Breaking Down Service By The Boxes: A Marine's Methodology

kind. But they used to have an officer in his dress blue uniform and he had his sword. He'd bring it up and it said the Marines, the few, the proud, the Marines. And I remember running into the kitchen and telling my mom, like, I know what I'm going to do. I'm going to join the Marine Corps. And so that was like seventh grade, I think it was. And so, yeah, so two weeks after high school, graduate high school. Two weeks later, I was in San Diego MCRD. uh going through marine corps boot camp uh i was a heavy equipment mechanic uh in the marine corps and um so after after i got out of the marine corps i was sitting around the house for a week or two and i was like i i gotta get a job so i just start telling how old i am and so i want to say thank thank you for calling me a young man because i'll i'll be 50 this year and

young man almost 80 yes so i'll take young man every day of the week uh but just show you how old i am Not as old as some. I've got the big yellow book. You know, it had all the phone numbers in it. And I just started flipping down to like construction equipment dealerships and just calling people on the phone and said, hey, I'm a mechanic and I need a job. And so I went to work for Rush Equipment Centers. It was a John Deere, industrial John Deere dealership in Houston, Texas. They were acquired by Doggett Machinery.

Correct, yep. Yep. And so, yeah, so worked for them for about three years or so and then promoted up to be a field mechanic and then did that for another couple years with them and then left them and went to work for the case dealership. Ironically, the case dealership... Also in Texas? Also in Texas and Houston. So Doggett owned the case dealership. And so I worked for the John Deere dealership and the Case dealership that Doggett has owned both of them at separate times, which is kind of ironic. But anyway, so I went to work for them for maybe a year or so as a field mechanic and then got promoted to service manager. then branch manager. Then I took a role with CNHI. I was a manager of field service operations on the KSIH side, covered Texas and Oklahoma. And then left there and went to work for Chris Wackman. He had just recently acquired Washington County Tractor. And he realized like, hey, I can continue to buy locations, but if I don't make any money, like what's the purpose in that? And so he realizes his parts and service business, just like every other ag dealership, you know, very sales, sales, sales focused. And so he's like, I need somebody that knows ag or not ag, but I need somebody knows parts and service. And so employees that used to work for me were currently working for him. And then the territory manager for New Holland, because they were New Holland dealer, him and I were good friends. And it was ironically, they. all told Chris, like, well, John lives in Brenham. And if you can get ahold of John Dowling, like he's your guy. And so over several months, I was doing very well at CNH. And at one point, Chris is like, just come work for me. And let's just take, take, take. take over the world, you know, the tractor world. And I was like, well, why not? Let's do it. And so turned down a two-page great promotion with CNH to go work for Chris and had great, great success. I mean, I think our initial revenue when I started was like $40 million. And in less than five years, we grew it to $139 million. So almost 200% growth, had over 200% growth in service, about 140%, I think, in parts revenue, doubled in locations, employees, everything. And so had a great time there. And I think it was about year five, I had a conversation with Chris and... I told him I was ready to move up, wanted to do something different. And he was like, well, the only place you can move up is my job and I'm not leaving. I was like, well, I guess it's time for me to move on. And I like a challenge. And so I stayed on for one more year and left there. Different things happened. That was during COVID. And so anyways, found myself without a job and didn't know what else to do. So I'd started writing a book about a year or so before. And I was like, well, I don't have anything else to do. So I went out to my pool house every day and wrote for eight hours. And then after I did that, my wife says, John, you need to go get a job. And I was like, I have when I'm writing a book, you know, but she didn't go for that. She wanted me to get out of the house. And so long story short. Went to work for Jay Lucas, who owns Jordan Center Associates. I think that's how you and I got connected through Jay. And, you know, JSA has been recruiting in the heavy equipment industry for, man, probably about 40 years now. And so went to work for him as director of dealer accounts management. And then left in January and I've gone full time in consulting and training and I do speaking engagements and stuff. So and then, oh, by the way, I also Kevin Landers, which I think you had a. He was on as a guest a while back ago. Him and I just co-founded a software development company called By the Boxes. So if you've ever read my book, Service By the Boxes, break service down into 10 basic steps. And so this By the Boxes is a work order tracking app and basically just tracks every step and stage of the work order process, gives you a nice visual dashboard. And instantly you can look at the dashboard and find out where's my bottleneck. Like where exactly in the service process is everything getting hung up at. And so if you've read my book, you know, Service by the Boxes, it's a methodology. You know, it's a philosophy of accountability. Let's break down the complex to simple. And it's undergirded with accountability. And what I mean by that is like there's one required task. to move a service work order from one step to the other. Like there's one identifying thing that you have to do. And once we identify that, that's how we broke down the different boxes. But then we assign that task to one person and one person has to be responsible. You know, like everybody says, if everybody's responsible for it, nobody's responsible for it. So you hold one person responsible for it. And so when you utilize the work order tracking app, It undergirds that. So when you have a bottleneck, you know the exact employee that I need to go and have a conversation with. So like I said, Ron, I started out as a technician, and I remember consultants would come in, and the executives would come down, and they'd always tell how bad service was doing. And every time, they would stop all the production in the service shop. Bring all the mechanics to the front of the service shop and tell everybody to work harder and work faster and to work more efficient. But what I've discovered, it's usually not the technician. Sometimes it is, but usually it's a poor billing process. It's a poor process from opening the work order to getting the estimate approved, ordering the parts. It's all those in-between steps or boxes, like I like to call that, really. adds time to it. And for a prime example, you know, average, you know, an average dealership, it takes them 14 days to 30 days to close a work order. So much now that cat is dictating that, that, that their, their dealerships close their work orders between seven and 12 days because it's such an issue, but that has nothing to do with the technician. You know, the technician can get the job completed. in a couple of days, but if it takes another two weeks or a month to close the work order, you know, so anyways, I can digress.

Uh, so I think two, two things I would say, um, one part of it is, is, uh, an, an internal labor rate. deflates your numbers, deflates morale, deflates everything. But with that, one of the successes I had to drive efficiency is we, so maybe it's three prong. One of them is you need a flat rate every internal job. Because a lot of times if you have an internal flat or service labor rate or not, everybody says, oh, it's an internal job. We'll just take our time. Those jobs should be flat rated. And so believe it or not, when you give an employee, a technician or whatever, you give them an objective, you give them a goal, they want to reach it. And so we increased our efficiency. One way was saying, hey, technician, you've got X amount of time to get this loader installed, the radio installed. And so they had a clear objective. And so instead of taking two or three days to get a loader and a radio and washed it, it took one day. Because they know this is a one day job. Like, like we're going to, we're going to hold you accountable for that. Streamlining our processes, you know, so the service by the boxes, that's the process that I developed while I was there at Washington County Tractor. And I rolled that out. So we did training at training every month, parts and service manager training to re re re ingrain, I guess you could say. Like the stuff that we were working on day in and day out, human people are very forgetful. So you got to constantly remind them on that. And so, but with the training that we knew exactly what it was. And so I had a work order, I call it a work order timeline audit. I think it's what it's called. Basically the app, by the boxes app, I had that in an Excel spreadsheet and I could go into the business system. And I would pull different dates within the business system, put it in this Excel spreadsheet. And it could tell me how long did it take me to open up a work order? How long did it take me to assign it to a technician? How long did it take me to get a parts estimate? How long did it take me to get approval from, how long did it take me to order parts? And so then when I'm seeing my bottlenecks, instead of going to the technicians and saying, hey, work faster, work harder. If it takes me two days to get a parts estimate. Well, then I need to work with that with that back parts guy is like, why is it taking me to two days to get a parts estimate? I want it in 24 hours. And so cutting all those little things out, we increase the efficiency.

So, yeah, so we would I was at a component rebuild shop. So I was at GSM company at camp. Pendleton and Southern California. And so what we would get is we'd get a unit, would bring it in and would have to tear it apart, diagnose it. And if we were less than 65% of total value, then we had approval to go ahead and do it. And, but one of the benefits we had there is, is. we would have an NCO. So you're, you're, you're, you're what we call a non, a non, a non rate. So if you ever see a Marine doesn't have a blood stripe, like the red stripe down, down their dress blues, they're called a non, a non rate. And that's a really great story, but probably don't have time to get into it. But those, the non NC or the NCOs would kind of manage, you know, four or five guys at one time and really help them, you know, cause you got kids like myself. I was right out of, right out of high school. Had, what, three months of training, and it was really more a theory of operation. And then I get dropped in a unit and like, hey, here's an LVS transmission or transfer case to rebuild. And so that's how that would work. You'd be assigned it, but you'd have like a mentor there to really help you.

Are you talking about like in the civilian shop or? Oh,

Yeah. I think that goes right back to, you know, flat rating, like, like your internal repairs and having that supervision of telling that technician, this is a, this is a five hour job. And because the technician may think it's a 10 hour job. Well, if they think it's a 10 hour job, they're going to mentally prepare for to take 10 hours to do it. But when you have that supervision of saying, no, this is a four hour job. And then they go, I have no idea how the heck I'm going to get this done in four hours. Then that shop foreman or that lead mechanic can work with that, that newer technician to, to reach it. Like this is how, this is how you get there. This is how you can do the job in four hours. Um, this couples with this man, we just like a rabbit hole we could go down, but part of the problem we have with technician recruitment and also retention is I've learned that shop foreman's and service managers, they don't want to do that work. They don't want to coach and train the technician. They want to, they want to hire a technician. who maybe was in the military, maybe has gone to a tech school and treat him like a 20-year veteran. And if they have to give him any assistance at all, they're like, oh, he doesn't know anything. These guys in tech schools, they don't teach him anything. And that's... I think it goes going back to what we're saying about supervision is we've got to train and grow technicians, but this hasn't changed. There's no difference in 20,30 years ago. I had a conversation the other day and I talked to the shop foreman and I was like, well, when you started out, how old were you? Oh,20. I said, did you know anything? No, I didn't know anything. I screwed everything up. I was like, okay, what's the difference with the, with the new generation?

And I'll take care of you all day long.

Yeah. Yeah. Labor is expensive. Parts are expensive. It takes a lot of cash. You've got to manage. I think you've got to manage your business better. I mean, back in the day, you could sell a couple of units and you made plenty of money and labor was cheap. Parts were cheap. I mean, I think when I started, I think our labor rate was like $55 an hour. Now it's like $255 an hour. So, but it is ironic. I'm glad you brought that up. I was working with the dealer the other day and they had an issue that the wrong part came in. And so parts and service were fighting each other. And the, the, the CEO was all aggravated. Like, why are you even bringing this thing to my attention? And so as I dug down, I told my, I figured out the problem. The problem is you have a service technician telling the parts guy, they're both looking at a part screen. Like you said, two people doing one person's job. And he pointed at the rod. He thought it was the gland. The wrong part came in. And now we don't know who to blame. We don't know where is the fault at. And then I told him, I said, in 1998, I was looking up my own parts. Like your technicians in 2025 can look up their own damn parts. And now you're being more efficient because you're paying one employee to do one job. And if the part comes in wrong or we don't have all the parts, who's at fault? The technician. If the technician, if it's on the technician's list, you know, and it didn't show up within it's on the parts fault. And I tell people I'm not trying to find somebody to blame. I'm not like trying to point the finger. I want to know what part of the system isn't working. If the failure is in the parts department, then I tell them you pay it. You pay freight overnight, get the part in. If the technician forgot to order the part because it wasn't on his or her parts list, service pays freight overnight. We don't have to think about it. There's no discussion. There's no mental capacity being wasted on $200. Everybody knows what the process is.

Yeah. And kind of what's been kind of getting back to buy the boxes. And one reason that we were able to grow service by 200 percent is because we were able to find our bottlenecks. If we can keep that technician and that piece of equipment in the same bay as long as possible, you're more efficient. Instead of moving things in and out, in and out, in and out, in and out, that's just time you can't bill. And so one part of it of tracking, it's stages, but I call them boxes. So tracking one box. So one box is parts to be ordered. And we should be tracking how long does it take to order parts. especially for the service department. And so I tell everybody you order service parts the same day, same day, every day. You don't wait for a stock order. You don't. And so what comes to find out or what I've discovered a lot of dealerships, the parts manager is getting his butt chewed out about freight. And so instead of selling the freight to the customer and quoting that up front, he says, well, we're going to put everything on a stock order and get free freight. Okay, great. Great initiative to do something. But what happens now we're ordering parts once a week. And now you have those $250 an hour technicians standing around there twirling their thumbs because we wanted to save $1,500 on freight. And so that's a part of the software that's good that you can say, here's my bottleneck. Why are we, why does it take us five days to order parts if the approval was already done? And just by doing that, we'll cut off five days. from your billing cycle, which increases profitability, technician efficiency, billing efficiency, cash flow, all of that can be laser pointed down on how long does it take you to close a work order?

Yeah, if you got a job shut down, it's losing you $10,000 a day. Do you really care about a $500 freight bill?

That's pretty good. I like that.

Very, very, very, very rare.

no.

I think. But it goes back to most owners don't understand the service department.

And they are fearful, and I mean fearful, of the unknown. They would rather lose money and not get involved and not dig into it and just turn a blind eye and they focus on trying to sell more equipment. But it makes no sense at all to continue to sell more equipment. Because it makes the service department issue even worse. Like loading up more pressure or more weight on something that's already broken, you're just going to crush it. And then you have this high turnover on the service manager role because he can't do it. He can't keep up with everything. He doesn't know what he's doing. Nobody knows what's going on. And I've talked to so many dealers. They're like, you know what? Owning a dealership would be great if we didn't have to deal with the service department like that. Everything is great except for that one aspect. And I'm like, that's your moneymaker. That's the fun part. That's that's that's where you really earn your customers. Loyalty and trust is right there. And they're willing they're willing to pay anything for it. I was I spoke at the. Oh, what was it? The Association of Equipment Manager Professionals or something like that.

And so in one of the main breakout sessions, so this is all, the majority of these people are construction company managers, owners. And we took a survey. It was like a live survey. It's pretty cool. What were they looking? for or what was their decision factor when they chose a dealership? And you know, the one response that got zero votes was the cost. They didn't care about the cost. They're like, can you, number one was, can they take care of me? Can they service me? And so I talked to some people afterwards and I was like, I am so glad. that y 'all did that because I'm going to go back to my, to my clients and say, look, I was just there with your customers and they could give a rat's butt about the cost. They want value. They want good value, but they'll pay what, if you take care of me, you take care of my equipment, you keep me up and running. I'll buy everything from you. And that's the service department. That is the key. And I think in this, in where we're at now, in the market we're at now, product differentiation, I think is no more like you, there's not, if you name whatever top five manufacturer you have, there's not a bit of difference between performance, fuel economy, warranty, like whatever you want to say that this brand is better than that brand. It's really the, the service department. Do you have technicians? And can you, can you, my equipment goes down because I don't care what brand you have. It all breaks, right? It's all going to break. And, and customers know that they just want to know when it breaks. Can, do you have the parts and do you have the technicians to keep me up and going?

You're certain?

Because the industry, they always roll them.

Oh, yeah, yeah.

Yeah, it is. But I would say this. Most equipment dealerships are very... reactionary posture, even selling, like you said, now they can be proactive and they can go and really provide that service for that customer, right? They can go with telematics like, hey, Mr. Customer, if you trade right now or you trade within the next three months, you'll get the highest trade-in value for that equipment. Once you get past this, repair costs are going to start to creep up and your trade-in value is going to start. going down. So before those two things meet, you may want to trade it in. If you plan on trading in the next 12 months, now's your time. You can do it six months later, but it's going to cost you another $30,000. Just heads up. I don't care if you buy or not, but that's being proactive versus being reactive.

Yeah. And I think another thing. So once again. they take a very reactive posture, right? It is so easy. I was working with a dealer the other day and we were talking about campaigns. Like you've got, this was a deer dealership. They call them PIPs. And so they have a slew of them. So I think, what

And so.

Yep. And so. They have, you got a lot of them, you know, every, every manufacturer has them. They, every manufacturer wants you to get them, get them down. And so I was talking with their, with their service managers and I think it was like January. And so I asked them, I said, what, what month comes after December every year? And they go January. I was like, what happens in January? And so they said everything in the world. I was like, The shops dry up. We don't have any work in January, do we? And they're like, yeah, we don't have any work in January. I was like, can you ever think of a January where you had a lot of work? And some people ask the oldest guy, like how long the oldest service manager, someone guys like 20 years. He was like, no, not really. There's this one year we had a bunch of work, but usually we don't have any work in January. And I was like, January comes around every year, right? They were like, yeah, it does. Every year it comes January and every January we don't have any work. And I was like, so why weren't we planning three months ago to order in all the parts that we needed and start contacting customers to bring in their machines to get these pips done in January? Because we know we're not going to have any work to do. And I made the point, I was like, anybody that's in the heavy equipment business can make money in June, July, and August. The ones who can make money in January, February, and also December, those are the ones that make money. Those are the all-stars in the business. But once again, it gets to that reactive mindset. Service managers don't like to do pips or campaigns because, like to your point, they got to pick up that phone and have to listen to that dial tone because they're used to the customer calling in saying, fix this, fix this, fix this. And they just stand back and there's very... reactionary posture of just taking it in, shipping it back out versus the phone goes both ways. And if you're going to be successful in that December, January, and February timeframe, you've got to be proactive. You've got to have more of a strategic view of how you're going to manage your dealership and spread that work out. An example, I had a customer who, when I was a service manager, And this is one of those guys who looks like he was a bum and had no money, but this guy was worth millions and millions of dollars. And so he came in, he brought some machine in, I gave him an estimate on it. And he made the point, he's like, John, that's way too much money. I'm not going to afford that. I'm not going to pay it, whatever. And I was like, that's fine. I said, well, bring it to me in December. And he's like, what? I said, bring it to me in December. He's like... I said, you don't need it. You've got plenty of equipment. If you can wait till December, bring it to me then. He goes, well, what happens in December? I was like, I push brooms in December. Like, I will make you one heck of a deal if you can keep my shop full in December. And so he got it. And so after that, he would call me ever so often. He's like, John, are you busy? I was like, yeah, I'm swamped. I don't have any time. Okay. And then he would call me and finally I was like, yeah, you know, I'm not busy. I'm all caught up, you know, kind of have a lull. He's like, all right, I've got some equipment I'm going to bring into you. And so just being strategic like that, I'm saying, okay, I'm okay discounting, but I want to discount to cover my costs, not discount because I mismanaged my customer relationship.

How much money? Like. percentage-wise or dollars dollars yeah

300 grand a year

in addition i'd say another 300 000 in parts so over half a million okay

should be sick about 65 to 75 percent

Should be about 40,35 to 40%.

What's that?

I don't think so. I think you're probably looking around five.

One technician. Well,

One to two weeks.

Well, I don't. That's not how I'm going to manage a business. I'm going to look at everything within 24 hours.

I I I learned this the hard way because I used to tell the customer like, hey, I'm two weeks out and they'd bring the machine. It would sit there for two weeks and then I would diagnose it, you know, do an estimate. You asked me how one reason how we grew service sales by 200 percent. Estimate every job, you know, sell sell the whole job. That's you.

I like estimate because I want to say to, if I'm within 10 to 15%, I'm good. Like if I do quote to me, sounds like I'm going to quote exactly what the job is. And I believe like a lot of service managers get, they're like, well, I don't know exactly what it's going to be. Just estimate it. Be within 10 to 15% and we're good. Like they're fine. Like we like. I think service is a range. I don't think it's a hard, fast number because it depends on the value is in the eye of the beholder. If you got a customer who's down, his excavator is down, he's willing to pay another 10,15,20% to get that machine up and running versus somebody who uses his excavator on the weekend at the family farm. He's not going to want to pay as much money. And so there's a range of value for that, for that job.

A great question. That is a really good question. And I think that's where technology is going to come in and really, really help us with that. In the times past, I have used warranty flat rate codes, like looking up the warranty jobs, which is a complete pain in the butt. And then doing a multiplier of 1.5 to 1.25, doing everything differently. I've done it like, hey, shop for me. Let's sit down and let's talk about the job. You know, there's like a thousand different ways to do it. And what's aggravating, or this is what's frustrating, is we have probably, what,30,40,50 years of data in our business systems of service repairs that we've done 100 times over and over and over again. But there's no good way for us to access that data in an efficient way to say, what does it cost us to do that repair? And so this is where AI can come in, that you can get digital iron. They're an AI platform based out of Ireland. They have a model, an AI model that will go into your business system and say, hey, I'm going to rebuild a transmission on a 310B or C or whatever, or J, wherever John Deere's on now. And it will pull all those service reports and look at how much labor you had on it, what was the parts on it, and give them a good range of this is what it normally takes.

No. Why not? It's a lot of work.

I'm just saying that's why they don't do it.

Many.

I haven't been around Deere for a while, but they've got a lot more engines now than what they did when I was around.

Yeah.

So would I, if you, I mean, when you, when, if. When our listeners, if they have read my book or when they do read my book. Well,

You can just go to Amazon. You can probably just Google Service by the Boxes John Dowling and it'll come up.

$19 and something cents.

So I guarantee instant ROI. If they read my book and apply one principle, they'll make that a thousand times over.

If they do it in the first month and they don't see a difference, I'll, I'll, I'll buy the back book back from them. If they apply that, well, at least one principle found in the book and they don't see a difference, then I'll buy that book back from them.

Well, before we go, I want to talk about, like you said, close the work order right now. Close the work order today. So in the book, that's what I say. Service manager, you don't go home. Just like you said, buy them some cots before you close every work order. Now, this is a general statement. Now, if you're doing a rebuild at a cat dealership and it's... you know, hundreds and thousands of parts. And it may take you more in a day to make sure everything's right. Stop.

Oh, that's a good point. Good point.

Yeah. So what you, what, what I've found, the reason you can't close the work order the same day that it's done is because we didn't estimate the work order. We have no idea how much it should be. We don't know if the customer is going to pay for it or not. And we're, we're fearful to pick up that phone and call the customer and say, Hey, it's $10,000 because we have no idea what their. what their reaction is going to be because, because we never got approval.

So when I say estimate, I'm going to, I'm doing the same thing you're doing. I'm, this is my price. If I go over, It's my bad. If I go under.

We did. We did.

No, I've thoroughly enjoyed it. And I tell everybody when I when I work with dealers, it. happens more often than not. They go, have you ever heard of this Ron Slee guy? And I was like, yeah, I know him. They go, you know him? I was like, yeah, yeah. I was like, he is, he's a wealth of knowledge. And so I would say that our industry needs to be forward thinking. We need to look at our, Parts and service, like the purpose of parts and service is to make the dealership money. I think one of the reasons that we take a reactionary posture is we believe the service department is to fix equipment and keep equipment up and running. And that is, that's not the purpose. The purpose is to make money. The way that we make money is by repairing pieces of, of, of, of, of equipment. And so in there, and what's key on that. is the reason the technicians don't like to do inspections and the reason service managers don't like to be proactive and ask for more work is because they believe their job is to fix as many pieces of equipment as they possibly can. Why would they add more work to their workload? But once they realize it's my job to make money, and that goes back to hiring. you know, your technician versus hiring a business guy. Like, would you hire a heart surgeon to run a $3 billion hospital system or an MBA business guy? You know, it's not this during heart surgery and running a $3 billion business is not the same thing. You know, replacing a hydraulic pump on an excavator is not the same thing of running a service department. So if we can. Get people to realize you need to be business focused and business minded and realize that the purpose of the service department is to make money, not to repair pieces of equipment. That's how we make the money.

Yeah, glad to be here.