April 3, 2006 – How you can stop the wasting of thy master’s goods

Back in 1860, Brigham Young said, “A woman can throw it out the window with a teaspoon faster than a man can pitch it in the front door with a shovel.”
Now, if there was ever an expert on thrift and economy (OK, and women too…) it was Brigham Young. Living in the middle of the Utah desert — no supplies within 2,000 miles, 27 wives, 57 children and about 10,000 other good folks that all had to be clothed, fed and housed — he couldn’t waste anything! His 1847 advance team got into the Salt Lake valley at about 4 o’clock in the afternoon on a hot 24th of July, and by nightfall they had dug a ditch, diverted a stream and planted 5 acres of corn.
They had to do that to keep from starving that coming winter. Now, you and I don’t have to worry about starving. And we’re not in the middle of a desert 2,000 miles from nowhere. But shouldn’t we be just as watchful over our goods and possessions as Brigham was back in pioneer days? Shouldn’t we be just as concerned about our assets being wasted?
No one of us can keep track of all that we have going. There are too many bins, boxes and bays; too many desks, doors and deliveries. We simply can’t keep our thumbs on all of it. Our employees are supposed to do that for us. And maybe they do it, and maybe they don’t.
I want to talk here about the “don’t” part of that last statement, and what you can do about it. Let’s start in the Parts Department.
Waste of assets? Time? Money? Numero uno for me is obsolete inventory. You buy it, store it, heat it, cool it, insure it and finally after about five years, you throw it away. Big waste. Use your computer to watch it in a way you yourself can’t do. Watch it, report on it and move it out quickly before it is yours forever. Cost of waste: Hundreds of thousands of dollars.
Second for me in parts is the “we must have it right now so let’s send someone to buy it down the street” parts acquisition plan. Again, use your computer to track sales history, mathematically project demand and have what you need when you need it. Cost of waste: By the time you drive to pick it up, pay a driver to make the run, pay cost-plus to the other dealer, lose your return allowance, and run a check through accounts payable (clerk time), you haven’t made a dime.
The third biggest waste to me in parts is simply lack of organization. Dave Spencer was my lead tech for many years. He was wise beyond his years, and once mused to me after searching the parts shelves and finding the part my manager said we didn’t have: “You know Hal, if you don’t know what you have, you don’t have it.” Get organized. Cost? A lot. Missed sales. Duplicate inventory. Mad customers. Mad techs. It goes on and on.
Service. How do our goods get wasted in service?
First thing that comes to mind is shop supplies. For years, whenever my guys wanted another can of WD-40, they just walked up to the parts counter, asked for it and walked away with a new can. And over time, I began to notice a can of WD-40 on the bench, and in the tool box, and in the truck, and under the bench, and (I’m now sure) at home in the garage too.
I finally learned. When they wanted a new can, I simply had my parts guys ask for the old can. It worked like a charm, and my cost of shop supplies went down dramatically. It doesn’t work with everything, but it certainly helps.
Improper storage, usually outdoors, that leads to scratches, dents and other “shop rash” is another waste of our goods. The cost isn’t so much the touch-up paint, or the new clutch lever, but rather the loss of our customer’s trust and confidence. Those bikes are treasured possessions. We damage them, we damage our relationship with our customer. Cost? Can’t put a number on it. But it is more that just the cost of repairs.
Now, the big ones.
Talk about spooning it out the window. Think of the following:
In sales:

  • Interest on major unit inventory because of late flooring payoffs;
  • Extra per diem on lien payoffs made after the agreed payoff date;
  • Not deducting pack, due bills, tow charges, sublet, internals and all other costs from deal before calculating commissions;
  • Program money not received due to deadlines missed.
    And in the office:

  • Vendor late payment penalties and interest;
  • Payroll tax penalties and interest;
  • Duplicate payment of vendor invoices (Paid COD, and paid again through AP);
  • Overpayment of unemployment and workman’s comp due to old audit figures and improper job classifications;
  • Co-op advertising never filed, or rejected because of improper content, or missed deadline;
  • Missed AP discounts due to late pay.
    No, Brigham Young never ran a motorcycle shop. But he had 10,000 people to feed, and the closest 7-11 was 2,000 miles back in Missouri. When they got into the valley, they didn’t waste their time, and they didn’t waste their goods. They planted the corn.
    There’s a lesson there. For all of us.
    Hal Ethington has been associated with the powersports industry for more than 30 years. Ethington is a senior analyst at ADP Lightspeed. You can reach him at Hal_ethington@adp.com

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