Everything about the trucking industry is big: big rigs, big tonnage, big freight. Another “big” that you ought to be just as familiar with is big data. Gaining control and understanding of the data generated by your dealership is key to improving efficiency, increasing sales numbers, and boosting revenue.
Because your dealership produces a tremendous amount of data every day, data analysis can easily become a slippery slope into data chaos. Consider the millions of data points collected by electronic onboard recorders (EOBR) and sensors, daily logs, repair and maintenance needs, sales actions and marketing campaigns across dealership locations. Then there’s weather data, data from the National Highway Traffic Safety Administration, DAC Services data – the list goes on and on.
But guess what? All that industry data can be pulled in and merged with your dealership data to create a 360-degree view of your business that lets you make better-informed decisions on your dealership’s performance. That is business intelligence.
The first step toward optimizing your dealership based on data is to identify the key performance indicators (KPIs) that will help you run your business more efficiently. But how do you tackle this “big” task without going data-crazy? We’ve whittled down the list to the top five most important KPIs for trucking dealerships based on our 20+ years of experience in the business intelligence space.
1. FINANCIAL UTILIZATION
Tracking the Financial Utilization of each vehicle shows you precisely how much revenue each vehicle is producing for your dealership. This KPI divides the annualized revenue by the cost of acquisition, resulting in a metric that can be expanded to include cost from service, repair, and parts.
Benchmarking the Financial Utilization percentage helps you compare which trucks are making the most money for your dealership and determine what new pieces you should be adding to the fleet, including whether those pieces should be new or used.
2. VEHICLE REPLACEMENT RATE
Obviously, it’s not good business to carry vehicles that consistently need maintenance and are often out of commission. You lose revenue, but more importantly, compromise customer satisfaction. Routine downtime opens windows for customers to go elsewhere to find what they need when they need it. Get on the front end of these potential issues by tracking your fleet’s maintenance costs, history, and age in comparison to revenue. With the right information at hand, you’ll be able to eliminate problem vehicles and replace them.
3. WIP AGING ANALYSIS
Work-in-Progress (WIP) Aging Analysis lets you view ongoing jobs. This analysis also shows the status of the vehicles in the service department and how fast equipment moves through your service department. Tracking things like last labor to invoice using WIP Aging Analysis will ensure you leave no open work orders once the work is completed. Invoicing the work order on a timely basis improves customer service and cash flow.
4. REALIZED LABOR RATE
Effective labor rates are a key indicator for understanding the profitability of your service department. Effective labor rate is not controlled by how much you charge, but by how much you produce. The simple calculation of Total Labor Sales divided by Total Labor Hours Billed tells you what your shop makes per billed hour. Anything you can do to increase the efficiency of your techs is going to increase your effective labor rate. It doesn’t change the amount your customers are being charged. Rather, it changes your bottom line. Tracking technicians’ utilization for labor average cost, hours worked, hours charged, and labor rate will also help you improve revenue by enabling more hours to be billed out in the same amount of time.
5. DEAD PARTS
Low demand over supply can lead to dead and obsolete inventory. When a dealership decides to get rid of dead inventory, the most common approach is simply to write it off, dispose of it as waste, or in some cases, return it back to the vendor. But first, you should determine which items are dead and slow-moving. The ability to see parts sales performance across all of your branches will help you decide what parts can be transferred to other locations to be sold and what parts are definitely dead. Dead inventory uses up valuable shelf space that could be used for higher-demand material. Then you can sell excess, obsolete, and dead inventory at a discount where and when possible, even if at salvage value.
Don’t be blindsided by lack of visibility into your data
We know each trucking dealership faces unique challenges, but we also know that tracking these five KPIs can help you improve your bottom line. What’s more, it’s an important step in creating a data-driven dealership.
Imagine HR being able to combine and compare data from DAC Services with internal data on absenteeism, claims, clear records, and daily logs. Or imagine the costly repairs and lengthy fleet downtimes you’ll avoid by Parts and Services getting an automatic maintenance notification based on EOBR data from the trucks. How about Sales receiving a report with qualified leads that includes contact information, types of trucks they use, fleet ages, whether they historically buy new or used trucks, and their most commonly run routes.
The possibilities stretch as far as the open road. But without the right tools to let you look at all the most important data your dealership is producing, your view of company health is about as clear as a fallen road sign. Learn more about what it takes to build an analytics-driven dealership in this free guide: How to Become a Data-Driven Organization