Back in the day, dealers could count on profits of 10% or more. But as competition has grown and customers have become savvier, those profits have dropped to about half that margin for many dealers.
While some of those losses are unavoidable, improved efficiency can gain back part of those lost margins. And even small increases can add up quickly. For example, a two-point profit gain at a $5 million yard yields an extra $100,000 for the bottom line.
Here are five simple ways to improve efficiency — and margins — at your yard:
1. Train employees for the long term. Labor is tight and skilled workers are hard to find. That’s why it’s important for dealers to recruit workers based on attitude and aptitude and have robust programs to train and mentor them so they stay. Some dealers find success cross training all employees so each one can handle duties if another is sick or on vacation. As a bonus, cross training helps dealers discover where employees’ skills fit best with the business.
2. Weed out disorganization and inaccuracy. Do a thorough audit of your supply chain and eliminate all unnecessary steps. Then make sure you have the proper takeoff systems — along with employees who are trained to excel using them. Ensure accuracy from the moment the order is taken including delivery address, date materials are needed and when they must be delivered.
3. Automate and streamline. Today, technology offers a variety of smart ways to automate tasks and eliminate wasted employee hours. Everything from accounting, sales, quoting materials, customer relations, inventory and production can be handled with one piece of planning software. Having all that information tied together not only improves efficiency, but it also streamlines the process.
4. Maximize deliveries with technology. Deliveries are a key part of dealers’ businesses — and a major cost driver. That’s why more dealers are turning to GPS technology to find the most efficient route, while keeping tabs on drivers. Combined with software, this technology can minimize miles, gas, drive time and maintenance. For example, using a combination of GPS and software allows dealers to divide addresses into zones for more efficient routes and drops.
5. Partner with the best vendors. Grade vendors on performance, such as number of late and on-time deliveries. Then partner with high performing vendors to offload tasks that might otherwise require employee time. For example, some vendors have added in house estimators who look over elevations and floor plans and then use software to produce a takeoff of the materials needed. This service can be especially helpful with atypical products such as extruded aluminum trim.
For more on how to improve your efficiency go to http://www.tamlyn.com.
