Digital Dealer - August 2018 - 12

D E A L E R OP S & M ANAGEM ENT: Sp e n d M anagement

By Doug Austin
Founder and President,
StrategicSource, Inc.

Are You Organized
for Success?
Since the dawn of the
industrial revolution,
business leaders have
realized that organization
and specialization breeds
efficiency, greater effectiveness, and greater profitability. The early automobile
assembly lines were a
classic lesson in increased
throughput, production
efficiency, economies of
scale and much more, and
these benefits were the
result of organization and
specialization. Mass
production yielded vehicles
that were within the reach of
the average American
which changed our economy and country forever. As
a student of history, I am
still amazed at how
American manufacturing
almost overnight changed
at the beginning of World
War II from a consumer-oriented economy to a
defense-driven economy.
Captains of the industry
quickly retooled, reorganized, and redeployed their
company assets to turn out
tanks, jeeps, airplanes,
ships, and ammunition to
equip our troops to win
World War II. In order to
accomplish these feats,
they had to reorganized and
specialize in different
aspects of production.
Businesses and organization of all sizes and
12

AUGUST 2018

shapes have benefitted
from the leadership and
management techniques
developed at the turn of the
century and those that were
so expertly applied during
the war and thereafter. All
businesses and non-profits
today have an organization
chart of some sort. These
organization charts usually
depict responsibilities and
specialization within the
organization. The salient
point of all this is that smart

ORGANIZED FOR
SUCCESS?

All dealerships have management teams, sales departments, service departments, parts departments,
HR functions, I.T. functions,
finance departments in a
traditional sense. These
departments all have a specific mission and role to play
which should align with the
overall business mission.
If the business is profitable
and customers are happy,

...ORGANIZATION
AND SPECIALIZATION
BREEDS EFFICIENCY,
GREATER EFFECTIVENESS
AND WILL MAXIMIZE
PROFITABILITY."
organizations organize
for success. Successful
organizations articulate
the organization vision and
mission, and then create
functional disciplines and
specialization to execute
the mission and satisfy the
customer. In almost all organizations, one of the most
important objectives of the
organization is to achieve
profitability...not just once,
but on a sustainable basis
to keep the organization
alive and well and functioning in perpetuity.
IS YOUR BUSINESS

D I G I TA L D E A L E R . C O M

it is reasonable to conclude
that the functional disciplines within the business
are probably doing a pretty
good job. Your organization
has sales experts, internet
specialists, human resource
specialists, IT specialists,
payables specialists and
they all lead to fulfilling your
mission and creating greater efficiency, effectiveness,
and profitability for your
organization.
IS YOUR BUSINESS
REALLY ORGANIZED FOR
MAXIMUM SUCCESS?

Since my area of focus

is on spend management,
procurement and logistics,
let me ask you some questions about your spend
organization and specialization structure:
1. Does your management team know how
much you spend with
suppliers annually?
2. Do you or members
of your management team
know how many active
suppliers are supporting
your organization?
3. Do you know how
many supplier checks were
initiated last month?
4. Are your purchasing
policies known and understood by your employees?
5. Do your employees
know who your preferred
suppliers are in each expense category?
6. What is the process
to bring new suppliers into
your organization?
7. Does your organization have a preferred
method of payment for
suppliers?
8. What business terms
does your team request
when negotiating with
suppliers?
9. What kind of price
protection do you typically
achieve when negotiating
with suppliers?
If you cannot answer
these questions, don't feel
bad. About 95% of dealerships today have great
organization structures in
most functional areas but
where the commitment of
company funds (spend
management) is involved
(potential profits) with
suppliers, most take a
hands-off approach and

http://www.DIGITALDEALER.COM

Table of Contents for the Digital Edition of Digital Dealer - August 2018