Benchmarking: Preparing to be at the Top of Your Game
July 14, 2011
July 14, 2011
Benchmarking may best be defined as: A Method of measuring performance against established standards of best practice.
For our purposes, benchmarking is used to compare a repossession sales process against the metrics of quality, time, cost and sales results. In essence, benchmarking is about finding and implementing a best practice with tangible data to support the decision making process.
What are the benefits of Benchmarking?
Successful benchmarking can result in changes in performance and innovation, improvement in quality and in overall productivity improvements.
- Benchmarking can raise the attentiveness to performance.
- Benchmarking facilitates learning from others and a greater confidence in developing and applying new methods.
Benchmarking is a powerful management tool because it can overcome the mode of thinking that says, “The way we do it is the best, because this is the way we’ve always done it.” A type of benchmarking that is particularly appropriate in the repossession re-sell industry is one that evaluates a process and its results against industry standards. By knowing what works, the credit union can compare its progress against industry standards to find flaws in its strategy. In “process-benchmarking,” the credit union would focus its attention on the goal of identifying the best practices from established industry standards and leaders. When outsourcing is a consideration, an additional objective will be to look at cost and efficiency standards.
Here are some measurement opportunities that will make a difference in repossession sale performance:
1. Sale Price: Are you getting market value?
- Compare the desired sale price to recent auction sales for an identical unit using MMR or PAR. Be sure to consider: year, make/model, equipment, mileage, and damage.
- Compare the desired sale price to more than one guide book, i.e. NADA, Black Book, Kelly Blue Book. Be sure that you are using the commercial, not public editions.
- Compare sale types, such as auction, repo agent sale, or retail lot sale. Be sure to keep track of net expenses and the time involved from repossession to sale.
2. Unit Condition: What is the condition of your repossessed portfolio?
- Average reconditioning estimates? This will identify the condition of the units, i.e. poor/fair/average.
- Average year, make and model of units being sold. Newer units tend have a higher risk and to take larger sale losses.
- Average mileage of units sold. This will help in comparing unit condition to overall sales prices.
3. Efficiency of Sale: Is the venue supporting efficiency? Look at these items very carefully:
- Cost of sale: calculate all fees to sell the unit.
- Time to Sell: this is the number of days from repossession to liquidation. Depreciation is normally calculated at 1-3% per month.
- Average credit union staff hours per unit sold: keep track of how much time is spent per unit sold, especially the amount of time spent in follow-up to original instructions.
No matter what portfolio size you are liquidating, it pays to compare your process to industry standards and look to industry experts for guidance.
About Repo Remarketing Repo Remarketing provides a trustworthy bridge to recover and liquidate inventory efficiently using proven industry standard principals with advanced technology, adapted expressly for credit unions.
Questions? Contact Sales & Marketing Associate Craig Reed: 206.340.4789, email@example.com.
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