Decoding the Fusion of Tech and Operations in the Auto Industry

Yeah.

Yeah, absolutely.

Yeah, yeah. I saw some people. So when I started at Tormont and I was a shop supervisor, we were still using a clipboard for scheduling. Yeah. And for like what was in the yard. And I, they came down from the IT department one day and said, we want to make a scheduler, an online scheduler. And I said, oh, that'd be awesome. I'd love to help on that. And that's how I got involved in this whole software business was as a supervisor. I worked on this project to develop. a scheduler and there's where i also became like what you said the go-between the translator that explained to the software people what it is we were trying to do so they could build it you know um and at the same time you know very few people would leave that i'm fairly rare in the fact that i left the actual dealership operations uh we had people in the software team that learned a lot but you have to be intentional about training people and taking that time and investing that time.

And then even then, you know, it wasn't until I'd spent time at multiple other places and gotten involved in other software developments or ran my own software developments at other dealers that you really start to get a strong understanding of how operations relates to software. Yeah. Even if you just did a cat deal, you have one model for how it works.

that's out i mean every system has a lot of fields that no one knows how to use And on the other side, you don't even appreciate some of the functionality that you can use if you don't have it. So you don't even know to ask for it. I was lucky starting at Cat. And when we started developing our own software for dealers, something like a work order is super complex in a sense. And it's really just a bucket for parts and labor, sure. You come across so many different scenarios of work orders and the reason the work order is happening and who the customers are, both internal and external. And once you understand that, oh, you could have a system that would let you deal with that complex situation in one work order, most dealers have to open multiple work orders on the same machine if they have multiple internal or external customers to charge. Right. Yep. So sometimes you don't know what you don't know.

Yeah.

Yeah.

Yeah.

Isn't that kind of like service manuals on the shelf? The machines were sold in the 80s and people still have their 980C service manual on the shelf.

Well, there's a really good equivalent. to that and I run across that on a regular basis and that's dealer people who are trained by the software they've been using. Yes. I had this awesome debate with a good friend of mine at a dealer who kept asking for reverse POs.

Well, it was a way to return parts to a vendor

get parts off a work order. And so the way that software was implemented, you just did a reverse PO. And I'm like, I'm not doing reverse POs, man. We'll do parts returns and we'll do parts return to inventory and parts return to vendors and we'll do vendor return documents and we'll do confirmation that you actually got the parts that you say you take off the work order before they come off the work order. But they're kind of trained that way, right? And I've seen it, especially coming out of dealers trying to run on them. on rental systems because they tend to go to a rental system when they're a rental dealer, even though they have other dealer operations, they're trained by what the software does. And so it's hard for them to think like, how should we really do it? And that's been one of the fun parts is to say, you know, we want to structure this in a way that we understand the business could run.

And so we're not going to prevent ourselves from running properly. by structuring the data in a way that will stop it like one of the most common things that i come across is the same part number from two different dealers so a lot of a lot of independent from multiple places and they can choose which deer dealer they buy the part from they have to set up variations with like you know a suffix of like this is the dealer that we buy this one from and this is the dealer we buy that from it's like what's an oversight in this the structure and how you could run the system. But people come get used to it. They're like, oh, you know. And it causes all kind of inventory control issues and whatnot.

It's not really rethinking what you're trying to do. It's

Yeah, to make it better, you need to understand both sides. You need to understand how the system could work, what it could do, how it's structured, and then also what the business needs might are and what they might be in order for improvement. If you don't know both sides, then it's really hard both to teach people better ways, but also to upgrade any system or create a system that will support a dealer's needs.

Yeah, I think one of the things is... And yet here you come.

I mean, structurally, how everything fits together, that's experience. And having practiced it in other places or seen it structured in other places, that was where I was lucky. And so you realize why something works and why it doesn't. Now, the nice thing is. We're not doing it from on top of another platform. We're just building it from scratch. And I think that's one of the challenges. You said that dealer software used to be developed by a collection of dealers who got together and gave feedback. But at some point, if you can't re-architect or you can't change that or the person who wrote the pieces that are really core functionalities, if that guy retired, then you might lose all ability to understand that code.

You know, and, and so then you end up with the option to take a whole bunch of software people and modern software, it has an 80% failure rate or something. Yeah. And I did some consulting through COVID for an auto manufacturer and started talking to them about the platform they would need for their new. It was a new electric car company. And the expectations of what it would cost and how many people it would take to build the functionality they needed was astronomical because it follows a current approach to software development that requires scrum masters and front-end and middleware and back-end developers who all do their little pieces. And so the cost to do something becomes astronomical. And so it's assumed. that it has to be expensive. Just like it's assumed that implementing new software has to take a year and cost upwards of $200,000. And once you have those assumptions in place, it's hard for people to reconsider those.

My biggest challenge is getting people to reconsider.

Yeah.

Fully

My first project was at the CAT dealership, which was like a from scratch, was the contract management platform for managing maintenance contracts, service scheduling, review of all work orders and assigning them to buckets of where we thought money was going to be spent and condition monitoring stuff. And when we started that project, we did a lot of scoping and planning and doing some designs. The developer went away for like three months. I didn't see him for three months. And then he came back and showed me what he built, you know, the first basic functionality. And that was ASP. net front end. And now we build and react with existing frameworks and existing theming and stuff that we just plugged in. And you could build the same thing in a couple of days. Yep. You know, because that's how fast software is. And that's like, so when we say, hey, we want to build this new function, like I have to start a warranty function.

Now we do warranty work orders and I got to have an interface for warranty. You know, with the new software, we can do that in a couple of weeks and get the basics up and running, you know? So that changes people's perspective as well, because if they think something is going to be complex to do, they don't even ask. When you can say, yeah, we can do that, it'll take you two days and it'll work kind of thing.

And it's remarkable.

Yeah, you said that a bunch of times. Or per service.

Yeah.

I had a dealer come up to me at AED last week. I had my first little booth there. And he came up and said, why should I switch from my existing system? Because your system is 40 years old. It doesn't integrate. It doesn't have APIs. It prevents you from moving your business forward and doing other things. good e-commerce integrations and changing your business model, accessing your data more easily for better analysis or for more automation in understanding what's happening in the data when you see things happening. That's why. I mean, yes, our system will do a parts sale very similarly, but that isn't what's going to move you forward. If you want to keep doing what you've always been doing, then...

Yeah.

I don't know.

Yeah, we... I mean, techs love their phones. One of the things I've learned is like techs have actually been one of the easiest groups to take on new tech. I think there's like an internal camaraderie that they'll just teach each other. Like, hey, how do you do this? How do you do a parts wreck? You know? And then, so they love their phones. So give them a phone app, list their parts that they need, take a picture of what they're working on for the parts guys. We have a better reference. And then send that in, keep working. But there again, you have to understand what the tech is doing, what are the challenges he's going to face. Do we always know the part number? Will he sometimes not? How do you support both the fact that he has a catalog and knows exactly what he needs, but may have some questions so it doesn't limit him? And so it's the only spot in our platform where a tech can just put in any part number.

It doesn't have to exist in the parts master because it may not exist there yet. So let them put in the part number. Let them add a picture. It's this thing.

Well, this is one of the... Things that I've learned is that, you know, the decision makers don't really see what's happening. And the people who are spending their days sitting in front of screens are fairly quiet. And they don't say, oh, this could be better or this would save me half my day. They just get their job done. They're primarily interested in just getting their job done, whether they're tech or admins or. service writers or whatever. And that's a really important disconnect. If you haven't lived in that space and your software provider is only getting feedback from the people at the top who are not hearing anything, then you're missing out on. And I was the first department at Tormont to have dual monitors. And when I asked for it, I got a lot of pushback. I wanted two for myself. I'd had them at a previous place. And they were like, no. Mike was like, I'll buy you a really big TV. And he did.

He bought me a huge TV so I could try and get more on one screen. Eventually, we got it. And sure enough, all these admins didn't talk paper to glass. It's like, imagine your desk was only 8.5 by 11 big. And you could never put two pieces of paper side by side. That's how we were forcing people to work. And when the team I had was a bit of a showpiece, we finally got two monitors. Now it's common. And it created a flood at Tormont. Skids of monitors were coming in every day because now everyone understood how valuable it was to have multiple monitors and be able to put two things up beside each other and work like this. And it took that long because it's like, oh, you know, it's like $300 per person extra. Why does an admin in most companies run a crappy old desktop, but the VP who only does email and goes to meetings has a $4,000 laptop? You know, and that's the commonplace.

Like buy your admins, the best hardware and as many screens as they can learn to use because it'll make them faster.

Ooh, I like that.

No, we, and this is the thing, like we, I remember doing a project that was where did a e-commerce platform and worked with customers. And one of the customers, They put the invoice approval online so that all the people could authorize payment and then it would download into the ERP system at the customer. And it saves like four man years, basically. That's a big benefit. And if you're running old software or you're not having your people talk to someone who understands their business. to try and improve things. Those are the kind of savings you leave on the table. We've talked about this before. Our business is a world of hidden losses. We don't account for lost time very well or lost troubleshooting time or misplaced parts. We don't really quantify it, nor do we look at...

How much time are we spending on payables and all the invoices that we're getting from all over the place from vendors at rare times and stuff and the work orders that didn't get closed on time because it took long to get an invoice and now the customer won't pay it. These are massive amounts of money. I mean, we always look at the top of the business. You know, what's my gross margins? But when we bleed it away in these vast scales, and if your software can't help you improve that, if you can't patch into a payables platform, because there's great, great payables platforms out there that will scan everything and auto-generate all their bills and then put them into your accounting, as long as you have modern accounting, there's huge savings there. Like, you know, I hate to put people out of work, better reassign them. But if you can save two man years, what's that really worth? That's a quarter million dollars, even for your true cost of admins.

Yeah.

Yeah. One of my favorite things is purchasing. You know, the number of dealers that I see who let the people run around and buy the parts wherever they want or other supplies wherever they want. And they don't think about the processing cost of payables. And the problems it causes them and failing to recover them on work orders are not being able to bill their work orders fast enough so that they get paid at a higher percentage.

Yep.

I think it's already happening in some places. I agree. And that creates a really interesting problem and opportunity in that if you're not using information systems to understand your sales opportunities, you're really just selling from inventory or selling to order. You may have a harder time than ever getting inventory if your manufacturer is going to prevent you from owning inventory. This is where CRM and opportunity management and analyzing your customer fleets and stuff would be hugely powerful because then you can justify to your OEM, why do I need 47 of that model wheel loader in my yard? Well, because here's my backup data.

They are. Like we talked offline, I know of a particular dealer where the... Best sales rep is working in the social media marketing department, sold more units than any other sales rep. And the data is there. I struggle to think that anyone doesn't have the data. The data is there. It's about wanting to use it, deciding that there is value. It's pretty easy to just get in the truck or go see some people that you know and have dealt with for years. It's harder to sit down in front of the data and really think through what's happening. So I think we're just tempted to keep doing what we're doing because why do the hard thing? But there are people that are starting to do that, people who make sure that every lead gets followed up on when it's all digital and stuff versus working their traditional way. And they're picking up a lot of deals.

I saw there was a digital dealer out there that came from a non-traditional starting point, not industry people. And they started selling aggregate crushing screening equipment. What's interesting is, you know, we've talked about people selling small equipment for, you know, say 50,000, maybe they're pushing towards 100,000. But that industry was happy to buy equipment sight unseen off of a brochure or, you know, a website for half a million to three quarters. Yep. You know, and because I think to some degree, those customers are used to not being able to get their hands on it. So if you've got that happening on one side with people who are just buy it off a brochure already, and you've got a lot of people who are happy to buy small equipment, then I don't think the problem is anymore that people are afraid to buy a $300,000 wheel loader off of a webpage. It's about enabling it.

Yeah.

A chief change officer? No, I haven't heard that one yet.

I haven't heard it.

You learn how to live in the ecosystem of the dealership you're used to. And this is particularly what happens in large dealers. You know, the large dealer has momentum. There's a lot of culture. A lot of things just get understood and how to deal with them. I went through this when I went to a much smaller organization that didn't have some of the advantages of, you know, high volumes of parts moving to make logistics easier and a long history of. dealing with warranty and large populations and stuff. And I had to really reshift my thinking and, okay, so why did we do it that way? And how would that work differently here considering, you know, I don't have the same inputs or I don't have the same volumes or the people don't understand it. I mean, I had this great old VP in my first job when I was a shop supervisor. And he was like, he was magic at dealing with customers who had machines fail, you know, and he just knew how to handle them.

He got the machine fixed, he got things moving again, and then they sorted it out. And even that, it was an example of, if you don't have that in your culture, if you don't have people like that, then it doesn't just happen. And so, yeah, we can know the language, but you have to really. understand what's happening. And that kind of brings us back to our starting point of having people in your organization that understand the business, but also understand technology and information so that you have a bridge in the organization that can say, look, I see you running around talking to all these people, but I ran some numbers and here's like 27 customers with larger fleets than the people that you're talking to that you haven't seen. And we looked at it and said that between them, they have 50 machines that really should have been replaced this year. But you need to have someone who can talk to them.

We're definitely a big industry for paying your dues and earning respect. So you've got to be able to talk to people about what they do knowledgeably. But that's an investment I think dealers have to make. in developing people that can bridge that gap or finding them and then training them on the industry side.

You can always tell if there's a traffic jam at the front door at quitting time, you know, if people slowly trickle out, then it's probably a sign of a good culture. If it's bad, they all log jam in the front door on their way home.

Yeah, we do have to be people first. But it's how we empower people, and it's how we inform people. Those people are just doing their job. I find that most people, like those admins who are just trying to get their stuff done so they don't put up their hands, saying, I could do this better if... you got me this, or if we change that, most people are just trying to do it. But it's putting information in front of people that they can evaluate that allows them to make change. And if you hide that, or if you don't spend the time on putting that information together and putting it out in front of people, then they won't make the change. One of my mentors along the way as the CIO, had a very strong idea of where he wanted the dealership to go and what areas were important to focus on. And so he used the tools at his disposal to say, look, I think people should be focused on this.

I'm going to invest in putting a tool in place and put it in front of them and say, look, now you can see what's going on. And I find a lot of places are unfortunately the opposite. They're using information systems for almost reprimand, like measurement, to find fault, measurement to drive performance, but they're not using it to drive knowledge so that people will take action. They take action out of fear. I don't hit my number and then I get in trouble, so I better figure out how to just hit the number. Then they're just going to hit the number.

And instead we burn that time asking whether or not the customer will fill out a survey when we're done. Correct. And see if I can get five stars. Yeah. Which is often, most people don't do it. It's really poor feedback. It brings no value to the customer. And so you're right. Better to show that customer that you've got some information about him, that you can be a benefit. I always said that about sales reps, you know, it's, you've got to show up with something of value. Some useful information about and understand the customer's business so that when you show up, they're always like, oh, hey, Ron's here. Ron's always got something useful. I have time for Ron, you know, and that same idea using information to put it in front of people. You know, the kind of joke version of that is that we all put birthdays in CRMs so that I can give you an automated happy birthday or call you to say happy birthday on your birthday. Okay, it's relevant.

It's the starting point of the right idea, but there's so much more you could put in front of salespeople to help drive them. We don't do metrics on our dashboards. We do indicators and exceptions. We flag the things that we crush out of the data and put it on the dashboard for the sales rep that are actionable items. Like this guy you haven't talked to in this long. And, you know, this machine is coming off of its finance lease. That's the kind of stuff that drives value for the people using it too.

My birthday was last week, and I made it a point to go back and answer everyone who said happy birthday from the automated click.

It was.