CaseStudy:SharedServices

Driving Continuous Improvement: Shared Services and Outsourced Solutions Improve

Business Performance for Americas Largest Automotive Retailer
Solution Streamlines Processes, Increases Efficiency and Reduces Costs
While the economic recession has left a few industries untouched, the automotive industry was not
one of them. With auto sales on the decline, automotive retailers have been driven to reevaluate their
processes and uncover opportunities to streamline operations and reduce costs.
At Americas largest automotive retailer, AutoNation, they have been on the road to continuous
improvement since moving to a shared services business model nearly a decade ago. Wanting to
further fuel their corporate culture and support their mission of being Americas best run and most
profitable automotive dealership, the company partnered with SourceHOV, one of the largest
providers of business process (BPO) and knowledge process (KPO) outsourcing solutions, to support
its shared services organization with outsourced mailroom and automation services. Through
outsourced support the company has been able to further streamline processes, increase efficiencies,
meet performance goals and reduce operational costs.
Fueling change
Automotive retailers have historically had accounting offices located in every dealership, but for an
organization as large and dispersed as AutoNation, this resulted in redundancy of operations and
increased costs. In challenging economic times, the message was clear: consolidating processes
would improve operations, eliminate redundant activities and reduce costs.
Moving to a shared services organization approximately ten years ago, the company established
three service centers to manage its accounts payable, accounts receivable and banking functions for
all of their automotive retail locations. Since then, they have expanded that capacity to include all
transactional accounting related to the operations of an automotive dealership for 65 of their locations
and plan to have the rest on board by the end of 2011.
Our mission is to be Americas best run and most profitable automotive retailer and to accomplish
that we knew we needed to capitalize on the size of AutoNation, said Maura Berney, director of
Shared Services at AutoNation. We established a metric based on the cost of accounting for every
vehicle sold and recognized we had a $19mm annual opportunity for the company if we could
centralize and streamline our operations.

Driventobethebest

Moving to a shared services model required significant change management because the internal
organization was used to having control over processes and doing things the way they personally
wanted to do it. One of the biggest lessons learned through the transition was that instilling a
technology-based workflow process with measurements and monitoring yielded the best results.
Another lesson was recognizing what AutoNation was able to do well internally, and what activities
would be better handled by a third-party outsourced provider.
We changed the culture and started utilizing performance metrics to start to measure the cost of
processing an invoice, collecting for an accounts receivable customer, and billing a car deal so our
associates would know what was expected of them, explained Berney. However, there were areas
where we werent meeting the business needs. We had purchased scanning and OCR technology but
it was something no one at AutoNation had done before and it became apparent that managing the
function internally wasnt a productive use of our resources. Recognizing theres an expert in the field
who does this and has the technology, it made more sense for us to outsource to SourceHOV.
SourceHOV transforms manual and paper intensive accounts payable and accounts receivable
functions into an automated outsourced process that reduces costs, streamlines the overall
management of payables and delivers greater visibility and control of the entire business process. By
partnering with SourceHOV, AutoNation was able to streamline their processes, meet customer
service goals, and reduce costs without the added expense of acquiring, deploying and managing
additional technology and resources.
Shifting to Shared Services with Outsourced Services Support
Efficient scanning is critical for automotive dealerships because the scanning of a car deal drives
commissionable pay. Also, dealerships need staffing flexibility to handle volume fluctuations. Similar
to other automotive retailers, 40 percent of AutoNations monthly sales occur in the last three days of
a month. By working with an outsourced service provider such as SourceHOV, they are able to handle
those surges in volume as well as have access to staff that is equipped to be successful scanner and
quality assurance team members.
Ive measured the cost of processing and metrics of associates for two years and weve made
dramatic improvements, said Berney. When I look forward, I say how much better can I get on my
own versus the cost of outsourcing? I have taken advantage of the opportunities I have with shared
services and to get to the next level and a 30 percent decrease in cost, I really need to get it with an
outsourced solution.

hile SourceHOV has global operations and distribution centers located throughout the world, they
ts payable invoices every month, and they
are


y is able to
once you understand
what you have, you can put the wheels in place to improve and have better control, said Berney.





W
also offer the flexibility of onsite support. AutoNation chose to have their outsourced solution located
in their facility for both cultural and process reasons.
For example, the company processes 170,000 accoun
need to be processed swiftly. Invoices come from 26,000 different vendors who supply parts for
service repairs. The parts and invoices are sent to the individual dealership locations and invoices
then forwarded to the shared services center for processing. Dealership service centers are measured
on the throughput time it takes to get a customers car in and out of the center, which requires timely
processing of invoices. Insurance companies will not team up with a dealership that cannot meet its
throughput goals so its imperative that invoices get scanned and processed promptly. Also, customer
satisfaction scores are tied to incentive dollars and without positive ratings, the companys ability to
expand and purchase more retail locations is limited. Outsourcing enables AutoNation to meet those
performance goals and ensure invoices are scanned and processed in a timely manner.
With SourceHOV providing an efficient mailroom and scanning environment, the compan
use its internal resources more effectively and further improve processes. By having a centralized and
efficient shared services operation with outsourced services support, AutoNation is able to gain more
insight into its payables and identify other cost saving initiatives. SourceHOV is also able to provide
line item detail of invoices which enables AutoNation to identify other purchasing opportunities such
as where they can consolidate vendors or achieve discounts on purchases.
We have been able to make incremental improvements in our processes and
There really are all kinds of creative ways to take advantage of a shared services operation. By
merging SourceHOVs outsourced solution with our in-house requirements we have been able to
improve service levels, implement best practices and drive continuous improvement.