A Conversation with KEA Advisors’ Allen Phibbs.
We recently caught up with KEA Advisors Director of Education and Industry Relations Allen Phibbs to discuss the trends he is seeing in dealership service businesses. Next month, along with Karmak Strategy Consultant Ashley Martin, Phibbs will lead a four-day Karmak user virtual clinic dedicated to service department education and leadership training.
Allen, how are service operations evolving and what is driving this evolution?
“I believe the biggest evolution is the heightened awareness of the currency called ‘time.’ Time is money for both the customer and the service department. Indeed, time is really the only thing that a service department has to sell. The more of it a dealership sells, the more money it should make. For the customer, the less downtime and the more uptime they have tends to be the best gauge of current and future success.”
What can service operations teams do to propel growth for their dealerships?
“Throughput remains the greatest opportunity for growth. Increasing the velocity of trucks coming through the shop and accelerating the number that can be worked on at a given time directly impacts the revenue both the service department and its customers can realize. Service departments that can get trucks in and out quicker – and of course, fixed right the first time – will be rewarded by the market with more business.”
What are the greatest challenges facing dealership service operations?
“Workflow is a challenge. That is, minimizing the number of times a truck or a service document is ‘touched’ by anyone in the dealership. The more touches, the slower the process. Today’s advancements in DMS technology, combined with a range of third-party software and OEM/vendor applications, can greatly impact workflow, throughput, and revenues.
“The pandemic has made plain the importance of the parts supply chain and available human capital toward the volume of work that can be completed – and when. The dealership service operations that are realizing the greatest success are planning proactively to minimize these business risks.”
Are these challenges being felt in other areas of a dealership?
“The parts supply chain ultimately impacts new truck production and has also been responsible for recent fluctuations in dealership parts inventories. Our industry in generally covers new truck order statistics well. In the used truck market, KEA Advisors is seeing a favorable uptick and we look for this trend to continue. As a result, we foresee a favorable outlook for service operations.”