Mastering the Work in Process (WIP) Schedule

Sheboygan and the Brewers 0:00

Steve Shaw: Dave Rogers, what's happening? What's on your mind today?

Dave Rogers: My friend Steve Shaw, how are things with you?

Steve Shaw: Dave, I'm in Sheboygan, Wisconsin. Sheboygan. I know, man. It's great. I had two great training sessions today. Pretty awesome people up here. You know what they say about Illinois: there are two parts of Illinois, Chicago and the rest of the state. I think Sheboygan has two seasons: the Fourth of July and the rest of the year.

Dave Rogers: Wow. So where is Sheboygan?

Steve Shaw: Just north of Milwaukee.

Dave Rogers: Just north of Milwaukee. So you're up there in the Green Bay-ish area.

Steve Shaw: A little bit south of Green Bay. I'm looking around here wondering, where are Laverne and Shirley? That's what I want to know. I'm trying to find Laverne and Shirley and take my brewery tour. But I keep asking these characters, "How many of you guys are excited for the Cardinals?" and they give me the finger. They're all about the Milwaukee Brewers.

Dave Rogers: Of course they are. It's amazing. You get into Green Bay and Milwaukee and all that, and they live and die by their sports. You go to Green Bay, it's drinking and Green Bay Packers football. That's it. There's nothing else going on in that whole place. It's great. I love it.

Steve Shaw: It's funny. They're making fun of the Chicago Bears, and I'm like, "Hey, you can make fun of them all day long, because they're not even on my radar." The last thing I know about the Chicago Bears is William "the Refrigerator" Perry. That shows my age, or what I care about. I'm hoping to get down to St. Louis and see the season opener if I can. Just pop into Busch Stadium. I'm hoping I can make that happen.

Dave Rogers: My God, 1985 you're talking about. That's great. You should.

Steve Shaw: So that's what's going on. What's going on in the car business, in the real world?

When in doubt, close it out 2:18

Dave Rogers: Well, I had a conversation the other day that got me thinking, and hopefully this isn't the whole car business. I'm running into a mindset, and I ask you this because when you were in the trenches as a manager, we lived and died by the end of the month. My expression used to be, "The only good RO is a closed RO."

I had a conversation with somebody the other day, and they were hemming and hawing about it, and I just blurted out, "When in doubt, close it out." And I started thinking, where has that gone? It seems like everyone's so timid now. At the end of the month, we'd be there at 11, 12 o'clock at night closing our ROs. You used to do that too, right?

Steve Shaw: Oh my God, heck yeah, man. I think I told the story. You sit there until every repair order is closed. You do not go home until every repair order is closed. That's just the deal.

Dave Rogers: And you'd at least touch every RO. We used to go through and physically touch every RO. I used to highlight it yellow, or whatever color it was, so you knew you touched it. The next 30 days, if it was still open, you knew from the color it was open at the end of last month. Every once in a while you'd have one with two highlights on top, so you knew that was a real problem car.

The thing was, you didn't go home until you touched every single RO. I didn't care if you had five advisors or one advisor. And I just don't see it anymore. Maybe we'll get some folks on who can tell us why, but I just don't understand where the urgency has gone. It's driving me crazy.

"Do you think I can fire you?" 4:02

Steve Shaw: It's money, right? I'm hungry. I want every dollar I can get. And I have some funny stories about work in process in my life. Boy, we could get off on a real tangent. Let's just say I was new to AutoNation. I'm a pretty solid player, and any RO over five days had to be answered for. I was always on it, on it, on it. And this guy calls me up one day, and funny enough, John's probably going to listen to this. I'm a young man starting to work for AutoNation, it's the last day of the month, and he goes, "Hey Steve, how's your work in process?"

And I do not do well with people asking me questions about my business. I'm like, "What do you mean?" He goes, "Well, I just wanted to know if you're going to get your tickets closed." And I'm like, "Bro, I've got better things to do right now, like close freaking tickets, than to listen to you give me a bag of shit." I was in Southern California, and he was in the Valley. As the crow flies, it's probably 50 miles, and if you drive it normally, it's a couple of hours. I've got to tell you, in about 30 minutes this MF'er was in my office. He flew down the 405. He sits me down and says, "Steve, do you think I can fire you?" And I go, "Well, John, I'm pretty sure you can, but there's a man over there in that office whose title is general manager, and you'd have a hard time getting around him."

That set him and me off on this path. I was a good manager, a good director. That was my store, and we were doing a serious amount of money. But he and I had words. We're really good friends to this day, and every time we talk or see acquaintances, my thing is, "Hey, ask John about his work in process." It's become standard. When we were young, it was a measuring contest over who was going to run the show. It became a joke, but we both knew after that moment there was never going to be a problem with my work in process. I was closing tickets, man, because that's what we did. We didn't allow that stuff. But I guess even back in the day, closing repair orders wasn't a priority for everybody.

Revenue is recorded when the work is complete 6:52

Dave Rogers: I had a great mentor, man, and the impact of that was: close your ROs. E.J. was an animal about it. And it was funny, because I was with a public company for a lot of years, and back in the early 2000s, probably after WorldCom and Enron, things started getting a little more by the book. There were internal auditors and all kinds of other stuff.

I was one of those geeks who read the accounting policy and procedure manual for the public company, and the 10-Q and 10-K statements they released quarterly. I'm reading one of them one time, and it says we record the revenue when the vehicle is delivered. Then it said when the parts are delivered. And then it said when the service work is complete. That's what it said: complete. It didn't say paid for. It said complete.

So I took that as a license to slam every RO if the work was done. I just did. Sometimes I'd leave one open if I wasn't quite sure the customer was legit. But for the most part, if the work was done, I slammed it. Like I said, the only good RO was a closed RO. That's the way I always felt.

So I get an internal auditor who comes in and questions why I closed when I closed at the end of the month. I said, "The work was complete." He's like, "Well, where'd you get that from? The car wasn't picked up yet." I said, "No, it's still here. We have a cash clearing schedule. When the guy comes and pays, we'll collect the money." He's like, "But it wasn't paid yet." I said, "Well, this statement you publish online says when the work is complete."

That spun his head. He had to get on the phone and have a conference and everything else, and he comes back: "Well, you're right." And all of a sudden it became the norm: "How come you left that RO open? How come you didn't close it?" They flip-flopped as soon as they realized what they'd written. But that was the way I grew up. I didn't know any different. Now I get people who just don't seem to get it, and it's hard to explain. Do you make too much money as it is? I just don't understand that mindset.

The daily parking lot walk 9:36

Steve Shaw: Well, farther along in my career, shortly after I left the publics, I went back into a private store, a small store, and I can tell the story because they're not around anymore. It was called Crenshaw Ford, in downtown LA. We were a tiny little Ford store, and it was one of those places where you had to pick up every penny. You did not leave stuff open. We were a single-point Ford store, probably 20 techs. I was service director, I had all my guys, and I started this thing, and I'm going to tell you, this is fucking rock star shit right here. We did a parking lot walk every day.

I started walking the parking lot with my work in process and my advisors, and we literally touched every car. I want to know why this car is open. I want to know where the parts are. And I had my markers, the paint pencils like the body shop would have, the grease pencils, and I wrote the date the car came in on the window, and every time I touched that car. I was militant with my guys.

Dave Rogers: Just like the body shop.

Steve Shaw: Just like that. Every day we touched cars. That was the only way I found. People got tired of answering questions. I'm going to pester you and beat the crap out of you every single day until this ticket is closed, until the car is gone. So you'd better just close your shit and make it go away, because if not, you have to answer to Steve.

And I love the parking lot walk. I love the inventory walk. I swear to God, if you hire me as a consultant, I will walk the parking lot with you, and I don't care if it takes me all day. One, I'm getting paid. Two, I'm going to touch every car in your parking lot. That's how we found out that a buddy of mine had been taking a car home every night for a year. I'm like, why is this car open for a year? Why is this ticket open for a year?

But then you have to ask yourself, and I hate to say this, I'm a service director doing this, but in the dealerships it's not only us as directors. We have our GMs, and let's just say hypothetically they're not supposed to know, but I would say they should. We have a lot of layers of people, the bean counters, our controllers, and I cannot imagine in my career that an accountant or a controller would accept a ticket open for more than five days. God forbid there was a special order part or something open 30 days. That was an act of Congress, and you had to report on it. The people above me were militant on me, so I had to have answers. If I'm not doing my job, there should be a bean counter, somebody tracking that above me.

And even to that respect, if I want to throw my hat in for the tip of the day: general managers, look at your work in process. The couple of guys I worked for growing up in the business, I had one guy who was an ex-Ford rep, Gary, who was actually really good, and then my buddy Jeff, who I worked for most of my career. We weren't fooling around. They would not accept me having that stuff, so I couldn't accept it from my people. That's how I learned. And I think that accountability piece is just gone. Why, I don't know. Why aren't the people in positions of authority on the money side, like your auditors, coming in and asking, "What's going on with these tickets?" It's almost criminal to me to have open tickets for that long.

Dave Rogers: I like how you did exactly what I used to do: you made your way the path of least resistance. You're doing those lot walks, people get tired of it, so what do they do? They start closing tickets. They start calling the customers to get the cars off the lot. Even though it's not the easiest way to do things, your way becomes the path of least resistance, because otherwise you're going to be crawling up their butts.

A car open for a year, and a car that disappeared 13:30

Dave Rogers: When I first started in Jersey City, and you'll hear me mention it because I spent six years up there, I used to tell everyone it was like dog years: I got 60 years of car experience in six years. The first store I was in had five franchises in one building: Nissan, Subaru, Isuzu, Volkswagen and Hyundai. I had 23 techs and five advisors, and I was the service manager. The guy whose place I took, they demoted to service writer. So you know how well that went. This guy lasted about six months, maybe not even, and then he blew up and left.

He was handling the Isuzu and Subaru stuff, and two weeks before Labor Day, I'll never forget it, I get a phone call from a lady who says, "My name is Ms. Rodriguez. You've had my car there for a little over a year." I'm like, "I don't have an RO open for a year. I would know that." I said, "Give me your name. Tell me the story." She says, "My car has been there a year. I paid $3,000 to get a wire harness put in. When I picked up the car, the check engine light was still on, and you haven't fixed it yet. I haven't gotten a call. I'm going away for Labor Day weekend, and when I come back, I want to pick up my car."

OK. I got her name and everything else, and I said, "By the way, what have you been driving for a year?" "One of your loaner cars." Now, I'd been there maybe three months. I didn't even know I had a loaner car out. So of course it turns out the guy whose place I took had been handling it. I go pull her file, because there's no open RO on her car, and her file is four inches thick. There are ROs written every month and closed every month. Open and closed, open and closed. Some policy, some small dollars, sometimes nothing. Always for the same thing, check engine light on. This guy had been doing it since way before I got there.

So I go to the mechanic and say, "Where's this car?" He goes, "Let me show you." There was a shed down the street, and the car is completely disassembled. It's dusty. Nobody had touched it in months. He says to me, "Honestly, this lady's fucking crazy." Oh, she's crazy? We've had her car for a year, we charged her $3,000, and she's crazy? He'd been using it as a parts car. It was a nightmare. So I make him bring the car back, and we put it back together and start it up. There's no check engine light. We drive it for three or four days, no check engine light.

So I send it over to detail, get it cleaned up, park it in the lot, and call the lady and leave a message right before Labor Day: "Your car's done. Call me, come pick it up." Fast forward: the day after Labor Day, I get transferred across the street to a different dealership. There was a reshuffling going on. The new guy calls me up and goes, "Hey, what can you tell me about Ms. Rodriguez's car?" I said, "It's done. It's right in the lot." He goes, "I've got her keys and her paperwork, but there's no car." I said, "Sure there is. Go look." "It's not there. The car's gone." The keys and paperwork were in the bin right where I left them, the RO, everything. She came to pick up the car, and the car was gone.

I said, "Well, I can guarantee you that mechanic probably had an extra key. He stole the goddamn thing." And he goes, "What do we do?" I said, "Well, she's been driving our Subaru for a year. I looked in the computer, and she's brought it in three times for oil changes. She's treating it like it's her own car. Why don't you just give her the Subaru and call it a day?" And I got back in my car, drove across the street, and said I'm done with this thing.

But I laugh, because this guy was milking the system with work in process. He was smart enough to keep it off the radar at the end of every month, so you didn't know about it. And Rodriguez was like Smith up in Jersey City, so you weren't going to notice a Rodriguez on the open RO list.

Open ROs and parts invoices are a license to steal 18:47

Steve Shaw: Nothing good comes out of an RO open over 30 days. I don't care how you slice it. I don't think we aired the episode yet, I think it was back in December, where we talked about when I started at that dealership in San Diego. My first day, I'm sitting there watching these guys on the last day of the month, and they close a thousand hours. And I'm like, "What the F are you guys doing? Not on my watch." And sure as shit, 30 days later when I took over, on the last day of the month they're closing tickets. I'm like, what are we doing? I thought I was on it. These guys sandbag shit.

It is day to day, every single day. You've got to grind it out on that fucking work in process, or you're out, man. That's why John and I laugh all the time now. We've become good friends, and he actually took over one of the stores I was running after a while. But if you're not on that work in process every single day... And how many people do you catch stealing because of an open ticket? I guarantee you there's something shady going on with that ticket.

Dave Rogers: Oh yeah. Same with parts tickets. I'd tell everyone to run your open parts invoices. You could have an open ticket for whatever, throw an alternator on there, walk out the door with the alternator, sell it to someone else, put it in an employee's car. Check your open parts invoices near the end of the month, or even mid-month, for the same thing. It's the easiest place to steal.

Think about it. You've got an open parts invoice for Fred's Garage down the street. There are three parts on it, and it's not invoiced. I throw an alternator on there, take the alternator home and sell it. Somebody goes to close the ticket and tells Fred's Garage, "You owe me for an alternator." "We didn't buy the alternator." Who's going to prove what? It's definitely a license to steal, both of them, open ROs and open parts invoices, because anybody can charge a part out on them. Anybody. I can hand one of your technicians some belts for a side job and charge them to an open RO. Who's going to know the difference?

Steve Shaw: At the high-line store I worked at in the Valley in Los Angeles, I had a pretty serious benchmark. It was like 700, 800,000 in gross profit. And I'm just telling you, I never missed it. I might have robbed Peter to pay Paul. At the end of the month, I was slamming tickets we'd just written. I've got an engine that just came in? Let's close that ticket, because I knew I had two or three days of wiggle room. As long as I could get the cash for that ticket within a couple of days, I'd never get caught.

So I'd close it on the 30th, and then I've got two or three days to collect that money. Nobody really ever knew, but all I was really doing was taking the money from next month and putting it into this month. They said you've got to hit 800 grand in gross? I'm at 800 grand in gross. If there was a bonus, if there was a number, I'm hitting it. And if it came from those tickets, fuck yeah. Excuse my French, man. We are closing tickets.

Dave Rogers: I think part of the thing is when you're overseeing multiple stores. When it was two or three or four stores, or even nine when I was at the auto mall, or when I was in Jersey City overseeing three or four stores, I could run from store to store to store and close things out. But when it's 30, 31 stores, you have to rely on your managers, and unfortunately a lot of times they just don't have the same fire in the belly. I wouldn't go home until I hit my numbers.

I wouldn't go home unless every RO was closed. Did I leave some open? Sure, in the public world. Did I ever close a ticket that wasn't done? Yes. Generally speaking, if the car started, I didn't care if the hood was on it, it was getting closed. It depended on the month. If I needed the numbers, I was definitely going to do it. I didn't go home until I knew I got everything out of that month. And working for that big box owner, we had two rules: we treated every day like RP was coming, and we treated every day like it was the last day of the month. And we still had our end-of-month crunches.

But years later, we weren't there at 11:59 at night. Did you ever do that? My first time closing ROs, I was in an ADP store in the late '90s, and it was one o'clock by the time we got done. I didn't know everything after midnight didn't count. I had no idea. I spent an hour there and then found out it went into next month.

Steve Shaw: One of these days we're going to interview my buddy Kanan. He was an advisor of mine who's now a vice president. He might be watching. I'm going to ask him, because he was one of those guys who would do the shuffle. He'd manipulate shit and hide stuff from me, and now he's a VP with five stores. I can't wait to ask him whether he holds his people accountable on work in process to the same standard I tried to hold them to. Because if you let it get out of control, and it doesn't take much, it will bite you in the butt.

Farmed tickets, torn ROs and old warranty money 24:26

Dave Rogers: I tell people, the longer a car sits on your property, the less satisfied the customer is going to be. I went to a Mercedes store one time where they had a habit of adding lines to every car that came in the door. They were farming the tickets. There was a used car ticket with lines going all the way to QQ. I think it was ADP, so the lines go from A to Z and then double letters. Any TSB that applied to the vehicle, they put on the ticket. It had been open for like a year.

When you first come in, you start cleaning things up, and you have some good months. So I look at it and ask, "Why is this ticket still open?" Well, the warranty had expired. This ticket was 20 or 30 grand, some stupid number, and there I am begging the rep, "Can you cover part of it? Can you help me out?" They'd added on so many lines. It was probably a nine-month-old ticket sitting in the shop with 20 grand on it, and this was an everyday, common thing.

You'd come in for an A service, and they'd keep it for three weeks because they were adding on all these TSBs. And they couldn't figure out why they were in last place out of 28 dealers in CSI. Think about it, guys. You bring your car in for an A service, they keep it three weeks, and you get it back with 15 lines on the RO about everything wrong with your car, and it's only one year old. I talked to the GM overseeing those two stores: "Does anybody look at the open ROs?" Nobody. Nobody was looking at it. A lot of bad stuff happens with open ROs. It really does.

Steve Shaw: My brain is on fire right now. Is it the theft? Is it not knowing? There are so many things about an open RO list. And I'll tell you this. My first job as an advisor was handwrites, at a teeny tiny Toyota store, Toyota and Dodge back in the day, two Toyota techs and two Dodge techs. First job, no one taught me anything. They just said, "Go write service." A guy was asking me questions, and I screwed up the ticket I was writing. So I tore the handwritten RO in half in front of the sales manager, thinking I'd just write a new one. I did not know they were sequential, that you had to void it out and do this and that. He looked at me and said, "Do you often tear up repair orders, Steve?" And I'm like, "No, I've never done that before, and I'll never do it again." I didn't know the handwrites were sequentially printed or what people did with them. I was a kid, 19.

Dave Rogers: That's funny, because my controller used to come back on the 15th or 10th of the month with her number list, lines through it from 00 to 100, looking for missing ROs she hadn't processed yet. She'd want to touch them all in my office if they were still open at the end of the month. I forgot all about that, but that's what they used to do with handwritten ROs, because yes, you could charge somebody $500, put the money in your pocket, rip up the RO and call it a day.

Steve Shaw: Yeah, I had no idea. I was a kid. I wasn't doing anything malicious. But thank goodness for the controllers, and that GSM or general manager certainly educated me, in a not-so-nice way. There's a control we have to follow, and I guess it's lost. That breaks my heart. I've seen clients of mine, who I won't name, go through terrible situations with warranty tickets open for months and months, and then they can't get paid. One store, Dave, I'm going to tell you, had a million dollars in warranty at a Hyundai store that was over a year old. And they're asking, "How do we get this money collected?" Not only was the manager doing it, there was a general manager not paying attention, and a high-level VP not paying attention. How many levels of not paying attention does there have to be?

I don't do a lot of consulting anymore, and people rarely share their finances with me. But as a consultant, I would look at your receivables, your open repair orders, all the things we learned from the publics, and I'd do that as an audit for myself, then take a deep dive and audit those tickets. It is a lost art. And you're right: if the manager's not on it, and you've got 30 stores you have to look at, how do you keep control over that?

GM tip: read the open RO report, then take the hill 29:49

Dave Rogers: I run the open ROs. I spot-check. I can't look at all of them. In CDK I can run operational reporting and pull them all, which I usually do toward the end of the month, take a look at the oldest ones and highlight them. But it's amazing to me when I dive into a store and look, and I see employees' names.

Honestly, that would be my tip of the day for a general manager: make them give you the open RO report, and peruse it. Look for employee names and how long they've been open, and look to see if they're pre-invoiced, because that's an easy way for people to create their own charge accounts, or to pay late. It's like Wimpy said: "I'll gladly pay you Tuesday for a hamburger today." I'll gladly pay you for the work in the future. I see it all the time. I ran an open RO list today, and I noticed an employee from another store. Sorry about that, text messages.

Steve Shaw: We just make this stuff up as we go along. We're not scripted.

Dave Rogers: No, no. But I really do believe you look at the list, look for employee names, and look for ROs over five days, like you said. That would be my tip of the day. Again, today I saw an employee from a different store on a pre-invoiced ticket that just wasn't closed, so I assume they didn't pay. It was on a Saturday, and they took the car home. Now you're thinking, "Oh, Jesus, how much is getting stolen out of the stores every month?" But I just don't see the aggressiveness, and I think that's where it came from. We were aggressive. We wanted to make money. We tried to close every RO, and the problem kind of took care of itself. You didn't have to worry about open ROs, because you were aggressive and slamming everything.

Steve Shaw: Right. Hypothetically, if something went past five or seven days, you always knew that at the end of the month it was going to be clean. We would ring out every stinkin' repair order on the last day to make sure we got the money. I just don't know any other way. I think that's what the business is all about. Our dealers really do allow us to run our own business, and they expect us to take care of their money. This man has entrusted me with his money, and at the end of the month I'm going to give him his return. No matter how you slice it, by hook or by crook, if he wants this million bucks, I'm getting it, man.

Dave Rogers: Now, I know you mean "by hook or by crook" in a nice way.

Steve Shaw: Yeah, I'm using the saying. No matter what.

Dave Rogers: I used the same expression. Whatever it takes to get the job done, that's what you're going to do. And I think that's the message. The end game actually takes care of the middle. If you're slamming the ROs, going for the money, going for the gross and not leaving any stone unturned, those little things take care of themselves. You're not going to have to worry so much about open ROs, because you know your guys are on it. It's funny how I was trained. It's probably very similar to how you were trained.

Steve Shaw: Somebody kicked our ass at some point in life and said this is not acceptable.

Dave Rogers: Shoot first, ask questions later. That's what we were told. Slam first, ask questions later.

Steve Shaw: Listen, we were given a goal. We had budgets, we had forecasts. Even in my Saturn days, with all the spreadsheets, we knew how many hours we were going to produce a day and how much gross we were going to make. I remember when I was in St. Louis at Saturn of West County, my first job, Jim, my mentor, told me, "You need to get this store to a hundred thousand dollars in customer pay gross profit. Once you get to a hundred thousand in CP gross, I might take your training wheels off, kid." So I had a mission. I've got to get to 100K in customer pay gross at this teeny tiny Saturn store. How do you do it? We went after it. We had a goal, we had a mission, and we knew what the tasks were.

I have a buddy who was a sniper in the Marines. His name is Chuck. Whenever I give him a job to do, I tell him, "Chuck, take the fucking hill, bro." He knows what that means, because he was a Marine. "The hill for you today is this. The hill for you this month is this. So take the fucking hill, bro." And I walk away and let him go to town. Let him have his way. And he did. You've got to have that with your guys. They've got to know what the mission is, and at the end of the month, get out of the way and let them go. "Did you take the hill?" "I took the hill, bro."

Dave Rogers: I talked over the weekend with my good friend and comrade Joe C., who works for Penske as East Coast fixed ops. We were in the trenches together. He said he's been listening to our episodes, so Joe, if you're listening, reach out. We're going to get you on. We had some good times closing ROs and doing the same exact thing, setting objectives.

Steve Shaw: Take the hill.

Dave Rogers: That's a great line, take the hill. Let's wrap it up. I gave the tip of the day. I just think we need that fire burning in people. There are a lot of dealers who probably do have it, and I congratulate you, I really do, because I lived that life and I loved it. There was nothing better than slamming at the end of the month. When I had the nine stores, I used to walk around and ask, "Are your fingers bleeding? Let's go, let's go." I think we need more of that. That's going to be the mantra for 2026, man: I want to see blood on the keyboard.

Steve Shaw: That's the car business right there. I'll get you a good attorney. All right, we'd better get out of here. I'll talk to you later, Dave.