This month we’d like to tell you about a business intelligence service we provide to dealerships. An
Impact Analysis
from KEA Advisors is a sophisticated statistical examination into your service department operations that makes it easy for you to focus on the most effective ways to drive your total absorption numbers.
Our mission at KEA is to increase
PROFIT
for commercial dealerships by transforming their business operations to best in class. An Impact Analysis takes the guesswork out of continuous improvement by detecting which specific actions will have the most impact on your bottom line.
Who is it for?
Any dealership service department who wants to reduce Dwell Time and increase Sold Hours (Dwell Efficiency Ratio (DER): a ratio of dwell hours/sold hours for each RO) will benefit from an Impact Analysis.
Why does DER matter?
It matters because the lower the DER, the more throughput your service department will produce. More throughput equals more bay and tech capacity, which leads to more sales and gross.
What is the industry standard/best in class DER?
Our current quarterly study of 60,000+ repair orders for 60+ dealerships show the best performing service department with a DER of 10. However, as we study the DER calculation and its inputs, we believe that this ratio can be as low as 3. Unfortunately, we commonly see DER two to three times our current best in class DER.
How is it done?
You simply provide us with Repair Order reports that already exist in your DMS, and our staff statistician, Pete Ramler, Ph.D, will process the data through his “RO-DER” (Repair Order Outlier-Dwell Efficiency Ratio) tool each month.
The focus of this base level Impact Analysis is on identifying RO Outliers to reduce the DER. An outlier is a data point that stands apart from the pack. The RO-DER Analysis identifies the worst and best 5% of the ROs for the month. RO-DER Analysis focuses on reducing overall dwell time with statistical analysis using the data of each individual Repair Order, then eliminating the negative outliers.
Why do outliers matter?
A common misconception is that outliers are merely random occurrences where achievements and breakdowns happened “just because.” Oftentimes, applying methodology to these “random” events is seen as futile or low priority. However, we understand that studying and addressing both the positive and negative outlying ROs will have a substantial impact on your overall dwell time and your Dwell Efficiency Ratio. Not only do outliers point out which positive department actions should be replicated, they identify destructive actions to your dwell time.
