Digital Dealer - August 2018 - 13

allow members of their
management team to do
whatever they want, with
little management direction
and oversight. Auto dealerships are very progressive
in many ways...benchmarking within 20 Groups,
the use of performance
metrics in managing
customer satisfaction,
innovation in marketing,
and much more. But
relating to the commitment
of company funds...purchasing...spend management, there is often little
organization which results
in kind of a quiet, subdued
chaos that nobody wants
to admit to. Ask a senior
manager of a multi-store
group who their preferred
supplier is for a particular
expense category is, and
you will not get an answer.
Ask a management team
how much money they
spent with suppliers last
year and most don't
have a clue. You can bet
manufacturers know their
spend, they know their
supplier base and all the
metrics that relate to those
expenses; they have to,
their profit margins are
razor thin. Manufacturers
grew up with an organized
functional discipline - Purchasing or Procurement
that managed suppliers,
the commitment process,
and supplier performance.
Manufacturers don't leave
this important organization function to chance...
they have it organized for
success.
DISORGANIZATION
DOES NOT MAXIMIZE
PROFITS

If I have heard it once,
I have heard it a hundred
times..."our management
team is incented on profitability...we trust them to
make the right decisions
for our business." This
usually is an explanation
for allowing all managers
to do what they want when
it comes to purchasing and
spend management, using
the suppliers they want,
with little thought toward
standardization, with the
different pricing and terms
they negotiate or don't
negotiate, etc.
Allowing a functional discipline like spend
management or purchasing
that has such an impact
on profitability to remain
under-led, disorganized,
with no controls or policies
to guide decision-making
is not a recipe for success
but instead, a guaranteed
strategy to minimize profits
and create inefficiency.

THE SOLUTION
- ORGANIZE FOR
SUCCESS - ADD YOUR
SPEND MANAGEMENT
FUNCTION

Most businesses are
organized around the traditional functional disciplines
needed to run efficiently
and effectively. Fortune 500,
Fortune 1000 companies
and successful business
from the Industrial Revolution through today realize
that organization and specialization breeds efficiency,
greater effectiveness and
will maximize profitability. Those organizations
have the same functional
disciplines that dealerships
have and probably many

more, but most of them
have a functional unit that
is responsible for the timely
and efficient acquisition of
goods and services, and
the commitment of limited
company funds. Dealerships would be well served
to emulate the successful
organizations of yesterday
and today and create a dedicated purchasing or spend
management function.
The requirements are not
complicated but do require
some thinking, some effort,
organization, specialization,
and investment. The payoff
can be great. Research
says that centralized
purchasing functions will
reduce costs by 25%. Our
practice validates that
research but that is only the
measurable hard-dollar cost
savings. The soft cost savings that are achieved from
greater efficiency, more
controls, less confusion and
less chaos are significant
as well.
To organize spend management for success, your
organization will need to
implement the following:
„ Centralize the control
and execution of the spend
management function
„ Develop a detailed understanding of your spend
and your current supplier
base
„ Staff the function with
trained, experienced, and
proven personnel who can
generate results
„ Develop supply base
and cost reduction objectives that are realistic and
measurable
„ Develop purchasing policies that restrict
D I G I TA L D E A L E R . C O M

purchasing authority and
delegate authority where
appropriate
„ Develop processes
to control the selection of
suppliers and acquisition of
pricing and terms
„ Review and source
all expense categories in a
systematic and prioritized
way to reduce and control
costs
Most dealership organizations are almost there...
they have all of the functional disciplines in place to
manage their business for
maximum efficiency, effectiveness, customer service
and profitability. Leaving
spend management, an important functional discipline
out of that mix, however, will
sub-optimize your results.
Taking the steps now to
create a specialized, organized and centralized spend
management function that
performs at a high level will
bring measurable results to
the bottom line and simplify
your business model.
DOUG AUSTIN is the
founder and president of
StrategicSource, Inc., the
leading provider of Spend
Management Services
(strategy, spend mapping,
sourcing, process improvement
and audit) for automotive and
truck dealerships, and various
other vertical markets. Doug is
a veteran of the U.S. Marine
Corps, a graduate of the
University of St. Thomas, and a
speaker at various conferences
and 20 Groups. Doug has
acquired over 30 years of line,
staff, and executive experience
in Spend Management and
Supply Chain Management
in various vertical markets.
Doug is also a trainer, speaker,
consultant and business owner.

AUGUST 2018

13


http://www.DIGITALDEALER.COM

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

Digital Dealer - August 2018
Contents
Message from the Show Director
How to Spot Potential Leaders in Your Organization
Bridge the Gap Between Where You Are and Where You Want to Be
Are You Organized for Success?
BMW and Mazda Incentive Program Changes May Violate Franchise Laws
Accountability: The Centerpiece of Success in Fixed Ops
14 Ways to Recruit Technicians
Disciplined Innovation
What the Companies With the Worst Reputations All Have in Common
The CRM of Tomorrow, Today
Interview With Phil Mitchell of Sunset Auto Family
2 Messages From Dissatisfied Customers
Why Reviews from the Decision-Maker Matter
The 3 Essential Traits of High-Profit F&I Managers
Price Is the Easiest Part of My Job
Phone Power!
8 Tactics to Help You Stand out on Social Media
5 Signs It’s Time to Part Ways With Your Conversion Tools
Direct Response: Now More Than Ever
Digital Dealer - August 2018 - Digital Dealer - August 2018
Digital Dealer - August 2018 - Cover2
Digital Dealer - August 2018 - 1
Digital Dealer - August 2018 - Contents
Digital Dealer - August 2018 - 3
Digital Dealer - August 2018 - Message from the Show Director
Digital Dealer - August 2018 - 5
Digital Dealer - August 2018 - How to Spot Potential Leaders in Your Organization
Digital Dealer - August 2018 - 7
Digital Dealer - August 2018 - Bridge the Gap Between Where You Are and Where You Want to Be
Digital Dealer - August 2018 - 9
Digital Dealer - August 2018 - 10
Digital Dealer - August 2018 - 11
Digital Dealer - August 2018 - Are You Organized for Success?
Digital Dealer - August 2018 - 13
Digital Dealer - August 2018 - BMW and Mazda Incentive Program Changes May Violate Franchise Laws
Digital Dealer - August 2018 - 15
Digital Dealer - August 2018 - Accountability: The Centerpiece of Success in Fixed Ops
Digital Dealer - August 2018 - 17
Digital Dealer - August 2018 - 14 Ways to Recruit Technicians
Digital Dealer - August 2018 - 19
Digital Dealer - August 2018 - Disciplined Innovation
Digital Dealer - August 2018 - 21
Digital Dealer - August 2018 - What the Companies With the Worst Reputations All Have in Common
Digital Dealer - August 2018 - 23
Digital Dealer - August 2018 - The CRM of Tomorrow, Today
Digital Dealer - August 2018 - 25
Digital Dealer - August 2018 - Interview With Phil Mitchell of Sunset Auto Family
Digital Dealer - August 2018 - 27
Digital Dealer - August 2018 - 28
Digital Dealer - August 2018 - 29
Digital Dealer - August 2018 - 30
Digital Dealer - August 2018 - 31
Digital Dealer - August 2018 - 2 Messages From Dissatisfied Customers
Digital Dealer - August 2018 - 33
Digital Dealer - August 2018 - Why Reviews from the Decision-Maker Matter
Digital Dealer - August 2018 - 35
Digital Dealer - August 2018 - The 3 Essential Traits of High-Profit F&I Managers
Digital Dealer - August 2018 - 37
Digital Dealer - August 2018 - Price Is the Easiest Part of My Job
Digital Dealer - August 2018 - 39
Digital Dealer - August 2018 - Phone Power!
Digital Dealer - August 2018 - 41
Digital Dealer - August 2018 - 8 Tactics to Help You Stand out on Social Media
Digital Dealer - August 2018 - 43
Digital Dealer - August 2018 - 5 Signs It’s Time to Part Ways With Your Conversion Tools
Digital Dealer - August 2018 - 45
Digital Dealer - August 2018 - Direct Response: Now More Than Ever
Digital Dealer - August 2018 - 47
Digital Dealer - August 2018 - 48
Digital Dealer - August 2018 - Cover3
Digital Dealer - August 2018 - Cover4
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