A Case Study in Efficiency

Posted on May 1, 2001 by LCT Staff - Also by this author

So, what exactly is an on-site audit? An on-site audit is when a consultant visits a limousine operator’s physical location for the purpose of reviewing the work process in order to determine if improvements are needed. Typically, a consultant is asked to review the workflow of each department. Usually, he or she begins in the marketing/sales department to determine how customers make decisions to do business with the particular client company. The consultant follows the process through the reservation, dispatch, billing and fleet departments. Each area of the business is examined to determine if work can be completed more efficiently and productively. What can a limousine operator expect from an on-site audit? First, the consultant will identify opportunities to improve efficiency and productivity, reduce costs, and often increase the company’s ability to sell more service. Second, if the operator desires, the consultant can provide recommendations to fix the identified problems. Finally, the consultant can provide counseling to assist the operator in implementing the various recommendations. In this article, an actual case study involving an on-site audit will be reviewed. The client situation will be stated, the assignment will be discussed, and the actual audit process will be provided for the reader. The company described in this article is real; the names have been changed to maintain confidentiality. Mary Hines, owner of Hines Transportation in Elmburg, Ill., requested an on-site audit of her company. Her company has grown an average of 13 percent for the last three years. Hines transportation has produced, in addition to Hines’ own compensation, a five-percent profit for the last two years. Hines’ fleet of six sedans and six stretches is almost paid for, and she will own all of the vehicles by March 2002. Her business is comprised of 50 percent retail and 50 percent corporate. She maintains a staff of 15 chauffeurs, one part-time assistant, one inside sales associate, one full-time reservationist, two part-time reservationists, one part-time dispatcher and one full-time car-care associate. Hines performs the majority of the dispatching duties herself. However, she wants to expand the business by buying a company in a different market. Hines wanted an audit of her operation in an attempt to ensure that when she buys the new company, she will have the best possible systems in place to maximize her efficiencies, productivity and profits. After reviewing her request, it was determined that a one-day, on-site visit by a consultant will be enough time to accomplish the task. The cost will be $1,500 plus travel expenses.

THE AUDIT REPORT The following is a brief summary of the audit report completed after a one-day, on-site audit of Hines Transportation.

Inside Sales Linda, the designated inside sales representative, has been with the company for only nine months. She was hired specifically for the sales position, and had no prior experience in the industry. She was given a quota of $2,000 per day in sales, which she met every week. Linda tracks all inquiries by using ACT, a computerized contact management system. However, Linda did not know that ACT has broadcast fax and e-mail capabilities. She learned that she could communicate to groups of prospects and existing customers almost instantly, and without cost in most cases. This significantly increases her productivity potential. In addition, ACT gives Linda the ability to send proposals and individual responses without using Word for word processing requirements — again saving Linda many hours weekly. Another ACT feature that Linda should be using has to do with reports. Linda was transferring sales information from ACT to Excel spreadsheets in order to report to Mary. ACT has this reporting capability internally, and Linda will save approximately 30 minutes each day by not using Excel. Linda has not been asked to track inquiry calls to Hines Transportation. However, she was taught how to obtain which advertising source generated the call easily and in a non-intrusive manner. She will be taught how to enter this data so that management can get a weekly, monthly or annual report to determine how effective their advertising is. The company uses Limoware software for recording its reservation information. However, Linda was not aware that Limoware has an automatic fax confirmation feature. That could improve the accuracy and quality of future reservations. Overall, Linda is performing better and selling more than most limousine company employees with the same job description and duties. It was apparent that Linda needs additional training on ACT and Limoware to maximize her time. If the new, acquired business is similar in size, the above recommendations could result in $100,000 to $300,000 in additional sales production overall.

Reservation Department The first thing to catch my eye in the reservation department was that Rachel, a reservationist for the company, was putting reservations directly into Limoware without the use of paper. After asking Rachel to walk me through the workflow process, I was stunned. Never have I seen a company that had mastered the art of not using paper to get the reservations into the computer use so much paper! Once the reservation for an airport transfer was entered into the computer, a driver’s trip sheet was printed. A map of the pick-up location was printed, and directions for pick-up and drop-off were typed on a separate sheet of paper. A vehicle checklist and a confirmation call sheet were then printed. All of these papers were stapled together and filed in future reservations. Seven pages of paper in total and not one of them a reservation. A review of the client’s financials earlier had shown that they were high in administrative salary costs by 14 percent; now I was beginning to understand why. Rachel had created the procedures for taking reservations to ensure zero errors. Frankly, a person had to use a checklist (which was the seventh of the seven sheets) to ensure that all the steps were implemented. The system seemed to work fine, but it was cumbersome, expensive, and unnecessary with the technology that Hines had available. Another justification that both Mary and Rachel offered for the elaborate paper system was to make up for the inadequacy of the drivers. As we often find, operators who buy limousine management software systems will learn only what they initially purchased the system for, and not use it for more than that. Limoware, and other limousine software systems, allows for reservations to be taken without paper and adequate chauffeur information in order to perform assignments without error. Since Hines’ computer system had both a disk and tape back-up system, I suggested that she utilize an off-site back-up level. This would give her three copies of every ... for more information on this topic, check out the May issue of LCT.

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