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Auto 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.
By Gerald Martin
No one loves comebacks. But they are a part of life. They come in all shapes and sizes:
1. Faulty parts. We have more part quality issues than ever before, including (less frequently) OEM parts.
2. Tech error. A tech fails to properly tighten brake caliper frame bolts. A belt is installed with one groove off the edge of a pulley. Some techs rarely make these errors. But mistakes will happen.
3. Warning lights on or new symptoms noted "ever since you worked on it". Always needs to be taken seriously - sometimes issues identified are fall into category 1 or 2. Or further OBD monitors ran since repairs were made and other issues are coming out of the woodwork. And sometimes people will try to pin every new issue on the shop that last worked on the car.
How do we deal with warranty cases?
When tech error is involved, is the employer responsible to pay the tech's time to correct his own mistake? Does it make a difference if there is a pattern of carelessness? If the employer picks up the tab for everything, doesn't this reward the making of mistakes?
It seems reasonable that the tech should not take responsibility for part failures not caused by tech error, doesn't it?
And what about that follow up scan to see why the warning lights are on? Should the tech handle this as a courtesy until determined what area the fault is in? It may be, after all, that he left a vacuum line off the air cleaner box. But it shouldn't take too long to know if the advisor needs to request more testing approval from the client...
And should any of these questions be influenced by whether the shop pays flat rate or hourly?
I know that's a lot of questions. But I hope it starts a conversation, because it's an area we really need to develop an SOP and stick with it.
By Joe Marconi
By Changing The Industry
Exploring the Impact of Company Culture on Business #podcast #business
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By Changing The Industry
Episode 141 - Embracing Change in the Automotive Repair Industry With Matt Ruffman