What do you mean we have OVER $100,000.00 in parts which haven’t had usage for over 18 months?
Well, it’s November the end of the year is just weeks away. Over these next few weeks, many in the Imaging Channel will be writing off obsolete parts. First, let’s define Obsolete parts, all part’s in your inventory with no usage in over 18 months. Of course, no one would expect that they buy parts and never use them. Well obviously, all service industries have parts which become obsolete. However, that dollar amount should never equal more than one percent of your total parts spend, should it? What percentage do you accept, or how much of your money are you willing to throw in the trash? Ironically it seems that Thanksgiving weekend or the Christmas holiday is such a wonderful time to realize just how out of control your inventory is. I guess the grief of throwing money away when balanced with the cheers of the holiday season is less painful.
In 2017 why are organizations still operating like it’s 1990? Sadly, it may be that organizations don’t shake things up enough. When was the last time your organization challenged itself to re-examine every aspect of your operational cost? Does your organization create a budget for the new year or do you work with no budget?
With the technology, today and in some cases technology that has been around for decades, technologies which can help organizations truly understand the habits of the moving parts of their business. I use the word habits because most profit-robbing problems in business are directly related to behaviors and behaviors are habits. Fixing or controlling behaviors which are not conducive to profitability standards will only be corrected with discipline. Data will outline the disciplines needed, and strong leadership will obviously manage to those disciplines. There is no automatic perfection; perfection comes from leadership wither you are an owner or those whom an owner delegated control too. You must become obsessed with having complete control over operating cost. Today you must employ a proven data system to assist you in this obsession. Fancy software, fancy PowerPoints, and fancy talk about the same problems which never get corrected must end for the survival of the industry. It’s time to correct the direction of the ship.
“Over the next couple years, the industry will see more innovation around how the products are sold and serviced then the products themselves, and we must be ready.”
The Imaging Channel is going through massive changes. 2017 will prove to be one of the most aggressive acquisitions years in the channel's history, and this will carry on in 2018. The time for The Imaging Channel, to get control of their service operations has come. The only area to increase your EBITDA is to control your service operating cost. Your service profitability can no longer be the shell game of moving numbers from one area of the PnL to the next depending on who you consult with in hopes of a better return. Experience the satisfaction of knowing the details of your spending. Service has a cost, and when your revenue from it comes in tenth’s of cents, you better make sure what you do makes sense.
In 2018 and beyond it is getting harder and harder to outsell poor decisions. The need to completely understand every cent of your service cost has always been important. However today it’s mandatory. It will take a complete understanding of current circumstances to create your future circumstances from them. Don’t let false analytics and outdated management strategies fool you into complacency the future will not forgive you.
So make this season the last time you participate in burning your cash. Welcome 2018 as the year you invest your time and passion for completely understanding the story of your service department, and its numbers, not from strictly a PnL follow them back to where they came from, after all, it represents at least half of your revenue and all of your profitability.
In Closing: The Industry we all call home is changing all aspects. We will not sell, deliver or service in the way we always have forever, and those who gamble with status quo on the tenure of forever will miss the evolution, and their relevance will fade.
“Transformation is a process which defeats irrelevancy. This happens when instead of fighting to stay relevant we collaborate with people and organizations and create the new relevancy.”
R.J. Stasieczko
For decades BEI Services has been the trusted provider for an unbiased imaging device and technician performance benchmarking. BEI offers a complete array of solutions to address every aspect of your service department’s performance and profitability. Exclusive solutions including Advanced Comparative Reporting, Effective Workload Distribution (EWD) Territory Management, Technician Compensation, Advanced Inventory Management (AIM) and the Overstock Parts Network (OPN) are utilized by the most respected and awarded dealers and manufactures in the industry. Visit our website it’s just a click away.
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