Are You Really Overbooked? [THA 339]
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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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Thank you to RepairPal for sponsoring The Auto Repair Marketing Podcast. Learn more about RepairPal at https://repairpal.com/shops
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By carmcapriotto
Did you know most shops only utilize 20-30% of their bay capacity? Let's explore the concept of effective bay rate and the potential benefits of monitoring and analyzing bay usage. What is the potential revenue that can be realized by addressing these inefficiencies? Our panel highlights the importance of focusing on bay efficiency rather than just technician efficiency and the need for shops to adopt lean six sigma principles to maximize productivity.
Chris Cloutier is co-owner of Golden Rule Auto Care in Dallas Texas and CEO of Autoflow. Chris’s previous episodes HERE Brandon Crusha, Training Manager, AutoFlow. Craig O’Neill, VP of Training, AutoFlow. Listen to Craig’s previous episodes HERE Show Notes: Effective Bay Rate and Bay Productivity (00:00:22) Discussion on the importance of effective bay rate and the use of cameras and AI to improve bay productivity and efficiency. Realizing Potential Revenue through Operational Efficiency (00:08:14) The discussion focuses on how the use of cameras and technology can reveal potential revenue that is not being realized and the fear some shop owners have in facing this reality. The potential of improving bay efficiency (00:10:14) Discussion on the importance of managing bay efficiency and how to become more productive and efficient with limited bays. The role of technology in tracking vehicles in the bay (00:11:17) Exploration of how a tool can provide visibility into which cars are being worked on in each bay, highlighting wasted time. Challenges with diagnosing and tracking diagnostic time (00:13:11) Discussion on the inefficiencies and lack of process in diagnosing and tracking diagnostic time, leading to wasted hours and $0 tickets. The Shop Manager's Data Needs (00:19:40) Discussion on the importance of data for shop managers and foremen, including workflow software, bay capacity, tire sales, and profitability of ADAS services. The Expensive Alignment Bay (00:20:30) Exploration of the alignment bay as the most expensive bay in the shop and the need for better utilization of alignment racks. Using Technology Efficiently (00:23:26) Discussion on the benefits of using technology in the shop, including efficiency, identifying supply chain issues, and improving communication between technicians and service writers. Thirsty for New (00:27:53) The importance of being open-minded and continuously learning in order to improve operations and stay ahead in the industry. The Trouble with Potential (00:27:27) The concept of potential losses and the need to measure and track them in order to make improvements and increase profitability. The team's experience in the industry (00:35:15) Discussion about the team's experience as former shop owners and the value it brings to developing software. The long incubation period (00:37:02) Conversation about the six to seven years it took to develop the software, including false starts and multiple versions. Challenges in shop efficiency (00:39:33) Exploration of issues such as technician distractions, wasted time on switching bays, and waiting for parts, and the need for improved efficiency. The importance of building a good relationship with parts suppliers (00:43:11) Shop owners need to stop blaming their suppliers and instead foster a mutually beneficial relationship. The need for education and training in the industry (00:44:05) Shop owners should invest in educating their service writers and technicians to improve the accuracy of parts ordering. The benefits of using BayFlow as a management tool (00:46:47) BayFlow provides valuable insights and data that can help shop owners run their businesses more effectively. The adoption rate of DVI (00:50:49) Discussion on the slow adoption rate and challenges of implementing DVI technology in the automotive industry. Thanks to our Partners Shop-Ware and Delphi Technologies Shop-Ware: More Time. More Profit. Shop-Ware Shop Management https://getshopware.com/ Delphi Technologies: Keeping current on the latest vehicle systems and how to repair them is a must for today’s technicians. http://DelphiAftermarket.com Connect with the Podcast -Follow on Facebook: https://www.facebook.com/RemarkableResultsRadioPodcast/ -Follow on LinkedIn: https://www.linkedin.com/in/carmcapriotto/ -Follow on Instagram: https://www.instagram.com/remarkableresultsradiopodcast/ -Follow on Twitter: https://twitter.com/RResultsBiz -Join our Insider List: https://remarkableresults.biz/insider -All books mentioned on our podcasts: https://remarkableresults.biz/books -Our Classroom page for personal or team learning: https://remarkableresults.biz/classroom -Buy Me a Coffee: https://www.buymeacoffee.com/carm -The Aftermarket Radio Network: https://aftermarketradionetwork.com -Special episode collections: https://remarkableresults.biz/collections
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