Service Model of Opportunities22 Oct, 2007 By: Editorial Staff imageSource
Service Model of Opportunities
BEI PROS creates a service model of opportunities... Improving profit margins
in the operations of service means developing and implementing a better service
model which, according to Jerry Newberry, president of recently formed BEI PROS,
they have successfully accomplished. Now focused on implementing new strategies
put in place, Newberry's shares them with imageSource:
imageSource: Jerry, now that you've started a new company (BEI PROS),
tell us about it, including the service you provide.
Jerry Newberry: BEI PROS was developed due to a major need within the
independent dealership environment. As you know, I was the VP of Service at
Global Imaging Systems, where I spent almost 10 years. The service side of the
business has always had major opportunities to improve from a profit and service
operations perspective. BEI PROS is the service that will specificall/y identify
these opportunities within service, and as importantly, lay out a detailed plan
to address every area identified.
IS: You obviously make an initial visit to the location and perform an
JN: That is correct. It typically takes 3-5 days to thoroughly analyze
all “areas of opportunity” within service. We actually focus on these following
areas, along with others seen while on-site:
- Financial performance of service/Revenue generation/Expense control
- Management & supervisor responsibilities (We train on what their roles
- What should be monitored in service (daily, weekly, monthly and quarterly)
- Service reporting capabilities / Dispatch processes
- Parts department analysis
- Field technicians performance / Field service structure, etc.
IS: That seems to be a thorough analysis. What are the typical issues
you find on your visits?
JN: Well, every company is different as far as what opportunities
exist. However, there are common problems I find in most locations. First, gross
profit in service is 20-30% lower than it should be.
The companies I've been hired by for assessments performed to date range from
$8 million to 46 million in sales. GP in Service is operating in the 28-44%
range versus a 52+% benchmark. I find it a little confusing out here because of
the number of different financial models being promoted. The first step for me
is to ensure that all allocations for revenue and expenses are “bucketed”
correctly. Typically, I immediately find that companies that think their
operating at 44% GP now, are operating at 36% to a real achievable model. From
there we are easily able to identify every financial area that needs attention,
and implement the appropriate solutions to resolve the concerns.
Operationally, I find a lot of companies trying to attain service benchmarks
for productivity, but are struggling to even get close. Typically, it's due to
not being in the correct structure for their size, machine population, and
geographical territory that the company covers. Accountability procedures and
lack of clearly defined expectations in the field are also big contributors to
less than benchmark performance.
IS: Can you highlight some of your successes since BEI PROS first
JN: I can't give company names (unless you request a proposal and I
provide the references!) but there have been numerous improvements documented,
including these results within the first 30 days:
- 60% reduction of calls on the board (averaging 160 calls upon arrival; now
closing at 60-85).
- $110,000 in expense reduction going forward.
- Ongoing expense reduction due to the strategic partnerships developed with
several benchmarks companies products or services that the majority of
companies currently use (In some cases the actual assessment charge is paid
for in a 4-5 month time frame by these savings).
- Restructuring of service created a “proactive” organization with “fires”
- GP in service obviously improves with the reduction of expenses.
IS: How did you choose the name BEI PROS? Are you affiliated with BEI
JN: Yes, I've known Wes McArtor and Greg Mosley of BEI Services for
12-13 years. These guys are top notch industry professionals and offer a service
that's invaluable for the independent environment. Wes actually approached me
after my departure from Global. We knew the need was there so we partnered in
this new venture. The two services complement each other completely. It amazes
me to watch companies spend numerous hours or days pulling and revising reports.
These reports can now be redirected using the wealth of data BEI Services can
generate in just a few seconds! BEI's tech compensation program rewards the
technicians for implementing the changes BEI PROS puts in place, and their data
can monitor and trend the improvement efforts. BEI Services data is unmatched,
but without proper execution it's only one piece of the puzzle! Consider
reliability and service-costs data, employee performance data, parts expense
IS: Tell us more about the levels of service, specifically of BEI PROS
JN: I would only close by saying the industry is changing and margins
are being challenged BUT the margins can still be extremely healthy (52+%) when
running the department right. Also, there seems to be a misconception that in
order to have margins high, it means a lower level of service and working the
employee's harder. This could not be further from the truth! The changes BEI
PROS makes within the service organization substantially improves the moral of
the employees. Think about it, most companies are operating at a call activity
level double where they should be. By implementing the appropriate structure,
enhancing the overall productivity in the field and putting processes into place
to drive product reliability in the field, we reduce the incoming call activity.
When this occurs we see technicians able to slow down, service machines
correctly, and walk into customer locations meeting all response time goals.
Customers become extremely pleased with the responsiveness of the service!
Ultimately, leading them in the right direction makes all the difference in
putting their company on a path to success.