What is Going to Grow Your Business? Inventory
n order for any business to grow it must increase its amount of inventory. We have a saying: “You really don’t know it’s inventory until it sells.” You purchase vehicles with the expectation that they contain inventory that your customers will buy. You should base your purchases of inventory on the evaluation of what you are selling and on the request you are getting from searches logged by your salespeople.
There are many variables that deter- mine if a part on a vehicle will produce future sales and at what price. The busi- nesses we are involved with that are grow- ing have become experts at this part of their business. All use some sort of bid- ding system, but all do not use the systems the same way. They have learned that they still need to know other new criteria that produces better results.
The limiting factor for most automotive recyclers is the number of parts vehicles they can process. Almost all future in-stock sales come through the inventory and dis- mantling processes. If these two areas func- tion at a high level, then sales will grow even with an average buyer. If they do not function well the business will not grow even with an excellent buyer. These areas are that important. It is somewhat of over simplification, but another thing we believe is: “A company’s growth is only limited by its ability to process new inventory.” Poor production is a product of either poor people or poor processes. Some- times it can be a facility issue, but rarely is that the overarching issue. You can almost always get more out of your facility if you upgrade your people or your processes.
14 Automotive Recycling | September-October 2016
There is no substitute for good employ- ees. The pursuit of good employees is one of the most overlooked aspects of growing your business. Great employees, like more inventory, push your business to the next level. We have another saying: “You rarely overpay your good employees, and you always overpay your poor employees.” This is based on decades of watching the performance of employees and the amount of cost incurred. Good to great employees almost always cost us less per preferred outcome than poor employees. A great employee will add to the bottom line, while a poor employee takes from the bottom line. You just make more profit off of good to great employees than you do off of average to poor employees. To this end, we think you should always be hiring. What that means is you should always have a help wanted poster, ad, etc. You never know when that next person is the one you have needed. Most of you only start looking when you have lost an employee. That is costly to your produc- tion and to your profit.
Processes are many things. They are guidelines, boundaries, a list of things to do and an order in which they should be done. They are very useful in the training of new employees and in the managing of existing employees. They are intended
to produce the best result all of the time.
They should also be built around the most straightfor- ward way with the least amount of input and supervi- sion from others. They must be consistently enforced and examined for improvement. It is important to include the performer of the process in the creation of the process. It helps get buy-in and it helps to clarify why the process is needed and why perform- ance based on the process is best for all involved. In today’s modern recycling facility, you should be able to monitor the outcomes of processes through your inventory management system, to see what the per- formance was prior to the introduction of the processes and what it is now. All processes should provide improve- ment in performance and in the quality of the performance. Thus, if this does not occur then the processes are flawed, and/or the employee is not following the process. Daily training and monitor- ing is going to be required anytime a new process is introduced, for five to ten working days depending on the com- plexity of the process and the quality of the employee.
Managing these four disciplines will greatly improve your odds of growth and longevity.
CBCDashboard and CBC support salvage and recycling business owners to improve and grow through PRP Profit Teams, Inde-
pendent Owners’ Groups, On-Site Consulting, and Online Consulting using CBCDashboard: personnel, buying, in- ventory, income, sales activity, operations, and financials. Contact Chad Counts at (512) 963-4626 and Robert Counts at (512) 653-6915. Visit www.cbcdashboard.com and www.countsbusinessconsulting.com.