Slashing Expenses One Line Item at a Time
Dealers regularly sign checks for things like phone bills, Internet connections, computers, computer repairs, printers, ink, etc., and if they invest the time to properly review IT-related expenses, they could save several thousand dollars a year. However, many people in dealerships across the country aren’t well-versed in Internet technology (IT). It’s often outsourced or relegated to the person in the dealership that somewhat understands computers and gets overlooked when reviewing operations.
In Blake Ledet’s three years as the IT Manager for the Team Automotive Group in Baton Rouge, La., his efforts more than paid for his salary, and this self-proclaimed “computer guy” has worked for every cent.
Ledet, who joined the group in mid 2008, is a “one-man band” who’s in charge of the technology used by 300 people across the four locations that comprise the Team Automotive Group, including: Team Honda, Team Honda South (a satellite store selling pre-owned Hondas), Team Toyota and the Team Collision Center. The significant savings came from technological changes and smart purchase decisions at all four locations.
When Ledet first took on the job of cutting costs for the dealership, he compared it to the old saying: “How do you eat an elephant? One bite at a time. You have to take on big projects in small bites,” which he did with a three-step process other dealerships could use to save as well. The three-step process included evaluating the dealership’s current processes, understanding those processes, and then determining the areas in which the dealership can save money by picking up the phone and calling vendors to find the best deals on everything from printers to phone bill rates.
The dealership’s IT savings in the first year came from purchasing refurbished laptops instead of new ones, reducing telephone services and getting creative with printing.
The dealer group saved $52,000 on laptops by purchasing refurbished Panasonic Toughbooks through the Toughbook Depot for the service department. The decision came about when both Honda and Toyota started requiring dealerships to provide their own laptops to connect to vehicles’ diagnostic systems. Toughbooks were chosen because of the extreme conditions the computers would need to handle in the service department.
“The Toughbooks can fall from three feet and still work. A regular laptop would crack in half. The material is a lot better. It has stronger plastic, it’s sealed and it can take a little water,” he said. The refurbished laptops were between $900 and $1,500, and he estimated similar new Toughbooks would have cost between $4,500 and $6,000. Eight were purchased for Team Toyota and five for Team Honda. “They look brand new and still have a three-year warranty.”
And warranties are extremely important, as is buying from one company for consistency. The rest of the dealerships’ computers come from Dell, through a corporate account, which gives the dealership further discounts. After Ledet began working at the dealership, he orchestrated the purchase of 42 computers with uniform three-year warranties on everything. “I don’t have to worry about parts inventory,” he said. The new computers were needed to support the dealerships’ new DMS. “I try to make things as uniform as possible; being uniform is key. If you have computers from different places and one breaks, you have to find out which manufacturer to send it back to. That’s a big pain and time consuming.”
Along with streamlining the computer systems, the messy business of phones at the dealerships was tackled. Ledet realized that there were various T1 lines sitting unused, costing $500 to $700 each per month. Just recently, nine more T1 lines were found and eliminated. In his first year at the dealership, $60,000 was eliminated from the telephone budget. The dealerships worked with a telecommunications company that helped assess the current needs of the business and compiled a list of different providers with price comparisons. Ledet encouraged other dealers to audit their phone bills regularly because the accounting office usually pays them without necessarily reading every line for hidden charges.
In 2011, the dealerships have saved an additional $1,500 by switching providers for their landline phones. “When our contract was up, we compared prices,” he said. He offered their previous provider, which the dealerships had worked with for over 15 years, the opportunity to lower its price to keep the dealership group’s business. However, the company didn’t, so the decision to switch providers was made. “We haven’t had phone errors since the switch,” he said. In the past, the dealership experienced billing errors and signal failures.
The dealership’s cell phone bill has also seen a sizeable reduction. The dealership shaved about $2,500 off its monthly bill by combining managers’ separate accounts into a corporate account. Though salespeople pay their own cell phone bills, they also indirectly benefitted because they now have the ability to get a discount through the corporate account. By using their foundation account number, employees can receive an 8 percent discount, which nearly cancels out Louisiana’s steep sales tax of 9 percent. Ledet is looking to save further by switching providers soon, which will increase that savings from 8 percent to 16 percent. The trick to saving is picking up the phone, making the call to the vendor and never being afraid to ask for a better deal.
One of the more creative changes Ledet made at the dealership was his “employee wellness plan,” which refers to the consolidation of the dealerships’ printer systems. Fewer printers means saving on ink, toner and paper, expenses that were “through the roof.” He said, “Not everyone needs to have a printer at their desk—that’s just ridiculous. … They all can get up and walk.” The nine employees in the accounting office share a large printer, while the rest of the 300-person staff share 100 other small- to medium-sized printers, with about 150 PCs connected to them.
The dealership is also saving paper, ink and toner in their accounting department. They currently use direct deposit for paychecks, and in a few months, they will eliminate printing paystubs altogether. A new system will allow employees to login and view their past paystubs online.
With so many responsibilities, Ledet usually can’t walk from his truck to his desk without someone in the dealership asking him a tech-related question—either personal or professional. He said it “feels good to be needed,” but it’s also a huge responsibility. In the current economy, all of the employees are thankful for the dealerships’ savings because it further protects their own job security and the dealership’s future. He said the staff expects the cutbacks, and while some of the older employees are initially resistant to change, they adapt. He said, “Once they learn the process, they realize it is easier.”
The self-named “jack of all trades” had this advice for others looking to slash expenses: “If you’re not willing to break it, you can’t fix it.”
Sidebar: Dealing with DMS Redundancy
Vol. 8, Issue 6