Digital Dealer - May 2018 - 23

...MANY DEALERS ARE PAYING FOR THE SAME
FUNCTIONALITY WITH MULTIPLE SUPPLIERS,
CREATING REDUNDANCIES AND WASTING MONEY."
cost decrease today, with
no eye toward the future
locked in pricing to control
costs, the effort will
provide negligible results
5. SENIOR
MANAGEMENT -

Management has failed
because they have not
developed a plan, have
not defined the objectives,
there are no metrics
defined and no follow-up
mechanism in place to
measure success.
THE DEALERSHIP
OPPORTUNITY

Based on research and
our 2017 metrics, you can
reasonably plan that you
are overspending by a
minimum of 26% of your
supplier payables! Where
did this data come from?
Purchasing research and
our benchmarks.
Imagine...if you are
spending $2.0MM a year
with suppliers, what kind
of effort would you put
forth to reduce those
costs by 26% and watch
those expenses turn into
new profitability. What
kind of effort would be
worth $500K per year to
your organization?
Review your 2017 total
year-end sales...you can
reasonably plan that you
will spend 5-6% of total
sales on supplies and
services...across 130
expense categories.
WHY ARE DEALERS

SPENDING TOO MUCH
ON SUPPLIES AND
SERVICES?
1. TACTICAL PRICING
- negotiating a price that

is great today, but does
not have long-term protection is a tactical price.
You don't know when
it will increase, but you
know it will. A strategic
or long-term approach
will preclude those price
increases and lock down
your savings long term.

2. LACK OF
PURCHASING
CONTROL - When

everyone in the
dealership has authority
to buy or contract with
suppliers, you have lost
control of the commitment
process and inefficiencies
will occur. Purchasing
policies and approval
levels are needed to lock
down that process and
limit activity.
3. REDUNDANCIES -

In the marketing category
alone, many dealers
are paying for the same
functionality with multiple suppliers, creating
redundancies and wasting
money. A review of the
supplier base with your
sales team will flesh that
out...or should. Eliminate
redundancies and you will
reduce costs considerably.
4. LACK OF SPEND
MANAGEMENT - Deal-

ers manage sales and
spend a considerable
effort driving sales, but
there is not a comparable
effort in organizing and
managing expenses. Yet
effective management of
expenses can increase
profits at a faster rate
than new sales. So why
doesn't management
spend the time managing
their spend? They either
don't know how, don't
have the resources, or
don't have the interest or
patience.

5. TOO MANY SUPPLIERS - If there are 130

expense categories that
you can spend money in
for supplies and services,
then why do you need
500 - 600 suppliers?
The short answer is that
nobody is minding the
store. Too many suppliers
result in less leverage and
higher prices. Too many
suppliers result in the
back office team managing and paying more suppliers than are needed.
Too many suppliers mean
your managers are having
more supplier meetings/
lunches than are needed
to effectively manage the
business.
There are some dealers
out there that are really
dialed in on expense
management. They
devote the time, have engaged resources manag-

ing their spend, and have
the infrastructure surrounding the team to help
them become successful
and profitable. More
often than not however...
management just is not
paying enough attention
to supplier spend. If that
trend continues costs will
continue to run 26% higher than they have to be.
Now might be the time
to take a fresh approach
to your spend management. The benefits can be
quite compelling if you are
willing to take a new approach. A 15%- 20% -25%
reduction in spend will
certainly help your bottom
line. Is it worth it?
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
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.

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

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