Feature June 1, 2011 by
Murray Voth, TACT (Total Automotive Consulting and Training)
The Productivity Challenge
Considering all the challenges a shop owner must face in a day, week or month, technician productivity ranks as one of the most difficult. Improving productivity is difficult not only because of the systemic obstacles we have allowed to...
Considering all the challenges a shop owner must face in a day, week or month, technician productivity ranks as one of the most difficult. Improving productivity is difficult not only because of the systemic obstacles we have allowed to infiltrate our shops, but also because of a lack of understanding of productivity, how to measure it and how to manage it. Many of you might say that you and your employees are very productive: everyone in the shop is working hard long hours and I would agree with you. How, you may ask, can we become more productive? That is because I need to clarify how I am using the word. I agree, for the most part, you and your technicians and service advisors are productive in the standard definition of the word. My definition of productivity is the percentage of time a technician is performing paid work on a customer’s car compared to their time available, the time they are present at the shop. If a technician is at work for eight hours, and works for six hours on cars, and those six hours are billed out, they are 75 per cent productive. So where did the other two hours go? Ordering their own parts, answering the phone, free test drives or free parking lot diagnosis, talking to customers (acting as a service advisor), driving vehicles in and out of the shop (if they are working on more than three cars a day), getting pulled off of jobs, etc. This industry has stagnated at 54 per cent productivity for at least the last 15 years, if not longer. Billing 4.5 hours a day seems to be a default setting for most shops. After training and implementation, we have many shops that average between 80 and 90 per cent productivity, the latter being the industry benchmark. A New Definition of Productivity In many cases, shop owners or consultants and trainers are the first to criticize the technicians. The first point we have to clarify is that productivity is primarily the responsibility of management and not of the technicians. Technicians are just doing what we have asked them to do, or do it because there is no one else to do it. We must take a look and actually see the obstacles we have put in the way of our technicians. For starters, let us remove answering phones, looking up and ordering parts, looking up labour times, writing up work orders and talking to customers from their duties. I guarantee that you will get at least one to 1.5 more billed hours per day. Who is going to do all that you say? Well, you are going to need to hire a service advisor. Well, I can’t afford a service advisor you answer. My accountant tells me I am already over staffed. Well, you cannot afford to not hire a service advisor, and yes you are overstaffed, but with the wrong staff. Most shops when they get busy hire another technician rather than an advisor. Hence their productivity never changes. Affording the Service Advisor In the previous paragraph I showed how you could gain 1 to 1.5 hours per technician if they did not have to perform service advisor duties. Using an $85 an hour labour rate, that would be $85 to $127.50 more revenue per technician. If you multiply that by three technicians, you end up with $255 to $382.50 per day in additional revenue. If you keep following me closely here, that is $5,355 to $8,032.50 more revenue per month. Assuming that your technicians are paid hourly or salary, there is no additional cost to you in technician wages. The question is; could you afford to hire a good service advisor for those dollars? If you are following the math trail I am creating, we have now achieved six-billed hours per day. We still have two hours to account for. Where does that time usually disappear in a day? Let me show you: waiting to find out what job is next, waiting for authorization from customers, waiting for parts, dealing with rust, corrosion and broken bolts that are not built into the estimate, performing diagnosis and inspections that are not charged for, performing too many low priced menu item services, for example. Another one is too much verbal communication through out the day trying to keep the day on track. Let’s unpack that last paragraph.
1 Technicians are waiting to find out what their next assignment is. A well-trained service advisor using proper systems and procedures will always be one step ahead of the technicians and have the work flow for the day laid out and prioritized.
2 Technicians waiting for parts or authorization. Again a service advisor, working one work order or estimate ahead of each technician can keep the parts coming in a timely fashion and keep the customers informed of the needs of their vehicles and the related costs and get the authorizations to proceed.
3 Technicians dealing with rust, corrosion and broken bolts. Why do so many people in this industry think that the labour guides are some kind of religious handbook? They are only that, a guide. If the vehicle is older, and the job requires more time, heating with a torch, or any other extras, the customer should be paying for that. You need to add a factor to your estimates for these eventualities.
4 No charge diagnosis. We need to get over the perception that we can only charge for physical work that we do with our hands. We need to charge for what we know, for the information and diagnostic tools we have purchased. Diagnostics is not as intangible as you think, make a list of what series of tests and inspections are required, manuals and databases you subscribe to, all the training and experience your technicians have, and learn how to communicate that value to your clients.
5 Performing too many low priced menu services. We need to get out of the “Oil Change” world and into the “Maintenance Service” world. You can charge more for a maintenance service and the customer gets more value.
6 And lastly, all the non-essential verbal communication that eats away time in a day. By using well-implemented systems and procedures like a work order rack flow system and a proper write up process, you can nearly eliminate verbal communication between technicians and service advisors. The systems I am referring to, need training to be understood well, but they work miracles. How many times does a technician come to the front wanting to know when their parts are showing up? The way we write up a work order it has a section on it for the service advisor to write down who the parts are coming from and the estimated time of arrival. The way a technician in our shops reports back to the service advisor includes a sheet with a complete parts list request on it. No longer do we order a timing belt and forget that we may need a water pump or a valve cover gasket or a set of pulleys, the technician has given us a complete shopping list. The first step for each of you is to measure how much time your technicians are actually working on vehicles and how much of that is being billed out properly. The second step is to measure where the rest of the time is spent. Your third step is to find ways to use systems, procedures and service advisors to make all time productive. In the example given above that would mean an extra $10,710 in labour revenue per month based on billing out two more hours per tech per day, after paying for a service advisor. And I promise you the stress level will be way lower as well for everyone, and that is worth more than money on some days.