Written By: Alysha Webb
The DMS is the heart of dealership operations, and dealerships should be intimately familiar with how to use the system and fully utilize its many features. It plays a critical role in helping a dealership remain compliant and maximize profits.
Nonetheless, DMS reporting gaps and data entry inaccuracies are two of the most common issues that result in profit leaks at dealerships. On top of that, many useful DMS features are often overlooked.
A recent Rosenfield & Co. webinar, “How to Leverage Your DMS to Correct Hidden Fixed Ops Risks, Reporting Gaps, and Profit Leaks,” addressed how to ensure a dealership is utilizing its DMS to the fullest extent. It also explored how underutilizing the DMS can create operational gaps that negatively impact dealership financials.
Panelists Corey Coler, a supervisor on the product management team at Reynolds and Reynolds, and Adam Rosenfield, CPA and partner at Rosenfield & Co., shared insights from both the DMS provider and accounting perspectives, offering a well-rounded look at how dealerships can better leverage their systems.
Preparation, Implementation and Monitoring
Preparation is “setting you up for success once we hit the ground, and a big piece of that is making sure everything is mapped, configured and set up appropriately.”
Reynolds’ partnership with a dealership includes three areas: Preparation, Implementation and Monitoring.
Before Reynolds earns a dealership’s business, it conducts a deep dive into that potential client’s operations, Coler said. Preparation is “setting you up for success once we hit the ground,” he said, “and a big piece of that is making sure everything is mapped, configured and set up appropriately.”
In the fixed ops department, Reynolds works closely with parts, service and accounting teams, employing its “small army” of advisors to ensure areas such as sales tax and shop supplies are configured correctly.
That includes, among other things, ensuring the correct tax system is applied for the appropriate state and that all parts are charged to the proper accounts, Coler said. That’s crucial “so you don’t have profit leaks where stuff is getting lost or you’re not accruing it to the appropriate accounting,” he said.
Reynolds also works closely with parts management to make sure the pricing matrix is “dialed in,” which is imperative because it impacts every single part on every service repair order and parts ticket, Coler said.
That ensures every bit of profit makes it to the ticket or invoice and, ultimately, the dealership’s bank account.
One “really cool feature” in the Reynolds DMS is a retail part markup option that rounds up prices ending in small increments such as $0.97 or $0.99 so a dealership captures that additional margin. For higher-volume parts, “that can add up to big money,” Coler said.
On the implementation front, a Reynolds philosophy is to use a single-system approach to help ensure all components are part of a cohesive suite. Whether it’s parts, service or a specific fixed ops solution, Reynolds’ team ensures everything is set up for proper reporting, Coler said.
That includes eliminating the ability to skip important steps such as the Multi-Point Inspection. If that happens, “your reporting is absolutely going to be inaccurate. And if you’re not reporting properly, it’s going to make it really hard to try and make the right operational decisions,” he said.
Reynolds encourages every store to implement a Service Price Guide that allows a dealership to tie parts and labor information together. Dealerships that use the SPG diligently can see up to 80% higher total gross profit growth annually, Coler said. “So it’s a pretty profound impact,” he said, “that can help not only improve efficiency, it also helps reduce or remove liability by ensuring consistent pricing for customers.”
It also helps maintain profitability because everyone is using the same pricing structure rather than making exceptions or offering inconsistent pricing, Coler added.
No matter how well a system is prepared and implemented, if processes and tools aren’t used consistently or properly, problems will arise. That’s where monitoring comes in. Coler recommended running standard reports available in Reynolds’ ERA-IGNITE web-based DMS.
Some particularly actionable reports include Effective Labor Rate and Upsell Analysis, Coler said. The ELR report not only allows a service department to see the profitability of each hour sold, it also shows what is actually being collected per hour.
That level of detail helps departments identify small, incremental changes that can increase ELR. When people know they are being monitored, it also spurs them to make sure they’re keeping their ELR up, he said.
The Upsell Analysis report shows the number of recommendations each technician is making and highlights how effectively service advisors are closing those opportunities. “So, this report allows us to key in and see, are we presenting things right or are we closing the services that are offered,” he said.
AI Helps In Monitoring
The data analyzed in the Upsell Report is a great example of the importance of good, or “clean,” data versus dirty data, Rosenfield said. For example, an advisor with a very high closing percentage may only be entering the upsells that he or she closed. On the flip side, an advisor with a lower closing percentage may actually be generating the highest number of completed upsells overall.
Rather than focusing solely on closing percentages, it’s important to look at total performance and understand what’s driving results. In some cases, the advisor with the lower closing rate may be the most effective at identifying the right opportunities and communicating value to customers. That creates an opportunity for management to dig deeper, understand that advisor’s approach, and share those best practices across the team.
Monitoring also helps determine if a dealership has strong internal controls in place, Coley said. For example, one store discovered that a service department employee was taking cash from a customer, then voiding or leaving the repair order open and pocketing the money.
Reynolds recently launched an AI virtual assistant called Rey that can generate reports such as the top five open repair orders by gross or the 10 oldest tickets. “Or hey, here’s an insight. There are 10 repair orders that were open overnight that really should have been closed, right?” Coler said.
How Well Are You Leveraging Your DMS’ Capabilities?
"The DMS is where all of all the data goes, it's where it's all gathered and what we use to interpret and run the business. And with that, whenever any of us are in a dealership, what we tend to see is that it's one of the most underutilized tools that a dealer actually has at their fingertips."
When Rosenfield & Co. works with dealer clients, it often finds that one of the most underutilized tools at their disposal is the DMS. “They’re always trying to find the next new shiny toy, and they’re trying to implement this new CRM system, or this or that, instead of just focusing on hey, what do I already have?” Rosenfield said.
The bigger issue, he noted, is that dealers often chase new technology before fully realizing the value of what they already have in place. On average, it can take two to three years to fully implement a system and begin seeing a meaningful return on investment. Constantly switching to the next platform can prevent dealerships from ever capturing those efficiencies.
Clean versus dirty data is also a challenge because many fields in the DMS are manually entered, increasing the likelihood of inconsistencies.
Rosenfield also outlined several key terms commonly found within the DMS.
Unapplied labor means a dealership has paid a technician, but that labor is not attached to any Repair Order, or to anything else. “So, you have paid somebody and gotten no work and no benefit,” Rosenfield said. “If that becomes a very large number, that is a clear sign that something is wrong.”
Dirty Cores are used parts that are removed from the vehicle that are going to be reimbursable. Parts Pad is the parts module of the DMS, basically a dealership’s perpetual inventory system, Rosenfield said.
Another critical metric is Units in Operation (UIO), which represents the number of registered vehicles within a dealership’s market area. With the average vehicle age reaching 12.8 years in 2025, according to S&P Global, this number continues to rise.
UIO should be seen as a key indicator that dealers need to refocus on fixed operations. An older vehicle population typically translates to increased service and parts demand, creating opportunities for dealerships to better align their operations with market needs. “I don’t know anyone who has a 13-year-old car who does not need to keep bringing it in for some issue that’s going on,” he said.
This also ties into inventory movement. By understanding what vehicles are on the road in surrounding areas, dealerships, especially those within a group, can shift parts inventory between locations based on demand. For example, if one store is seeing slower movement on certain parts, those items may perform better in another market with a different customer base or vehicle mix. As with vehicle inventory, aligning parts with local demand can improve overall efficiency, though dealers should confirm any applicable sales, service, or framework agreements before making those moves.
Policy expense is another area that is often misunderstood. Dealers may assume it functions like a discount or coupon, but policy expense is not reimbursable. “This is coming straight out of your pocket to be absorbed by the dealership,” Rosenfield said, making it critical to monitor closely.
Sublet refers to service or body work performed by an outside vendor. It is important to monitor this outsourced work as a percentage of total service, as it represents lost internal revenue. “It’s better than just losing the job completely,” he said, but not if a dealership has a high sublet number.
“You might want to check if that number is too high,” Rosenfield said, “because maybe someone in your service department is getting kickbacks from someone down the street.”
Work in Progress (WIP) refers to outstanding labor that has been flagged on an open repair order. “You have paid the tech for this work. It is still attached to a repair order, which is why it’s different than unapplied labor, but the RO is still open at the end of the month, and this does cause a lot of problems,” he said.
Open repair orders can also become a compliance issue, Coler said, because the vehicle may still be in use. If it is involved in an accident, “rest assured, on discovery the attorneys are going to look for that,” he said. “And say, ‘how come you had a repair order that was open on this vehicle? Is that why it was unsafe to drive?’”
Dealers should reconcile Work in Progress monthly, and it should be part of the controller’s closing process. If there is a credit balance on the balance sheet for WIP, Rosenfield said, “it should be theoretically impossible to have a credit balance.”
Special order parts are another area that “can get out of hand very, very quickly,” Rosenfield said. Dealerships should have processes in place to ensure customers return for those parts once they arrive.
These are all part of the setup and mapping function of a dealership’s DMS.
Ultimately, the DMS is more than just a system for tracking repair orders and transactions. It’s a powerful operational tool that, when used effectively, can uncover inefficiencies, strengthen internal controls and drive profitability. Dealers that take the time to properly implement, consistently monitor and fully leverage their existing systems will be better positioned to close reporting gaps, reduce profit leaks and make more informed decisions across their fixed operations.
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