Digital Dealer - October 2017 - 14

DEALERSHIP MANAGEMENT

Continued from pg. 13

...UNLESS YOU HAVE DEDICATED STAFF
BENCHMARKING, SOURCING, QUOTING AND
NEGOTIATING PRICING...YOU CAN ASSUME YOU
ARE WASTING UP TO 25% OF YOUR ANNUAL
EXPENDITURES ON SUPPLIES AND SERVICES."
ries first, working down
the list to the smallest. A
spend map in descending
order of category spend
will help you create a very
effective cost reduction
plan.
3. BUILD YOUR
TEAM - Build your team

internally and externally and task them with
attacking each expense
category with definite due
dates and targeted results. This process needs
to be managed to ensure
that everyone stays
focused and on track.
4. EXECUTE
SOLUTION AND AUDIT
RESULTS - Expense

management is one of
the few functions across
an organization where
you can effectively
measure results and
your ROI. Using the last
price paid for an item
or service compared
to the new price will
determine savings. Then
that savings multiplied
by forecasted or actual
consumption will identify
cost savings. Auditing
supplier price to ensure
that what you committed
to is actually invoiced
is key. Auditing internal
compliance to ensure that
employees are using the
solution is also important.

5. MOVE THE
SAVINGS AMOUNT TO
YOUR INVESTMENT
ACCOUNT - Once the

14

OCTOBER 2017

savings have been
audited and proven, the
cost savings amount
can be moved into an
investment account that
earns interest and grows.
I would recommend a
quarterly move of the
savings amount. Longterm pricing with your
suppliers will ensure that
the savings generated

new revenue and new
cost savings. Unless
you have dedicated staff
benchmarking, sourcing,
quoting and negotiating
pricing...you can assume you are wasting up
to 25% of your annual
expenditures on supplies
and services.
Once you have decided
to attack your expenses,

BUILD YOUR TEAM
INTERNALLY AND
EXTERNALLY AND
TASK THEM WITH
ATTACKING EACH
EXPENSE CATEGORY
WITH DEFINITE DUE
DATES AND TARGETED
RESULTS."
occur over a protracted
period of time. The cost
savings from multiple
category implementations
will add up to some
interesting totals and
can be viewed in your
account or even on an
app provided by your
wealth advisor. Watching
this new source of profits
grow into a larger sum
will quickly provide you
with a "war chest" that
will provide you with the
flexibility to explore new
options.
Improved profitability
requires a two-phased
approach that includes

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

the results will be visible
through the sourcing,
quoting and audit phases
of your plan execution.
When those dollars
are identified...you can
deploy those new profits
back into the operation
or...stepping outside of
the box, move those
savings to a separate
investment account that
will grow your wealth...
giving you more flexibility
into the future.
The new profitability
opportunities are there for
you to recognize and recoup. Based on our data,
they have been there for

years and will continue to
be there as long as you
ignore the optimization of
your organization spend.
Think what an investment
account might look like
today if you started this
initiative five, ten or twenty years ago. You need
to start somewhere...
why not now? Your 2018
profitability might look a
lot different than 2017 if
you choose to make this
move.
If you are interested in
a spend map template to
help you in your planning, send me a request
by email at: daustin@
strategicsource.com. I will
be happy to provide one
of our tools via email.
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
the 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
30+ years of line, staff and
executive experience in
Spend Management and
Supply Chain Management
in various vertical markets.
EMAIL: daustin@
strategicsource.com
http://www.DIGITALDEALER.COM
Table of Contents for the Digital Edition of Digital Dealer - October 2017
