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Written by: Steve Hall
When we ask service managers how important technician efficiency is to profitability, they most often say that “it goes hand-in-hand” or “if they aren’t efficient, you won’t make money.” I agree with their comments, but am constantly amazed with how they quantify “efficient.”
It seems that we have become accustomed to thinking a technician is efficient if they hit our flagged-hours goal for the week. At times this is true. Everyone can have a bad day, or a tough job that takes up time without producing many hours. This is one reason managers like looking at a longer time span, usually a week rather than daily, to get a feel for their efficiency. After all, if a technician works 40 hours and flags 50 hours, they must be efficient right? They are 125% efficient and we’re happy with them aren’t we?
While this can be a good measurement tool, let’s look at it another way. How do you monitor their daily activities? How many interruptions or work stoppages do they have during a normal day? How do these interruptions affect their efficiency? Did they produce their 50 hours and really only work on vehicles 6 hours a day, or less? How many hours could they have turned if they used their complete day?
Let’s list a few of the daily “time wasters” and gain possible insight into our “leaks” during a typical production day.
How many minutes a day do these items take away from efficiency: talking (non-productive talk); waiting for the first job of the day; waiting on authorizations from customers; waiting on advisors; waiting in line in Parts; looking for or waiting on tools (special tools); walking to Parts and back, phone calls; texting; e-mailing; tablets or laptops; smoking; arriving late or leaving early; tool trucks; and the list goes on and on.
When we hold service management training at NCMi, we make a list of time wasters and estimate the number of minutes wasted per day. The group of managers within that training group makes the list and it varies slightly in each class. Then they agree upon how many minutes to assign to each item, again slight variances.
When added up, we routinely come up with 2½ to 3 hours of time spent each day, not working on vehicles. I know it is unreasonable to think that every minute can be spent on productive work, but how many of these lost minutes can we pick up? How much would it equate to in dollars at your dealership?
Let’s look at an example: We will figure an average shop of 12 technicians and gain just 15 minutes a day in actual production. We will use an $85.00 an hour effective labor rate and a gross profit percentage of 75%. The numbers would look like this:
12 technicians x 15 minutes a day = 180 minutes of production gained a day (3 hours a day gained)
3 hours gained x $85.00 ELR = $255.00 in labor sales gained per day
$255.00 x 75% gross profit (labor) = $191.25 labor gross gained per day
$191.25 x 300 business days per year = $57,375 additional labor gross profit per year!
Add in corresponding parts gross generated from the labor sales and it can total more than $95,000 in additional fixed gross profit per year (and that is figured at 100% efficient). If they are 125%, the numbers are even larger! All of this from just gaining 15 productive minutes per day from each of your technicians. What if you could gain more minutes per day? Do the math….
Take the time to evaluate all of your technicians’ daily time wasters. Find ways to reduce the wasted time. Ask them for ideas and creative solutions. Also, if they know you are paying attention, some of the time wasters may just disappear.
Go ahead, use your own numbers and see what your potential looks like. It always amazes people.