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By Joe Marconi in Joe's Blog0 commentsAuto shop owners are always looking for ways to improve production levels. They focus their attention on their technicians and require certain expectations of performance in billable labor hours. While technicians must know what is expected of them, they have a limited amount of control over production levels. When all factors are considered, the only thing a well-trained technician has control over is his or her actual efficiency.
As a review, technician efficiency is the amount of labor time it takes a technician to complete a job compared to the labor time being billed to the customer. Productivity is the time the technician is billing labor hours compared to the time the technician is physically at the shop. The reality is that a technician can be very efficient, but not productive if the technician has a lot of downtime waiting for parts, waiting too long between jobs, or poor workflow systems.
But let’s go deeper into what affects production in the typical auto repair shop. As a business coach, one of the biggest reasons for low shop production is not charging the correct labor time. Labor for extensive jobs is often not being billed accurately. Rust, seized bolts, and wrong published labor times are just a few reasons for lost labor dollars.
Another common problem is not understanding how to bill for jobs that require extensive diagnostic testing, and complicated procedures to arrive at the root cause for an onboard computer problem, electrical issue, or drivability issue. These jobs usually take time to analyze, using sophisticated tools, and by the shop’s top technician. Typically, these jobs are billed at a standard menu labor charge, instead of at a higher labor rate. This results in less billed labor hours than the actual labor time spent. The amount of lost labor hours here can cripple a shop’s overall profit.
Many shop owners do a great job at calculating their labor rate but may not understand what their true effective labor is, which is their labor sales divided by the total labor hours sold. In many cases, I have seen a shop that has a shop labor rate of over $150.00 per hour, but the actual effective labor rate is around $100. Not good.
Lastly, technician production can suffer when the service advisors are too busy or not motivated to build relationships with customers, which results in a low sales closing ratio. And let’s not forget that to be productive, a shop needs to have the right systems, the right tools and equipment, an extensive information system, and of course, great leadership.
The bottom line is this; many factors need to be considered when looking to increase production levels. While it does start with the technician, it doesn’t end there. Consider all the factors above when looking for ways to improve your shop’s labor production.
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By Joe Marconi
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By carmcapriotto
Matt Fanslow discusses the challenges and considerations of offering small engine repair services in an auto repair shop. He shares his personal experience with his grandparents' implement dealer and explains the low profitability of consumer-level products like chainsaws and lawn mowers. The concept of opportunity cost is emphasized, highlighting the potential loss of focusing on these additional services. He also discusses the challenges of finding parts for classic cars and the need to consider the opportunity cost when expanding services beyond auto repair.
Show Notes:
The challenges of offering small engine repair (00:02:21) The difficulties and considerations of offering small engine repair services in an auto repair shop, including opportunity cost and low profit margins. The struggles of small engine repair shops (00:04:51) Explains the struggles faced by repair facilities and dealers that focus solely on small engines, including the high overhead costs and low profitability. The importance of technician training (00:08:24) Highlights the benefits of technician training in improving knowledge, skills, job satisfaction, and overall shop profitability. Understanding opportunity cost (00:09:30) Explains the concept of opportunity cost and its significance in terms of productivity and profitability in an auto repair shop. Considering opportunity cost in shop operations (00:10:36) Discusses the impact of opportunity cost on shop operations, particularly in terms of vehicle storage and its effect on productivity and income. The challenges of finding parts (00:16:46) Discussion on the difficulties of finding parts for small engine repair and how it affects the rate of service. Working on classic cars (00:17:57) Exploration of the shop's willingness to work on classic cars and the positive response from customers. Considering opportunity cost (00:18:51) Advice on considering the potential loss of income when offering additional services and the importance of evaluating daily tasks.
Thanks to our Partner, NAPA Autotech napaautotech.com
Email Matt: [email protected]
Diagnosing the Aftermarket A - Z YouTube Channel HERE
Aftermarket Radio Network: https://aftermarketradionetwork.com/
Click to go to the Podcast on Remarkable Results Radio
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By Joe Marconi
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By Joe Marconi
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