Digital Dealer - May 2019 - 19

in the traditional sense of
selling vehicles, servicing
vehicles or parts...but in the
on-going generation of new
revenues (profits) through
improved management,
reducing everyday expenses, improving processes,
driving new efficiencies,
and the recovery of supplier
overcharges throughout the
organization.
The revenue center
would be organized as
follows:
 Typical cost center
number assigned for budget
purposes
 Staffed with one innovative, credible management FTE to lead, manage,
and execute this initiative
 Function would report
to the CEO/dealer principal
or CFO
 Annual objective -
achieve a minimum of five
to seven times salary (new
FTE) or $500k annually or
more depending upon the
size of the group
 This individual would
have authority to cross
organization boundaries
to generate reasonable
recommendations that generate significant savings or
new organization revenues

OPPORTUNITIES FOR
NEW REVENUES

The opportunities are
endless, but a starting point
would be the following:
1. REQUOTING (not just
negotiating) high spend
expense categories with a
selection of a new supplier
that will reduce costs over a
12-24 month period.
2. REQUOTING
CATEGORIES THAT
CAN INCREASE GROSS

PROFITS (buy for less and

increase your margins),
which includes parts,
lubricants, tires, towing,
body shop supplies/
materials, and more.

3. RECOVERY AUDITS
TO RECOVER SUPPLIER
OVERCHARGES in areas

such as utilities, healthcare,
transportation, warranty
labor, parts, F&I insurance,
unemployment insurance,
and much more.
4. DIGITAL MARKETING
AUDIT to eliminate redun-

dant suppliers, ineffective
suppliers, and drive costs
out of the business.

5. PROCESS IMPROVEMENTS - Ensuring that

credit card transactions
are processed correctly to
drive down rates, ensuring
credit bureau pulls are not
excessive, paying suppliers
with the most cost-effective
methods, etc.

6. SUPPLY BASE
OPTIMIZATION - Reduc-

ing excess suppliers to
reduce back-office costs,
management costs, and to
increase pricing leverage
with suppliers.
7. ELIMINATION OF SUPPLIER SPEND - There are

categories of expense going
on in your business today
that can be completely
eliminated without significant impact on your CSI
scores, employee morale,
and overall efficiency and
effectiveness.

8. NEW MANAGEMENT
CONSULTING
APPROACHES - There's

a myriad of specialized
consultants that can
alter your property tax,
improve your depreciation

schedules, help you with
the management of your
aircraft operation, and much
more.
Reputable purchasing research reports that
companies that centralize
procurement can generate
25% cost savings of their
annual spend...or brand
new revenues! Our work
experience proves that...
and more.
QUICK DEALERSHIP
FACTS

 Dealers spend roughly
5% of total annual sales on
suppliers for supplies and
services
 Centralizing procurement can reduce costs - improve profits by 25%
 There are over 130
expense categories that
dealers have to source and
manage regularly
 Most dealers can
reduce their supplier bases
by 40% or more
 Even the smallest of
dealerships should be able
to generate $100K per year
from the revenue center
 Multi-location groups
should target $500K to
$1MM in new revenue from
their revenue center
SUMMARY

Many dealers report that
their business results are
challenging, and not what
they want or expect. So,
what do you do if you are in
the same situation? Nibble
around the edges and hope
for the best? Or do you start
upsetting the status quo
and begin to break some
eggs in your organization?
Maybe the time is right to
think about your business
differently. Maybe it is time
D I G I TA L D E A L E R . C O M

to admit there are inefficiencies built into the organization that can be rectified
and in the process, bring
new dollars to the bottom
line. Maybe now is the time
to put a full-court press on
waste, inefficiency, redundancy, over-payment, low
margins and the like, and
think differently about your
own opportunities. Maybe
now is the time to build your
own revenue center and
claw back those dollars that
are yours, but are ending up
in somebody else's pocket.
The choice is yours. The
answers are right there in
your dealership...you just
have to be willing to think
a bit differently and take
action. A revenue center
for 2019...is the idea worth
exploring?
If you are interested in
getting a roadmap for the
development of your own
revenue center, email
daustin@strategicsource.
com to receive a template
that will provide some ideas
and plant some seeds.
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. EMAIL: daustin@
strategicsource.com.

M AY 2 0 1 9

19
http://www.DIGITALDEALER.COM
Digital Dealer - May 2019

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