A Pragmatic Approach to Developing a Center for Excellence (C4E)

A Pragmatic Approach to Developing a Center for Excellence (C4E)
in
Performance Improvement

A Proposal Targeted to Sustain Enterprise-Wide Continuous Improvement

Presented
To
Mr. Rich Mattern, CEO
Raymond Handling Solutions, Inc.

By
W. D. Cravenor
SunChase Consulting,
a division of SunChase Products, Inc.

April 17, 2008
Aliso Viejo, California

I. Purpose

Establish a Center for Excellence (C4E), to be instituted as a forum to facilitate and foster the development of departmental performance expectations targeted to sustain enterprise-wide continuous improvement.


II. Process

Phase 1 – Perform baseline departmental performance measurements based on the criteria as detailed in section IV below.

Phase 2 – Establish Specific, Measurable, Attainable, Relevant and Time-Specific (SMART) departmental performance expectations/goals.

Phase 3 – Perform a variance analysis of actual departmental performance to established expectations.

Phase 4 – Develop written action plans to address all negative variances to expectations, including specified timelines for the restoration of performance to expectations. The internal designation for this initiative is Dealer Review and Action Plan, or DRAP. Point values should be assigned to measurement categories to designate achievement of planned expectations which should be used in consideration of merit increases, promotions/demotions and/or terminations.

Phase 5 – Quantify results—Actual to Plan, (DRAP).

Phase 6 – Revise Expectations & Action Plans as necessary to facilitate continuous performance improvement.

Phase 7 – Develop and implement Center for Excellence (C4E) quarterly and annual awards for performance above expectations.


III. Payoff

By implementing the aforementioned C4E, the following benefits should result:

1. RHSI will achieve continuous departmental performance improvement.

2. RHSI will meet and/or exceed fiscal (EBITDA) goals.

3. RHSI customer satisfaction will be enhanced.

4. RHSI will experience increased market share.

5. RHSI employees will generally experience an improvement in their overall quality of life.

IV. Departmental Performance Expectations Development

Key departmental metrics should be established for each operating RHSI department and compared to plan, as follows:

A. Sales

1. Gross Profit (GP) (for the period) to plan

2. Gross Sales (GS) (for the period) to plan

3. PNTR to plan

4. PUTR to plan

5. Number of New trucks sold to plan

6. Number of Used trucks sold to plan

7. Number of new logos (new, first time accounts) sold

8. % new logo GP to total GP

9. % new logo GS to total GS

10. Weighted Funnel Value to Weighted Funnel Value Standard, as follows:

Activity/Sales Cycle Identifier Weighted Funnel Value
Prospects 0% of dollars in play
Qualified, First Meeting w/ UDM 25 % of dollar in play
Presentation, Proposal Issued 50 % of dollars in play
Sold, Written Order Confirmation 90 % of dollars in play
Closed, Delivered and Paid 100% of dollars in play

Total all accounts to arrive at Weighted Funnel Value. A Spreadsheet is available to track this upon request.

Tip: For Account Manager’s, Weighted Funnel Value should be equal to or exceed 3X their monthly quota.

For new hires use ramp quota, as follows:

Months on Job % of Full Quota
1 – 3 0 %
4 25 %
5 33 %
6 50 %
7-8 66 %
9-11 75 %
12 Months or more 100 %

11. Activity Measurement to Plan, as follows:

· Prospecting – dials, door knocks, business cards collected
· Discovery – first appointments and follow-up appointments
· Proposal – Proposal Dollars to Plan per period

12. Close Ratio to plan – Use Total $ Sold/Total $ Presented, as follows:

Tenure in Position Recommended Close Ratio
1-2 Years 33 %
3-5 40 %
6-8 50 %
> 8 years 65 %

Major Account Managers should utilize the GSSBI Model to overcome pricing objections and facilitate the translation of acquisitions from an expense to investment on the client’s balance sheet. Additional details and training relative to GSSBI component strategies are available upon request.

13. Systems $ Sold to plan

14. Allied $ Sold to Plan

15. Customer Satisfaction Ratings to Plan

16. Employee Retention, (all personnel carrying quota) to plan

17. Lost Sales to plan, as follows:

· Deal count
· $ count

18. Pump-in, sales generated out of assigned market, but delivered in market, to plan.

19. Pump-out, sales generated by HRSI personnel for product/services to be delivered to clients outside of the RHSI coverage area.

20. Ratio of Pump-out to Pump-in. Use 1.2 (pump-out) : 1.00 (pump-in) as a starting guide.

B. Parts

1. GP Wholesale Sales to plan

2. GS Wholesale to plan

3. GP Front Counter to plan

4. GS Retail

5. Lost sales to plan, as follows:

· W/S
· R/S

6. Inventory turns to plan, as follows:

· Total
· Fast Moving

7. Obsolescence Reduction to plan, as follows:

· % of total inventory
· $ amount
· Number of SKU’s

8. Customer Satisfaction rating to plan

9. Employee Retention

10. Training/Proficiency Certifications

C. Credit

1. Collection Activity to plan, as follows:
· % of Sold and Delivered accounts paid within 30 calendar days
· % of Sold and Delivered accounts paid within 60 calendar days
· % of Sold and Delivered accounts paid within 90 calendar days
· % of Sold and Delivered accounts paid within 120 calendar days

2. Bad Debts Management/Collections to plan, as follows:
· Total $ bad debt for period
· % total $ bad debt to total $ billed 1-120 days aging
· % bad debt collected to bad debt billed
· Total $ bad debt collected to bad debt billed

3. Customer Satisfaction rating to plan

D. Shop/Service

1. GP Labor (Warranty, W/S, R/S, Used) to plan

2. GS (Warranty, W/S, R/S, Used) to plan

3. GP per WO, to plan

4. GS per WO, to plan

5. Total flagged hours to plan

6. Average flagged hours per headcount to plan

7. Training Certification

8. Customer Satisfaction rating to plan

9. Average Response time to Standard

10. Average Repair time to Standard

11. PDI completion time to Standard

E. Customer Service

1. Customer Satisfaction

2. % Work Orders closed as promised, as compared to plan

3. Sales by Category to plan, as follows:

· Batteries
· CFPM
· RSM
· Allied
· Labor
· Rentals

4. GP by Category to plan, as follows:

· Batteries
· CFPM
· RSM
· Allied
· Labor
· Rentals

F. Used/Rental


1. Number of units rented in period versus standard

2. Number of units available to rent versus standard

3. Number of rental days booked in period versus standard

4. % booked days to total available days versus standard

5. Rental GS in period versus standard

6. Rental GP in period versus standard

7. Lost Rental $ versus standard

8. Lost Rental days versus standard

9. Battery/Charger GS to plan

10. Battery/Charger GP to plan

11. Customer Satisfaction rating to plan

12. Parts & Labor Cost Containment vs. Plan

G. Transportation

1. GP transportation sales versus standard

2. GS transportation versus standard

3. Total units transported versus plan

4. Customer Satisfaction rating to plan

V. Concluding Remarks

The proper implementation and administration of the DRAP will permit the dealer principle and other members of executive management to optimize expense control and gross profits, increasing EBITDA while providing enhanced clarity and speed in the diagnosis and treatment of performance deficiencies.

As a result, enterprise continuity is accentuated and the reliance of staff on the interdependence of departmental operations is heightened. DRAP spotlights performance below expectations, permitting quick identification, before it can propagate across departmental boundaries, infecting up-line functional areas.

I have effectively used DRAP in working with over 21 Mazda dealers in Southern California, resulting in the migration of my assigned district from last to first in the Pacific Region. If you would like additional information relative to Funnel Management or GSSBI training, please call 949-338-7387 or email at wcravenor@sunchasecorp.com .

Good Selling!