses it, refers to the necessity of any industry to satisfy the demands of the consumer. According to the speaker, "consumerism reigns supreme . . . it is with us and it is with us to stay." To the auto industry, then, consumerism means, "What is the automobile dealer doing to satisfy the driver?" Herzog emphasized the point that now is the time for change, saying, "Gentlemen, you're going to have a revolution in the service department and you're going to have it now." At present, Herzog feels that because service men more or less work and take breaks when they want to, they are not employees but independent contractors. Thus the Basic Shop Trak Principal is to put management back in charge of service departments in dealerships. Herzog then outlined the basic points of Shop Trak:
1. Plans for loading and scheduling of shops and shop work must be out in writing. The service manager then has a permanent written record of that which he previously committed to memory.
2. Personnel: there is a mechanic shortage in most service departments but it is usually not in the area of highly skilled labor, because there are not too many jobs requiring this kind of service. If 70% of men are highly skilled, it raises the cost of all work unnecessarily. Dealers need to "get the right man for the right kind of job." According to Herzog, "There is a better way of doing it than it's being done." He claims that in the last 10 years dealers dropped 10% of their service business and Shop Trak can bring it back.
At this point Herzog introduced Russell Gilbert, President of Town & Country Dodge, Farmington, Michigan. Gilbert is currently using Shop Trak and is more than pleased with its results in his service department. Gilbert began with a warning to dealers that within the next 24 months they will lose 45% to 50% of their service business to Sears, K-Mart, and independents down the street. Having caught everyone's attention with that, he went on to explain what Shop Trak means.
1. "Merchandising your labor force."
2. "Merchandising all of your available space."
3. "Merchandising your service department on a competitive basis with super market type organizations down the street."
Shop Trak allows you to:
1. Increase service net (profit)
2. Increase mechanic's production
3. Lower labor cost of sales
4. Have more competitive pricing
5. Have more flexibility in special pricing
6. Have better employee evaluation
7. Pin-point problem errors in service
8. Set up an apprentice training program
9. Improve customer relations
10. Merchandise service department.
Asked what the greatest benefit Shop Trak has been for Gilbert, he said it is in the increase in service net due to greater productivity and lower cost of service sales. Also, Gilbert said, the quality of service work has come up. They have had, for instance, fewer irate customers coming into the shop with a problem which was supposedly already taken care of. When this does occasionally happen, though, the service manager places a rubber stamped "PREVIOUSLY REPAIRED" across the work order and sends it back to the mechanic who did the original repair job. Seeing the big red rubber stamp tends to quiet the customer and makes the mechanic think twice before rushing through another job.
The major problem of Shop Trak is in not selling it right. In other words, the dealer must carefully explain each facet of the operation to all who are involved in it and everyone in the dealership must be behind it 100%.
Herzog took the podium once again and explained that failures do exist, but usually only where dealers decided thay did not want to manage or really run the shop, either himself or through his service manager. The dealer, to make the program a success, must be willing to run the show.
Herzog closed the session with a listing and explanation of costs to the dealer of the Shop Trak program.
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