Learning Without Scars
As a third-generation educator, it is easy to say that teaching and training are in the blood for Ron Slee. From his beginnings as a coach, through his time at McGill University, Ron developed a foundation for the work he does today. From working within dealerships, to operating a consulting company, creating a training business and running twenty groups, Ron has been directly involved in this Industry since 1969. Ron has been known as the industry expert for years, and has brought this expertise to bear through his training programs. Today, Ron provides specialized, job function based internet based subject specific classes, job function skills assessments, as well virtual seminars and webinars. These courses are designed for manufacturers and their dealers, as well as independent businesses in the construction equipment, light industrial, on-highway, engine, and agricultural industries through Learning Without Scars (www.LearningWithoutScars.com). This platform is a continuation of the work begun by Quest, Learning Centers which was established in 1996. This training is aimed at improving dealer parts and service operations through qualified people that are knowledgeable in using operational metrics and current market and operational best practice methods.
Learning Without Scars
Mets Kramer and Ron continue their discussion on the Digital Dealership.
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This Candid Conversation with Mets continues the discussion on the Digital Dealership. We introduced this subject back in April then transitioned to the fundamental data element machine ownership, then we took on the challenge of this change. This conversation deals with action items, what I call Triggers. We talked about how Amazon and Google approach their businesses. How Six Sigma was implemented. The fact that we are problem businesses not problem avoiding businesses. This latest step in the Digital Dealership should not be missed.
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We provide comprehensive online learning programs for employees starting with an individualized skills assessment to a personalized employee development program designed for their skill level.
Aloha, and welcome to another candid conversation. Today, our guest is Metz Kramer. This will be the fourth podcast that we have done with uh Metz, and we're continuing the discussion on the digital dealership, which we first introduced in our podcast back in April, where we started talking about what that really was and laid the foundation and the groundwork. Then in August, we started bringing together more action items. We started with the machine ownership and the fact that machine population was a primary data element for us if we were going to be digitizing our business. And then the third one was the transition difficulties that we were having. Change is a tough thing in all circumstances, but we've also got a generational dilemma between technology people that are very easy if you're under 40 and very difficult if you're over 50. Um and so with that, let me welcome Mets and throw it back over to you. And maybe you want to give a little bit of foundational information as well.
SPEAKER_00Aaron, good to see you again. Yeah, so this uh this past weekend I spoke at uh IEDA, the Independent Equipment Dealer Association. Um, and while my my presentation was no doubt interesting, uh the one that really caught my ear was uh a presentation called uh Amazon is coming for your business. And it was from someone from our industry looking at uh Amazon's current focus and attempts to break into the the business products or the business parts uh industry. And so they've created Amazon Business and Amazon Commercial, they're doing you know basic office supplies and other uh sundry items, but then they're also trying to get into the parts business. They're starting to list standard parts, filters and o-rings, etc., to try and understand that business. And one of the things that Luke brought up was that Amazon's business is highly focused on using the information. You probably mentioned it somewhere along the way that Amazon looks and has analysts looking at their sales and their predicted sales on every single item. And if the predicted sales don't match actual sales, it's a cause for inspection to understand what might be causing that difference between actual and predicted sales on every item. And so when you have a company like that, even if their initial attempts to get into the industry are not super successful yet, um, they're learning. And one thing that we do really poorly, I think, in our industry, is learn from that. Learn from what we see happening. We just um solve the problem that day, the problem that was caused, and then don't really do that much to prevent the problem in the future. Then there were two other points that are related that came up. Um, one was that 60% of the purchasing that millennials do at the moment is done online. So 60% of all their money spent is spent through an online interface where they buy, research what they want, and they purchase it without any interaction. And then the stunning piece of it was that 73% of all current corporate buyers are millennials. So we have a growing group of people who think very different from the way the industry, our industry does at the moment. So those things really caught me. Um and and if we look at um you know just I think the way we we act on our business and how different it is from those who have been successful or those who are potentially even threatening our business. Uh, I think that everyone kind of took notice of that this weekend.
SPEAKER_03So it I I think that's a really solid point. You know, there's the American retail landscape is covered with businesses that have gone away because of the entry of Amazon. And it started from a um a simple circumstance of books. Look out there now. Where's borders? Look out there, what's the volume at Barnes and Noble? Look out there with the private, the small private bookstore. And Circuit City. Yeah. And you know, if you think about it, I I read a lot of books, I buy a lot of books. A lot of people criticize me. You know, have you never heard about a library? Well, you know, you can't get a lot of the books that I need to read or have been reading at a library. And I'd go to a bookstore, and the problem was the bookstore didn't have the book either. Yeah, so I had to order it, and then I had to wait. So here comes Amazon. I don't have to go to the bookstore, they don't have the book either, but I can order the book and it's delivered to me instead of me having to go down. So they they recognized a couple of customer things that they satisfied with the books, and now they're the largest retailer in the world, and they've seriously altered Walmart, which was the previous largest retailer in the world, and now Waltmart's fighting back and doing the same thing. It all goes down to digital data and how it's being used. And let me just throw one little thing out there before we get too carried away. Google has made an art form out of making money on what people are trying to find out about. So Amazon allows us to shop online, Google allows us to do research online. So those millennials are 73%. Why the heck do they need to go anywhere? That's why they, you know, they're lazy like you and I are. They why should I do all those things and take all that time? Why don't I just do it online? So here comes Google. And contrast that to our industry, 70% of the monies that Google spends goes to maintaining and working on the model. 20% annually goes to improving the model, the continuous improvement criteria. And that comes from performance reviews, that comes from employee engagement, that comes from listening to the customer, as Amazon does. And then the thing that intrigues me is there's 10% of the money they spend is on what they call moonshots. Yep. They just throw 10% on the table, say, go spend it. If it works, can fantastic. If it doesn't, so what? And then contrast that to us. And and and and we've got the last podcast we had was about the change in generations and going from the steam engine to the electric engine, and it taking a whole generation before the benefits of the electric engine were truly realized. We have, as you characterized it, we deal with problems every day, all day. We solve problems. That's our job. We come in in the morning, and if we get too many phone calls, it's going to be a tough day. It's hard like hell. I want to survive and get out of here tonight.
SPEAKER_00Yep. It's the firefighting analogy. Yeah.
SPEAKER_03Always firefighting. Exactly. And who is there at the dealership level that is making a determination of what data we need to pay attention to? We pointed out machine population, machine ownership. If we went around to all of the dealers in North America, I bet you I'd find less than 10% of them had accurate current machine populations. And yet that's the fundamental piece of information we need to start with, isn't it?
SPEAKER_00Yeah. And then there's certainly no dealers spending 30%, even if they're their gross profit on reinvesting and improving the business.
SPEAKER_03Or even asking the employees of what we can do to make your life easier or make your job better. We don't do that easy either. I'm posting a blog that's talking about workplace and worker disengagement. And you know, we've we've had we've been shielded with the pandemic. We haven't been able to continue to do what we've always done. But if you look at 19 and earlier, we we didn't have a profession that was management. We just took the better counterperson and made them the supervisor or the better technician and made them the lead hand or whatever it is. Now we need a management function. We need somebody who's good at leading with people and engaging people and all the rest. And where where we we decided, you and I, that we wanted to talk about today was what I call triggers. I don't know if you want to use a different word, but like the idea of an action.
SPEAKER_00A trigger is an action that happens from information. Exactly.
SPEAKER_03Exactly. So whatever that term's going to be, we need to we need to identify things that we need to take action on. And one of the things we talked about with machine ownership is the guy's got a machine he bought in 2002, 19 years ago. He's got 27,000 hours on it. Don't you think somebody should call on him to say, wait a second, wouldn't you like to have another machine? And do we do that today? I don't see that.
SPEAKER_00Do you? Well, it's certainly we've discussed that, and I've discussed that with dealers as of you, and that isn't being done. And that's, you know, probably the simplest example in our industry of how to use information. Um, when I wrote about this a couple of weeks ago, I started with this idea that you know, people love reports, but reports are really just information. And if you read a report, then you have to interpret what it means. And then once you've interpreted what the report means, you find actionable items on the report. My very first one was my work in process list that my manager used to print out every Monday, and he would circle everything that was older than nine days. And he put it in my mailboxes to say, these are over how old they should be, deal with them. And so from very early on, I started thinking that reports don't make a lot of sense in some ways. You can learn some stuff from them, but really what we do with reports is we take the report, we understand what it's saying, and then what we want to do with it. And so rather than keep doing that on a weekly basis, why aren't we simply taking that interpretation of the information and turning that into real action items? And so from very early on, I tried to turn everything that we did from a report to an indicator, and from an indicator to like a short list of action items. You know, we we built uh the equipment management toolkit um at Tormont for managing all the contracts, and the home page of that platform was this giant cycle of the machine life cycle, a big circle, and surrounded in indicators for every stage of its life that told us exactly what was going on behind the scenes. There was no menu to drive it, there was no reports to run to find what you should do next. It was the dashboard was already processing the data. And every time we figured out something else that we wanted to keep an eye on, we created an exception out of it. We said, from all of this data, do this analysis on it, if pick out items that have this condition and then present them to us so that we can click on it and make action. And that's what you're saying. And your example is a is a time-triggered information analysis. If I pull all the machines I sold last year, then I put a line after so many months ago, and I say everything above this line has been triggered because it's now so many months since. And now I need to do something with that information. And so you can run the report, you can print it out, you can hand it out, you can hope people do it, but really in a digital dealership, we automate that and we put it exactly where it needs to go. That list may be all the machines sold in the dealership, and then you have to print it out and hand it out to a bunch of people, or you take just each machine attached to each customer and put it right in front of the sales rep who's responsible for that phone call. And you watch to make sure they get done.
SPEAKER_03Imagine the world, and I agree with you 100%. The first thing that I was thinking as you were talking is that the reports that we deal with typically are financial reports. Typically, and financial reports are retrospective, they're historical, there's nothing you can do about them. They're there yesterday. Very much, and we get hardly any management reporting, which is exactly what you and your boss with the nine-day work and process type of thing is is talking about. And then I think you you you gave us another beautiful little transition. We recognize there's a problem with reports, but rather than solving the problem with reports, what we did is we changed the report and we called it a dashboard. We just changed the the delivery system. And dashboards are important, don't get me wrong. But imagine the day that you walk into your job and you have a digital dealership, and we've determined what those action items are and what the data elements are that are going to drive that, and then you turn on your laptop and you're given a list of activities for today. And if we were able to parse through the data elements we've got and look at all of the things that we know we should do that we aren't doing, and we assigned a piece of time to that, we'd find we haven't got anywhere near the right amount of people. We haven't got the right amount of people to serve the customer, we haven't got a right amount of people to manage the assets, we haven't got a right amount of people to look after our own employees. And perhaps that's why there's such resistance to this change, because people don't understand how to translate that.
SPEAKER_00No, they you could look at the other way. It might be very true. Um, but I did a project in the UK um like 10 years ago, and something like 80% of the service department's time was spent answering phone calls for customers progressing the state of their work orders. Yep, whether or not the machine was done. And so we made a dashboard and an action system for the supervisors to use that all it did was on all the state changes of a work order, force the supervisor to log that he'd call the customer with the update information. And that after two months of going into place, I got a call from Andrew and he says, you know, like our call volume has dropped like 80%. The phones don't ring. And we don't have problems like a customer calls and says, Is my machine done? And we look it up after an hour and find the work order and call him back and say, Oh, it was done three days ago, and he's angry, and now we got to fix that and deal with that. I mean, how much time goes into dealing with the things that we could have, you know, automated or informed ourselves better and avoided the time spent?
SPEAKER_03Exactly. And to take your project from 10 years ago, today there's tools out there, software tools. Caterpillar just bought a company called Modern that sends text messages out every day or whatever frequency you want to every customer who has a job going on, sends pictures, does all kinds of stuff. The the trick with that is it's kind of like Amazon and your millennials, they're going to shop online, they don't want to waste time. The customers doesn't what he wants is to know what's the status. Okay, let's come backwards on that one. The reason he wants to know the status is we never meet a delivery date that we give. So that's you know, it's it's it's all we it the problem fix, problem fix, repeat. You know, it's like wash, rinse, repeat in your your hair. Um, and and we're not getting out of that trap.
SPEAKER_00Notifications are a funny version of triggers, yep, because they're not really filtered. Um, they tend to be like, you know, your work order report is done. Click here to see it. And it comes every day, and we stop paying attention, then we make an auto rule that moves it to a folder called this or that, and we set them all up and we never watch, we never see them again. I'm as guilty as anyone of those. Oh, we all are. Because we really just need to get the email when there's a problem, you know. And that's so you brought up the example of a uh a time-based trigger. You know, something that happens that something else needs to happen within a window of time. So a new machine sold, we want to go back six months later, we want to go back within 250 hours because warranty covers all repairs or but whatever that they're time-based. And then the the more complex one is kind of a derived analysis of the information. So taking the information and extrapolating or understanding what the information is saying about where this situation might be going. So it's like we're we're um we're working on a work order, we've got a promise date of three days from now, but we have parts that are on order and they're not delivering for four days. You know, if you were to look at that, then then you've got a forecasted information-driven trigger that says, here's a problem coming, deal with it. And you brought up uh examples like um people whose parts sales have been dropping off, or people whose number of transactions they've been doing with the dealership have started to change and they were good for so many a month, and now that's changed, you know, really that's a leading indicator of a bigger problem. Probably five months from now when go visit that customer, come into a yard of competitive equipment or something like that. And that's when he tells us, you know, I've been pretty unhappy. And we're just way behind the eight ball on that one.
SPEAKER_03Yeah, yeah. So that's that's what I, you know, that's the buying pattern, the change in buying patterns. What I had a hard time getting dealers to give me retention statistics. What percentage of your perch customers do you retain on a year-over-year basis? And then that became defensive because, well, the economy's off by seven percent, that customer's purchases are down by nine percent. Yeah, it's okay. But we never we never tried to find out. Well, what about the customers that stop buying altogether?
SPEAKER_01Yep.
SPEAKER_03Oh, so the the prospective triggers, action items. For instance, I want to go check every part number whose been went to zero today. That'll forestall or hopefully prevent a back order. I want to look at every part number on every first shipment of a stock order from a vendor that didn't get shipped completely. Yeah, because that's a portent of a part that's going to be in short supply at the vendor.
SPEAKER_01Yeah.
SPEAKER_03And and so we start, I guess, putting it into two piles problem solving and perspective problem avoidance. Right. And if we look at the Amazon and the Google experiences, who's doing that today at a dealership? Either one of those. My conclusion is nobody.
SPEAKER_00We're a reactive industry, it's fun. I I loved my time and service. It was very energetic, always something happening, always a new problem. And I and I think to some degree, I proposed this recently for the first time. We we sort of filter out and retain people who like that. Like it's it's a type of work that fits certain people. And so those people stick around. Those that don't like that crazy all day phone calls and dealing with problems eventually leave the business and do something different. So we end up with a group of people that like a certain lifestyle and a certain business process, reactive, the firefighters. We're not, they're not real firefighters, real firefighters spend Most of their time preventing fires.
SPEAKER_03And so rather than say that again, Mets, because I don't know that very many people think about that. The firefighters do what?
SPEAKER_00It's a really old analogy. Every time that I've been told over the years that, oh, we're busy fighting fires, like, you know, like they're good firemen. Like, real firemen don't spend their time fighting fires very often. They probably spend 5% of their days fighting real fires. What they spend 95% of their days on are fire prevention programs. Education, fire statistics, whatever it takes to stop fires from happening. They know that that's what their real job is.
SPEAKER_03So translate that into our industry and say fighting the fire is solving problems. And what percentage do you think that we have that's of our time? The firefighters is 5% fighting fires, 95% preventing them. What percentage of the time of our workforce? I think you you gave us a hand, do you think are solving problems?
SPEAKER_00I think it's very small. I I've had a period in my time that I was able to like have a lot of control. And I broke out Friday afternoons to sit with each of my teammates and like just do creative stuff, like just come up with new ideas and try and play with them on Friday afternoons because things tend to wind out anyway. Uh and that was pretty rare. You know, I when I was a supervisor, I I worked on a project to create a better scheduling system for the for uh service. Ron, can you pause for a sec?
SPEAKER_03Sure, hold on a second.
SPEAKER_00Okay.
SPEAKER_03Okay.
SPEAKER_00So there was a period of time where I had quite a bit of control over my department, and I made Friday afternoons a time to get together with my team members and really come up with new ideas. Like, look at what we were doing. How could we really come up with a new idea that would get us better? And that was really rare. It was a lot of fun, but it wasn't a normal thing. It was hard to maintain because there's always things coming up, so you really have to force on it. Uh, when I was a supervisor, I worked on a scheduling system uh to improve how we scheduled the shop. Um, previous to that, it had been a clipboard, and that was in 2002. They're still using clipboards to plan a really big shop. And I so I spent a bunch of time working on that. I even went to other branches to kind of teach other branches and talk to them about this new system. And I was told at one point that it had hurt my performance by my manager. That me working to create a better proactive way of planning our shop um had been bad for my performance. So I think that kind of shows you what what our industry and what some of our dealerships look like.
SPEAKER_03I wonder, I wonder how many dealers actually have time. That Friday afternoon uh discussion is kind of interesting. If you go back to the 80s, we had to use um Six Sigma as a tool to get us to look at change, at process improvement. We had to have a device, an excuse that gave us permission to do that. You know, and I wonder how many people think they have time to be able to sit down and spend half an hour to an hour talking to every one of their teammates about what if.
SPEAKER_00So Six Sigma is a great example because we had Six Sigma at 1.2, but they took specific people out of the business and it made it their job. And they did a lot of fringe projects. It was hard to get into like the core parts of the business, and the core business people were typically not that involved. And that, if anything, there's an example of where how really proactive work and making that part of our culture didn't even really work. We came up with black belts. We had some people who were like green belts and white belts. Um, but the real work, and I think that's one of the reasons the programs struggled and why you think have projects on like travel expenses and you know, freight and things like that, because they were fringe projects that the Six Sigma black belts could work on, but it wasn't part of our culture. And I think that's kind of at the heart of our digital dealership concept, that the heart of the business has to be the information that we're gathering and using that information throughout the business to improve how we run the dealership. It's not just digital transactions, it's not just enabling the business to be digitally transacting more things. It's that our mindset is changing to use information to run the business differently. And that ties right back to the Amazon presentation I heard this weekend. Amazon's core focus is to use information to get smarter than their competitors to beat them. Yeah, that's why they're successful. Yep, they're not successful just because they offer you know great logistics and a nice place to buy stuff, it's because they do it by using information to sell it better. Yeah, yeah.
SPEAKER_03I'm I'm uh as you know, I'm a bit of a freak relative to checking things out and and and looking for different approaches. So here's a here's a statement. The rate at which organizations learn may soon become the only sustainable source of competitive advantage. And exactly what Amazon is doing is focusing on learning. Now they're learning about their customers, but you also, I think, made something uh really critical Six Sigma, etc. We took people out of the day-to-day jobs and gave them that job to do as their life. Yeah, we need to do that for the digital dealership as well. Absolutely. Then there's another approach, as you can tell, I've been doing something on curriculum design and and core structures, all fixed set patterns, all processes that we're locked in on are incapable of adaptability and pliability. They're fixed, they're not supple, right? The truth is outside all of these fixed patterns, which is why the disruptors are always at the edge. In this particular case, you're a disruptor bringing the digital dealership. Yeah, you know, to many people, wait a second, I'm not sure I like that guy, he's causing me trouble. That's welcome to my world. That's been what they've been saying about me forever. But you know, on how we allocate time, I don't I don't think anybody's got time that they wonder what they're gonna do. They're over busy in every case. How do we get to the digital dealership unless we can have somebody whose life depends on that transition?
SPEAKER_00Yeah, well, I think it should be like everyone. I mean, sure, you need people that that are doing the day-to-day, but I think to some degree everyone needs to realize that they're at risk of not changing.
SPEAKER_03Well, you know, go go go backwards. You and I've talked about this. Over the last 50 years, the market share in parts has dropped by 50 percent. It's crazy. I don't know that anybody planned to have that happen. And the price of product has doubled and tripled and quadrupled, so to some degree, that drop in sales market share has been masked. Yeah, we've got the same thing in service. The market share in labor has gone down by 50 percent. We're losing to all manner of people. Amazon, they I don't think the bookstores originally thought that there was going to be a risk. Today, seals and hardware and gaskets and hose and fittings, etc. I don't think anybody feels at risk with that today. Look out, boys. Um, you know, I saw trust-reference books that were being sold out of Chicago back in the 70s on seals, o-ring seals. Here's all the suppliers in the world, and here's the seal dimensions and specifications, and here's who you buy it from. They were in books like encyclopedias, for goodness sake. And they sold for, I don't know, seven, eight hundred bucks at the time, which was a lot of money then.
SPEAKER_01Yeah.
SPEAKER_03But you know, as a cat dealer, you're not allowed to buy from somebody else. As a brand representative, John Deere, Volvo, Case, Kamatsu, whomever, you're not supposed to buy outside the family.
SPEAKER_00Yep. No, you I think you would know that better. That was part of this presentation. Um, was that Amazon's ability to buy direct and cut out, you know, two or three one or two steps of margin, 30% margin increase, um, has a huge impact on pricing. Yeah. If they if they can find the filter supplier and buy direct and get all the cross cross-reference lists digitized, then they are immediately going to be 50% more competitive on price.
SPEAKER_03In the late 70s, I was getting beat up by a competitor on loader linkage pins. Not a highly sophisticated engineered product, nothing. And my primary vendor, the dealer net, was a hundred bucks. Yeah. And my suggested list was 150. Yeah. So I made 33% on that particular part. There was somebody in my territory who supplied exactly the same part from the real manufacturer, yeah, for 75 bucks. Yeah. Half my price. Yeah. And it drove me nuts. So we did a little research, we found out who the source was in Italy.
SPEAKER_01Yeah.
SPEAKER_03We got in touch with them. I could buy that same thing for 10 bucks. Wow. Yeah. So who's the price house? Is it me where I'm paying 100 and I'm charging 150, or is it them where they're buying it for 10 and selling it for 75? Yeah. So I got my primary vendor to let me compete with them directly. But as long as I didn't make any more percentage gross profit, they were okay.
SPEAKER_00As long as you didn't increase your margin but drop the remote.
SPEAKER_03My selling price became 15 bucks. Now who's the price house?
SPEAKER_01Yeah.
SPEAKER_03And guess what? Those guys went out of business within 18 months. So here comes Amazon, and they're going to be able to take out a number of layers of the supply chain.
SPEAKER_00Yep. You know, it's um manufacturer, we have a wholesaler, we have OEM, we have dealer, we have retail.
SPEAKER_03The best example that I had of that was with General Motors, where you started with a manufacturing-based price, then you had a wholesale distributor price, then you had a distributor price, then you had a trade price, then you had a retail price, then you had a walk-in-the-door price, and then there were specials. And the you know, there's so many different tricks on our business. It's complicated. So we got a lot of people that are busy trying to keep up with the complications.
SPEAKER_01Yeah.
SPEAKER_03But again, we've got nobody looking at the transitions and trying to take us into a better place. We're still solving problems. We're not in the problem avoidance business, which is what the digital dealership is aiming at, isn't it?
SPEAKER_00Absolutely. Yeah, and it allows you to look in, you know, in that scenario at different aspects because you can program the analysis. You're so focused on certain metrics with the assumption that there's no risk to competition on those parts, if you don't start looking at some of the derived information and what it's telling you about what's really happening to your parts market. We talk about machines being a predictor of you know, um, machine sales, of the service sales, but it's also, you know, the population is a predictor of how many parts you should be consuming. And if that doesn't match what you're actually selling, you have to ask why.
SPEAKER_03We have wonderful data on life cycle.
SPEAKER_01Yep.
SPEAKER_03We have wonderful historical records on parts consumption, mean time between failure, what the number of hours is on a machine of work. Now with telematics, we know how hard the machine's working, we know when there's sensors that are at risk. We have a whole host of things that we could use as action items. But who's going to go looking for them? Everybody's got a job, they're busy. You they can contract with you, you can go in and and look at these things, you can do an analysis, a review of the business and say, you know, we can improve your equipment sales, we can improve your rentals, we can improve your parts, we can do if you do this, this, this, this, this. Yeah. But is how many people are out there doing that today? I don't know many. Do you?
SPEAKER_00Not enough. Not not for the competitive nature that we're heading into, not to be an information-driven dealership. We're a customer demand-driven dealership industry. We're not an information-driven dealership yet.
SPEAKER_03No, I agree with that. The secondary thing, there's a fair amount of study that was done on second owner market share. So the guy that buys the machine from the dealer, it's a brand new machine, the first guy. Yeah, he has a much higher market share and a much higher relationship with the dealership than the guy who buys the used machine. Maybe he buys it at an auction, maybe he buys it from the original owner. You don't, but he has no relationship with the OEM dealer. Yeah. And we, you know, equipment data associates in in North Carolina has got data with with all of the financial transactions, etc., that go on, the leases, so we know what machines are bought in a territory. We can do that by county. We can go back over years. How many people do that? I don't know. But there's so many sources of data now, it almost overwhelms you. It really is the fire hose coming at us, isn't it?
SPEAKER_00Yeah, you need you need a plan to deal with it. You remind me of something else, and that's really relevant to this, because we talk about the things that you have to do to be the digital dealer, to operate in a modern way by analyzing and using information to run the dealership. And there was someone in the audience that pointed out, and that person works with a lot of dealers, like we do, and they had done an analysis or a survey, and it was something stunning. Like 94% of customers would prefer to buy their parts from the dealership if it was made easy enough. They didn't really want to look around, they would prefer one-stop shopping, but it's the challenges they face with the dealership or pricing that makes them start to look around. So there is this desire, according to this person, to do that. And at the same time, are we feeding that desire?
SPEAKER_03The answer is no, and and that's going to open the door for a whole bunch of competitors. We used to do surveys every five years at the AD with customers, and we asked all those things, and and that statistic has gotten stronger. They want to buy from the dealer. The um the primary um reasons that they want to go by what they need most, the customers, is you know, availability is number one on the part side. Everybody thinks it's price on service, but it's responsiveness on the service side. And you know, what's what's your availability? You know, we we we end up with these reports, and congratulations, you've got 87 overall. And the you customer orders 100 parts, you give them 87 off the shelf. Fantastic. Doesn't say anything about the 13 we don't give them, doesn't say it takes us a month to get those, and and we feel good about it. And and you know what my number one rule is find every part every customer is looking for and do it before you go home right today, and call the customer.
SPEAKER_00And like that, you have simple standards, yeah.
SPEAKER_03Well, that's a real simple statement. But the other thing was when I went out west to to when I left Quebec and went to British Columbia, I said that that's what our mission was. And uh I sent 53 cots out, one for every parts manager. One of the guys asked, actually picked up the phone and said, What's this? I just got a cot. I said, That's for every day you don't find every part, you can have someplace to sleep. They didn't they didn't think I was serious, believe me, I was. Did they think you were funny at least? Pardon? Did they think you were funny at least? Well, I no, not at that, not afterwards. The the you know, there were a lot of comments. That's the crowd that that uh I was I did a little story on the side. I was brought into the company from Quebec, so that's French Canada going into British Canada. Um, it's an outsider when they had 53 guys that felt that any one of them could have done the job. Yeah, so they introduced me to this crowd. We went by helicopter from Vancouver International Airport up the coast about 30 minutes, and then we spent, I don't remember whether it was four days, five days, three days. We spent the morning fishing for salmon, which I'd never done before. And I caught all the fish, and I didn't, it's very different than trout and bass. You don't set the hook, it's a soft mouth. So if you set the hook, the salmon's gone. So I got all kinds of flack for that. Then the afternoon we spent time meeting and talking about things. In the evening, we ate and drank and told lies to each other, usual stuff, right? It became very clear that they didn't want me anywhere near the place. Interesting. So that well, not surprising, but you know, if you knew me, that you you know. So the second day I said, Look, it's obvious you guys think that I shouldn't be here, one of you should be. So I'll make you a deal. You guys all agree on something, anything that's going to improve the performance of the parts business. But you all have to agree. Right. If I can't get it done in three months, I'll quit and one of you guys can have this job. And it's not you'd have thought that I'd given them a cashier's check for a million bucks. They were happier than clams. So the next day I asked you, you ready? No, we have we were still working on it. The next day they gave me one. So I go back. Now think about this. We're doing 100% absorption in the parts business. Yeah. And everybody agrees it's something that's going to improve performance.
SPEAKER_01Yeah.
SPEAKER_03Who's going to deny me? Nobody. So I got it approved almost instantly, and I waited a couple of weeks to make it look like it was more difficult. Then I we had a conference call, said, okay, we're going to do it. And, you know, said, by the way, you know, was that maybe it was too easy. You want another shot at this? Yeah, we like another shot. I said, Well, how long do you think? Well, but next Friday. Okay. So they gave me another shot. Same thing happened. And I offered to have a third shot. Said, no, we now know why you got the job. You're a devious devil. But it's it's the it's the same thing, it's it's what I call the art of the possible. We we have action items that are there that we know, but we're not doing anything about it. Yeah, I I I would submit to you that that we need we need everybody to how about this as a starting point. Give me five action items for each department: sales channels, parts, service, finance, five action items, triggers for each of those departments. Yeah. Why don't we put that out for people on the podcast? If you want to send us an email, either Mets or I, with your five items and let us play with that. Yeah. Or you go into a dealership and do a review and and come up with your list. You can, you know, the first consulting job I ever had, I went into the guy and I had about five pages of suggestions. And this was a really good. Dealer, and and he was being very generous to let me be have my first crack at this. And I get about halfway through, about an hour later, he was a good friend of mine. He said, Ron, do I do anything right? So I learned very quickly that you don't give them everything, you you you feed them a few things that they can absorb. Maybe that's a thing that the people can absorb on these action items. Give me five for every department. What do you think?
SPEAKER_00I think that makes a lot of sense. I mean, it's certainly been a lesson I've learned over the years that um sometimes my vision is a lot to take in in one set in one sitting. Um, but if we start looking at, you know, I have this problem, I have this need, um, how would you solve it inside this concept? Those would be great tasks to to both talk through and to show people what they what they mean in this context.
SPEAKER_03Let's let's end it there. Let's let's ask the audience take some time, talk to your teams, come up with five items in your department that you think are action items that would be beneficial for your business, and send it to either Metzuri. Sounds good. And we can we can go forward from that.
SPEAKER_00That makes sense. Makes very good sense. I think it'll have people understand the practicality of this. It's uh it's like you said, the art of the possible. Yep.
SPEAKER_03And that might be a good subject for uh your your next blog relative to the action items. Maybe you can reinforce that that five-point thing and what you're looking for and how to deal with it. In other words, what you do when you go review a dealership and what determine what they need to do and and and how your business works and helps dealers make more money, become more successful, get more market share, whatever the heck it is that they're after. Let's do that. I I think we covered a lot of ground again today, Mets. And I don't want us to go forever. Um, people get a little cranky with us, but um anything you want to provide as a closing comment?
SPEAKER_00I I learned one more thing. When we talk about how the industry works now, some of the challenges that our industry, the dealer industry has, especially around capitalization, and um this idea that at some point someone is going to come around with an a change in how they structure things to change how they can approach the market. And I learned this weekend, and maybe well known to other people, that Komatsu's method of handling inventory is changing. How they handle the inventory at the dealers, their ability to view where machines will be needed and where they are located right now through contracts, is changing their ability to hold less inventory, to have it in the right place, and to not burden the dealer as heavily with um capital cost. That to me, while it may have sounded interesting, just interesting to some people, that to me is one of those key indicators that someone is positioning differently to look at how to structure the dealership business. One of the things we've always been challenged with is all the capital that sits in a dealership. And when people start to rethink those structures, that really opens the doors to approach and change price structures and change approach to customers and change how we execute deals. And I thought that was very interesting and something to watch out for. So someone I think still is going to rethink how we do this in a bricks and mortar and inventory way to a more modern structure, and that's going to be a big changer. Yeah, it's and and you're right.
SPEAKER_03And there have been various uh changes on inventory man parts inventory management almost every decade has been an adjustment. Um, and and the disruptors are are gonna cause us hiccups. And it's our customers want us leading, they don't want us following. Yeah, and and at the moment we're we're waiting for somebody to challenge us and then we'll adapt. And until they challenge us, we're not gonna do anything. And that's a blasted, that's a shame. It's a waste of a lot of potential and a lot of talent and a lot of people. Yeah, well, on that, let's close it up and uh we'll we'll have another one that uh uh will follow through on this and and take us to another place. But as usual, thank you, Mets. It was, I think, very informative and to our audience. Thanks for listening, and we look forward to having another kind of conversation with another interesting individual in the near future. Mahalo.
