Digital Dealer - March 2019 - 30

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.

Where Are the
Cost Savings?
Organizations frequently embark on various
cost reduction initiatives
across their enterprises.
Some organizations have
purchasing departments
and their role is typically to
get the right product or
service, to the right location,
at the right time at the best
cost. In either case, whether
your organization is
centralized with a purchasing department or decentralized with various
departments working on
cost savings initiatives, one
common frustration will
normally occur. Where are

the cost savings? How
come we can't see them?
Are they really there?
Frustration can occur
unless some visibility is
shed on the challenges
inherent in this process.

PROFIT AND LOSS
STATEMENT CHALLENGE

Most of us would assume
that cost savings generated

would be easily identified on
the profit and loss or P&L
statement generated each
month. Any reduction in
price and spend should be
easy to identify on the P&L
right? Wrong!
The typical P&L statement is a summary document. While all P&Ls are
summary documents, they

ANY REDUCTION
IN PRICE AND SPEND
SHOULD BE EASY TO
IDENTIFY ON THE P&L
RIGHT? WRONG!"

typically contain about 25
lines of expense to review.
The reality however is that
most companies spend
dollars in between 60
to 130 expense categories depending upon the
industry. So, how are
those expense categories
represented on the typical
P&L? They are typically
summarized into the most
appropriate line on the
P&L.
Remember, supplies
and services might
number as many as 130
expense categories in your
organization, so the spend
and savings you have
obtained are going to be
aggregated with many other categories represented
in the summary P&L document which is represented
by about 25 lines on the
document.
EXAMPLE: WHY
DON'T I SEE THE
OFFICE SUPPLY
SAVINGS?

Your organization
reduced your office supply
pricing by 25% and expect
to see average savings
of $24,000 per year on
office supplies. You have
verified that all employees
are using the designated supplier, at the new
prices, and the suppliers
are selling the product at
the agreed pricing. So, the
office supply spend is now
blended into a category
on your P&L listed as
"Supplies." The spend for
"Supplies" this month did
not decrease, but actually
increased...how can that
be? There are a number
of possible explanations
30

MARCH 2019

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



http://www.DIGITALDEALER.COM

Digital Dealer - March 2019

Table of Contents for the Digital Edition of Digital Dealer - March 2019

Digital Dealer - March 2019
Contents
A Message from the Show Director
Ask the Experts
DD26 Pre-Show Highlights
Interview with Ferman Chevrolet Mazda
How to Drive Growth Through Digital Marketing
Under the Hood with Automotive Inventory Ads for Prospecting
Data Gaps are Costing You Sales Every Month. Here's How to Close Them.
Behavioral Data & Artificial Intelligence: The Keys to Marketing Personalization
Media Report: Who Why What When Where!
Boost Website Rankings
Building a Powerful Brand is Everyone’s Job
Where Are the Cost Savings?
Tales from the Front-Line of Auto Retail Buy/Sells
Is Your Comfort Inhibiting Your Team's Growth?
Automotive and the Amazonifcation of Everything
The Reports of My Death Have Been Greatly Exaggerated
What Have You Done for Me Lately? The Power of Reciprocity in a Slighted Sales World
What Is Your F&I Team Obsessed About?
Educating Your Customers Increases Sales and Builds Trust
Digital Dealer - March 2019 - CT1
Digital Dealer - March 2019 - CT2
Digital Dealer - March 2019 - Digital Dealer - March 2019
Digital Dealer - March 2019 - Cover2
Digital Dealer - March 2019 - 1
Digital Dealer - March 2019 - Contents
Digital Dealer - March 2019 - 3
Digital Dealer - March 2019 - 4
Digital Dealer - March 2019 - A Message from the Show Director
Digital Dealer - March 2019 - Ask the Experts
Digital Dealer - March 2019 - 7
Digital Dealer - March 2019 - DD26 Pre-Show Highlights
Digital Dealer - March 2019 - 9
Digital Dealer - March 2019 - Interview with Ferman Chevrolet Mazda
Digital Dealer - March 2019 - 11
Digital Dealer - March 2019 - 12
Digital Dealer - March 2019 - 13
Digital Dealer - March 2019 - 14
Digital Dealer - March 2019 - 15
Digital Dealer - March 2019 - How to Drive Growth Through Digital Marketing
Digital Dealer - March 2019 - 17
Digital Dealer - March 2019 - Under the Hood with Automotive Inventory Ads for Prospecting
Digital Dealer - March 2019 - 19
Digital Dealer - March 2019 - Data Gaps are Costing You Sales Every Month. Here's How to Close Them.
Digital Dealer - March 2019 - 21
Digital Dealer - March 2019 - Behavioral Data & Artificial Intelligence: The Keys to Marketing Personalization
Digital Dealer - March 2019 - 23
Digital Dealer - March 2019 - Media Report: Who Why What When Where!
Digital Dealer - March 2019 - 25
Digital Dealer - March 2019 - Boost Website Rankings
Digital Dealer - March 2019 - 27
Digital Dealer - March 2019 - Building a Powerful Brand is Everyone’s Job
Digital Dealer - March 2019 - 29
Digital Dealer - March 2019 - Where Are the Cost Savings?
Digital Dealer - March 2019 - 31
Digital Dealer - March 2019 - 32
Digital Dealer - March 2019 - 33
Digital Dealer - March 2019 - Tales from the Front-Line of Auto Retail Buy/Sells
Digital Dealer - March 2019 - 35
Digital Dealer - March 2019 - Is Your Comfort Inhibiting Your Team's Growth?
Digital Dealer - March 2019 - 37
Digital Dealer - March 2019 - Automotive and the Amazonifcation of Everything
Digital Dealer - March 2019 - 39
Digital Dealer - March 2019 - The Reports of My Death Have Been Greatly Exaggerated
Digital Dealer - March 2019 - 41
Digital Dealer - March 2019 - What Have You Done for Me Lately? The Power of Reciprocity in a Slighted Sales World
Digital Dealer - March 2019 - 43
Digital Dealer - March 2019 - What Is Your F&I Team Obsessed About?
Digital Dealer - March 2019 - 45
Digital Dealer - March 2019 - Educating Your Customers Increases Sales and Builds Trust
Digital Dealer - March 2019 - 47
Digital Dealer - March 2019 - 48
Digital Dealer - March 2019 - Cover3
Digital Dealer - March 2019 - Cover4
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