One on One with Doug Betts, Senior VP of Nissan

Special to The Auto Channel
By Marty Bernstein
AIADA Contributing Editor

One of the most important acronyms in the retail automobile business – an industry so laden with acronyms it’s hard to understand some conversations – is CSI: the omnipotent, sometimes controversial Customer Satisfaction Index.

It’s the number most dealers live and die on. It’s the number that’s been known to make grown men weep if it’s low, or conversely, bring tears of joy and exaltation when high. It’s also the most misunderstood.

Contrary to most opinions, the showroom floor is not where dealers build their reputation or CSI. It’s through those big overhead doors at the back of the building that serve as the entrance to the much quizzical service department. This is where CSI lives or dies. Here’s where, if you’re a dealer, you get the marks you deserve.

And it’s the place that is receiving a monumental effort from Nissan to change operations, work habits, conditions and the overall efficiency of the process for the customer, the service technician and the owner of the dealership(s).

For Nissan, this project is being spearheaded by Doug Betts, Nissan’s senior vice president of Total Customer Satisfaction. A title that says it all, Betts is an engineer by education and training who joined Nissan almost three years ago after 10 years with Toyota, and prior to that, eight years with Michelin when Carlos Ghosn ran the American operation.

I had heard rumors about a new service initiative in pilot testing for Nissan that was based on – yikes – factory production line service and repairs that utilized techniques of industrial engineering management.

You know the first pre-computer geeks, pocket-protector guys with clipboards and stop watches. The adversaries of guys and gals on the line and the bane of those on piece rate work. The rumor was true. New techniques were being evaluated at several Nissan dealers around the country in a hush-hush environment.

Now, Betts does not sound or use the lingo of an engineer – not that there’s anything wrong with that. Rather, he is marketing focused and consumer oriented around the concept of total customer satisfaction.

MB: In today’s fiercely competitive automobile business service, repair, preventative maintenance and warranty work is just a natural part of the business. Something mechanical or electronic is going to go wrong sometime, right?

DB: Yes, but as our product quality has significantly improved, our dealers have told me their warranty work has gone down as much as 50% to 60% in the last year. So, now it’s very important the dealer be very efficient, professional and reliable doing maintenance work.

MB: Warranty work has always been a profitable component of the service business. What’s going to happen to the dealer’s bottom line?

DB: If we don’t help fill-up our dealers service bays with maintenance work to replace warranty work, it’s going to put a lot of pressure on them for profitability.

MB: Haven’t independent, non-factory repair facilities benefited when the warranty period is over?

DB: Yes. Quality has improved and that’s for both international and domestic namplates. Now, there’s the aspect of choice and there’s more competition between the dealers and another service provider. Result? Dealers are losing business and profits. And, that’s not very good.

MB: Is Nissan’s new service program a result of perceived need for dealer profitability and improved CSI?

DB: Both.

MB: What was the genesis of the concept? When, where and how did it start?

DB: The idea originated in Japan. The basic idea is that the service department could run more efficiently if there was input from the manufacturing side of the business.

MB: How do factories have more experience with auto repairs than dealers?

DB: Take a plant with two lines; cars are coming off the line every 26 seconds. When something goes wrong, it’s suddenly wrong on every car – plant operations are standardized. Before there’s time to make the problem go away, another car is coming off the line. So, he factory must be good and efficient at repairing cars under these difficult conditions.

MB: OK, that’s the problem. What was the solution?

DB: At the end of a line there’s not a huge repair area to put the cars in and fix the vehicles and move on. That’s why the factory service people can get so good at quick repairs because they are exposed to the way the plant works and functions.

MB: Sounds a bit like the old days of engineering time and motion studies.

DB: We are always looking for every tenth-of-a second in improved efficiency. There is a need to eliminate any time that is being wasted. Our factory repair teams are accustomed and exposed to this way of thinking.

MB: How was this concept imported to and implemented in the U.S.?

DB: We started over a year ago with a pilot activity that used people from the plants in Japan to go to dealers to study, analyze and work with them on service operations in order to find ways to make the operations more efficient.

MB: What results or improvements has the test program produced?

DB: In the pilot dealers, we found huge gains in dealer efficiencies. This has resulted in the dealers being able to schedule more work in the same day and make more money.

MB: How did their customers benefit?

DB: Faster service and limited delays. For example, if a customer called to make an appointment and instead of being told, “I can get you in four days from now,” he was told “we can get to you today or tomorrow.” That is an improvement.

MB: Has this program improved dealers ROI?

DB: In the same space, same time and with the same number of technicians they can fix more cars per day. This results in a higher margin for the dealer in its repair and maintenance service word. They make more money.

MB: What’s been the reaction from the dealers’ technicians?

DB: The technicians at a dealership usually get paid by how many cars they fix or repair in a day and what they do to them. So, the techs make more money because the efficiency comes from eliminating wasteful movement and steps which slow them down.

MB: Can you detail a few examples of improved efficiencies in dealers’ service areas?

DB: Some of the things that have been done are as simple as putting telephones at the technicians work stations so they don’t have to walk to the parts counter for what they need and want. They call and continue to work and then either go and get the parts which are already in an identified tray ready to go or someone brings parts to them depending on how it’s been worked out.

MB: Tell me about how the speed of a specific repair job has been improved?

DB: When doing a brake job, technicians usually go around the car to take off all the lug nuts; going from wheel one to wheel two to wheel three to wheel four. Then, they go back around to take all the tires off, undo the caliber bolts – which I used to do to because somehow it feels right but actually it’s not right. One of the basic tenants of industrial engineering we learned at the factory is the way the service job is done: if you’re at a position on the car, do everything you need to do at that spot before going to another position.

MB: How was this brake job improved?

DB: When the tech is at wheel number 1 and follows the process of taking off the lug nuts, then the tire, then the caliper, then the pads, and puts the new pads on and so forth in reverse order, that’s the fastest way to finish the car. Somehow, it’s more satisfying in one’s mind to progress on the whole car, but at the end of the day another mile has been added when it’s done that way. And that is not efficient.

MB: Can department organization and layouts be improved as well?

DB: Another way is identifying tools a dealer service department uses infrequently. If things are left to their own devices, when a specific tool or machine is needed and the tech can’t find it, he’s going to walk around and ask where it is, but maybe it’s at the Infiniti store next door. The new program takes intermittently used tools, machinery or equipment and assigns a specific spot where it is supposed to be and implementing process that identifies who has taken it and is using the tool.

MB: This sounds good, as long as the rules are followed…

DB: It seems like common sense, I know, and many dealers do it, but it is not as common or universal as it should be. Service people and management don’t always recognize what’s in it for them. They’re thinking, “I don’t want to go to the trouble of doing all of that,” but when an industrial engineer sits down with them and explains how much time and money has been lost, it becomes important. Basically, it prioritizes the process. Less time looking for stuff means more time to fix the cars, which means more profitability.

MB: What other steps have been used or considered?

DB: One of the things we’ve been able to implement is a system called, Assist, for the things that are or can be electronically diagnosed with computers. A print-out tells the tech what is wrong with the vehicle and what parts and tools are needed to fix it.

MB: How does this speed up the process?

DB: In dealerships that use Assist, the technician gets the print-out and goes to the parts department, which then builds a kit the tech will need to fix it based on the electronic diagnosis. When the tech goes to the parts counter or the parts are delivered to the bay, everything that is needed is there packaged in the kit.

MB: How does the process work on major problems that are baffling?

DB: Nissan has a tech line for additional support, which is staffed with engineers who are in the same location as engineers who primarily work in the field. It’s the place dealer service personnel can call if they’ve been stumped on solving a problem. We’re not unique with that, a lot of manufacturers have similar systems. Vehicles are so difficult now; especially with electronic issues it can be difficult… very difficult to solve some problems. There are six or seven or eight computers in a vehicle now and when a car doesn’t work, you don’t know which computer is the cause.

MB: Do you think dealers will pass any savings realized with Project SX along to the customer with reduced prices?

DB: I believe normal market forces will drive that decision appropriately, but that’s up to the individual dealer and since most of them are smart, they’ll figure out what’s going to make the most profit. If I’m able to fix a hundred cars a day in my store, but I only have 80 coming in; if I determine that if I lower my prices a little bit, I could probably fill up the other 20 spots – on the net, I’d make more profit and will probably do just that.

MB: What is the pilot program called? Is the test over and how many dealers are now using it?

DB: It’s called Project SX and it’s rolling out now. Over 50 dealers are signed up for it at this point.

MB: This is more than engineering efficiency theory isn’t it?

DB: Efficiency, at the end of the day, always goes to the consumer. It may take time, but it always does. Dealership owners expect a specific return on their investment. So, if the store starts to make more money in service, it provides the flexibility to be more competitive in another area. It can result in lower prices on service or in lower prices on new cars for the consumer. And this can generate even more business and profits.

MB: That’s a win, win, win situation for everyone, isn’t it?

DB: That’s what good efficiency is all about. Too many times the word efficiency gets a negative connotation; if industrial engineering is done correctly it is not about forcing people to work faster, it’s about making them work smarter and better. Efficiency is eliminating movements and things that don’t add value to the job, process or procedure. We are totally committed to this program. Today, it’s very important dealers be very efficient, professional and reliable when doing maintenance and service work. We think it’s very important to have a totally satisfying experience for the customer

Every Nissan dealer I’ve spoken to who was in the SX service pilot program is enthusiastic, indeed very optimistic about the potential results on a long-term basis. Changing engrained work habits is, at best, a daunting task. Overcoming objections, gripes, and complaints won’t be easy, but the implementation and refinements of a systemized, efficient service department operation will, I believe, revolutionize the business for the consumer. And, of course, result in total customer satisfaction. Let’s see what happens.