Normally, when delivery expectations are set we tend to look at lead time metrics to get a predictable answer. Then, when we look to improve those lead times we focus all of our attention on optimising our active work in other words the time in which we physically respond to requests we receive.
There is one other factor that should be considered when trying to improve current processes; the waiting time. The ability to reduce the time that people or in this instance cars spend on waiting to move onto the next stage in the preparation process for example; when being parked up.
Measuring the flow efficiency
Continuous production flow is what preparation centres should be striving for. As soon as one task is completed, the next one should ideally begin immediately after. There should be no unnecessary wait time present If the workflow is managed efficiently.
The term work-in-progress tends to be generalised, but it does not necessarily mean that the flow of production is always progressing. By measuring your flow efficiency you can identify how often work-in-progress actually happens.
The flow efficiency formula:
(Find out what is the ideal flow efficiency rate here)
Reasons for wait times:
The frequency and length of your wait times can be down to 3 major factors:
- Dependencies – specialists or micro groups responsible such as vehicle inspectors, painters, valeters etc, for single stages within the preparation process who fail to communicate effectively with the rest of the staff involved in prepping the car for retail.
- Variations in the nature of work – individual car scenarios where more or less activities must get performed to prepare it for retail. Inevitable to occur, those might include body work repairs, MOT checks or delivery of car parts supplies.
- Staffing – lack of employees that are right for the job, present at the right time and in the right place to ensure a smooth flow of production.
Reducing the wait time, should be understood as ‘working smarter not harder’ unfortunately it can also be interpreted as ‘reducing down time and putting extra effort into getting more work done’. That is why increasing flow efficiency isn’t a particularly easy thing to achieve. It is as much as an optimisation exercise as a perception shift in employees minds to utilise their time and resources better.
The cost of wait times:
So why should we pay attention to our wait times? What are the implications of having long or frequent wait times? How much do waiting cars in prep cost our business?
A really good method of trying to understand why and how to increase your flow efficiency is to learn about the causes of the unnecessary wait times (for tools that help dealerships monitor their flow productions speak to one of our advisors).
Unnecessary wait times drill holes in dealerships profits and therefore rightfully make us debate over what we should be spending our money on. For example, how does the cost of having the car wait to be collected from an auction compare to the cost of organising immediate transport once the hammer has gone down? How does the cost of 3-5 working day car parts delivery compare to the cost of same-day delivery? How does extra waiting time influence the profit margins on the car or its financing costs?
Dealers should aim to utilise every minute available to get the cars out to the forecourt in the quickest possible time to maximise chassis profits. Every minute that cars sit around waiting triggers a cost that start to chip away from the already tight margin.