Used Car Reconditioning – A Dealership’s Supply Chain
There is a magical number floating around most dealerships, and that number is 3. Three days to get a car frontline ready. The problem with this arbitrary number is most dealerships either don’t know what their days to the frontline are or how to fix the process to get it where it needs to be. There are consulting companies that promise to help you fix your used car recon process for the lower rate of $150 per hour, and there are software companies promising the moon. There isn’t anything wrong with buying a software package or paying for a consultant, but don’t be surprised if you still have the same issue as before, but with less money in your pocket. The problem is how the process is viewed and the methods employed to improve it.
Used car reconditioning isn’t a unique process that only happens in the dealer world, where outside examples of process improvement don’t apply. The process of buying a car from an auction, delivering it to your location, assembling a team of people and vendors to prepare the vehicle for sale is a supply chain problem. Cambridge Dictionary defines supply chain as, “the system of people and things that are involved in getting a product from the place where it is made to the person who buys it.” The dealerships and vendors are the systems of people that repair a vehicle and get it ready for the person who buys the vehicle. It is important to view this as a supply chain process so we can start applying supply chain management principles to help address some of the issues. That also includes applying lean supply chain and Six Sigma principles. We no longer have to make things up or try and tweak the process until we get some perfect combination.
I will be writing a series of articles over the following months that discuss this topic. We will dive into some common pitfalls most dealers face with their reconditioning process, and how supply chain management and methodologies can be applied to address them. Many of these topics may not apply if your dealership is only reconditioning 30-40 vehicles per month, but there will still be some good information that can apply to any operation.