Do you run a car dealership and employ Lean Principles ?
Case study: Implementing Lean Principles and tools in a car dealership is no different than implementing #TPS in a production plant. In some ways its even more exciting.
These take-aways are based on our experiences in implementing lean in a current engagement with a large regional Ford and Honda dealership.
Used cars can be purchased by a dealer as either part-exchange or from the second hard car auction market. The key is to turn the car around from purchase to forecourt and website in the shortest possible time. Let us call this the lead time.
Second hand vehicles come in all shapes, sizes and conditions. However, there are many standard work processes and some non-standard work processes.
Typically, a vehicle can take anywhere from 6 to 12 days, lead time, to hit the website and forecourt all sparking and ready for its new owner. However, the “touch-time”, the time where a mechanic physically works on the vehicle (sum of cycle times) can be as little as 6 hour or as much as 3 days, depending on what has to be done.
The key is to use marker pen and white board with the team to monitor the daily activity of the used car as it flows, from purchase to forecourt/website.
Your KPI’s are; reduce lead time = LT, reduce the touch time, but most importantly to reduce the WIP time when the car is not being worked on. A good metric I add here is to show the % of touch time(process time) divided by the total lead time.
Car is purchased and arrives when the dealer opens on Monday 8:00 am. Key standard processes are: inspect, clean, fix dents, paint work, replace basic parts (wipers, tyres, brake pads, oil, filters) which are available to hand, wash, polish, take photos for web site.
Let’s say this takes a total touch time of 10 hours, this is one KPI. The car hits the web-site on Friday at 2pm, ready for the weekend sales rush!. KPI two: Lead time = 4 ½ days (38 hours, assuming one shift per day). KPI three: 10/38 = 26,31%.
What Kaizen’s can we do with the team: Go for the Jugular as does Dracula. The big one is to reduce KPI 1, lead time (LT). The vehicle is not wine, it does not get better as it waits for all the process to take place. Go, See, Genba what is the root cause of WIP. If you want progress and cash-flow, you need to move from push to pull to flow. Later look at process improvements.
The Team visualised each vehicle on a daily basis. They mapped the key processes and wrote down the down-time and cycle time at each stage for each vehicle, then they experimented.
The Team reduced the average lead time (ALT) for a small family car with standard work by 55% in 2 months. So, LT = 17,1 hours = 2,2 days (so Wednesday afternoon it was already on sales. Then they reduce the Standard work process time by 20% from 10 hours to 8 hours.
What more could you ask for? True story, eat them for breakfast.
Give me a challenge !
What KAIZEN’s do you think they came up with, over to you.