Why is Productivity An issue?

[Carguy]

Most experienced techs can beat the book on most repairs and services. If this is true then why is low productivity such an issue? Is too much time being wasted between jobs? Are shops not charging enough labor time? Is diagnostic analysis eating too much time because shops are not charging enough for diagnosing? Or are we simply giving too much away?

[Tony M]

Productivity = $$$$. It's that simple. And, we need to charge 1.5 to 2 times our labor rate for diagnostic work. If you are not willing to charge that, I suggest you look for another line of work!

[DUFRESNES]

Productivity = $$$$. It's that simple. And, we need to charge 1.5 to 2 times our labor rate for diagnostic work. If you are not willing to charge that, I suggest you look for another line of work!

 

 

We have 3 master techs and 1 lube tech. What I see is happening is 4 cars are worked on right away, diagnosing and etc. Then they bring the work order to the Service Writer and he has to estimate the work, call the customer and get an OK, then order parts. There is too much standing around. Yes, they grab another car and the circle continues, finally catching up later. If anybody has a suggestion, I would love to hear it. We also have 2 people that answer the phone and make appointments. The service writer is working on his 4 techs

[Joe Marconi]

We have 3 master techs and 1 lube tech. What I see is happening is 4 cars are worked on right away, diagnosing and etc. Then they bring the work order to the Service Writer and he has to estimate the work, call the customer and get an OK, then order parts. There is too much standing around. Yes, they grab another car and the circle continues, finally catching up later. If anybody has a suggestion, I would love to hear it. We also have 2 people that answer the phone and make appointments. The service writer is working on his 4 techs

 

I had the same issue. You may not want to hear this, but, you need to hire another service writer. My original shop had 6 bays, 4 techs, one service writer. We built the car counts up to 100 to 120 per week. Our productivity suffered because the one writer could not get the paper work processed quick enough and sell the work. After a while, we were not selling the work we knew we could sell.

 

I hired another service writer, and the productivity went up and up-sells went up too.

 

We now have 10 bays, 7 techs and do 180 to 200 cars per week and have three service writers. (I help too, if needed). You need enough service people if you have the work. The service writer needs the time to speak with the customer, create the estimate and sell jobs. Techs standing around will bleed money from your business. Plus, you will eventually burn out the service writer.

 

The increase in productivity and the increase in those up-sells will pay for the additional service writer.

[DUFRESNES]

I had the same issue. You may not want to hear this, but, you need to hire another service writer. My original shop had 6 bays, 4 techs, one service writer. We built the car counts up to 100 to 120 per week. Our productivity suffered because the one writer could not get the paper work processed quick enough and sell the work. After a while, we were not selling the work we knew we could sell.

 

I hired another service writer, and the productivity went up and up-sells went up too.

 

We now have 10 bays, 7 techs and do 180 to 200 cars per week and have three service writers. (I help too, if needed). You need enough service people if you have the work. The service writer needs the time to speak with the customer, create the estimate and sell jobs. Techs standing around will bleed money from your business. Plus, you will eventually burn out the service writer.

 

The increase in productivity and the increase in those up-sells will pay for the additional service writer.

[DUFRESNES]

Joe,

When you added the 2nd Service Writer. How did you pay him. We now pay to #1 Service Writer 8% of all sales of the techs.

[Joe Marconi]

Joe,

When you added the 2nd Service Writer. How did you pay him. We now pay to #1 Service Writer 8% of all sales of the techs.

 

Great question! I pay my service writers a base pay with a sales bonus. BUT, here's the key; base your bonus not on sales alone, but on gross profit dollars.

 

For example: If we had a week where we install 2 engines and 2 transmissions, our gross sales may “look good” on paper, but what is the actual profit dollars? When you do the math, the gross profit (parts/labor) may only be 40%.

 

Let’s say you have a week with similar sales but you filled your week with brake jobs, maintenance work, steering work and suspension work. The gross profit on these sales may be 60% or better. The sales amount for both weeks were the same, but there is more money in your pocket.

 

You need to sit down and calculate your break-even. Create a sales goal based on the amount of money over break-even.

 

I add 20% above break-even as my goal. Anything above that amount I give my service writers a percentage of those sales. I also track what each service writer sells (Mitchell Manager tracks this).

 

My top writer receives a larger portion of the bonus and so on.

 

If you need further clarification on this program, please let me know.

 

BTW; Gross profit dollars is calculated by adding you labor dollars sold plus the profit on your parts.

Labor dollars for week= $10,000

Parts sales for week = $10,000

Total gross sales = $20,000

Profit on parts = $5,000

Total gross profit dollars: $10,000(labor) + $5,000(profit from parts) =$15,00

[Evan Smith]

So far--the responses in this thread have touched on addressing several potential "profit soft spots" related to productivity:

1. 
    
   
2. appropriate pricing for diagnostic/ up-front work (i. e. making sure the shop can cover its costs) (diagnostic pricing recommendation, offered by Tony M, Baldwin Express Lube);
   
3. cutting down the transition time between performing the (small-revenue) diagnostic work, and performing the associated (larger-revenue) maintenance work (add a service writer recommendation, offered by Joe M, Osceola);
   
4. improving the clarity and precision with which "diagnostic findings" get translated into a job estimate that a customer wants to buy (service writer rec, Joe);
    
   

 

Beyond the suggestions above, and improving the "on the job" productivity of the technician individually - it is worthwhile for you as a shop owner/ business manager to look at what I'd call the "white space" around the direct work on the car. This "white space" is defined as "space where low/ no value is being created"--for you or the customer. Some examples of white space that you might want to think creatively about addressing include:

 

• 
   
  
• the car-movement/ parking issues around your shop (if your techs are moving cars, they're not contributing positively to productivity);
  
• the time you spend going back/ forth with customers on the phone, trying to communicate the details of an estimate, and discover if the customer wants to go forward with it;
  
• the ways that you structure your parts/ equipment inventory (if your techs need to search for tools, equipment, or parts, or walk too far to get them, they're not contributing positively to productivity);
  
• the precision/ detail with which your tech's diagnostic findings--or other observations about the "street-readiness" of the customer's vehicle) get translated into an estimate the customer wants to buy;
  
• ... and others.
  

 

These and other white-space examples can all be forms of "waste". Some of the highest value opportunities in your business can be removing these types of barriers to productivity, to help you create more satisfied customers, and earn more money.

[Joe Marconi]

I agree. Increasing shop productivity is more complicated than the actual time the technician takes to complete a job. We all know that a tech can beat the book time on most jobs, so why would productivity be lower than normal in a given shop?

 

To elaborate on Evan’s remarks; wasted time between jobs, techs performing tasks that are not productive, time wasted finding the right tools or equipment, receiving the wrong parts, on and on, all contributes to lower than normal productivity.

 

I too agree that shop owners need to do an analysis on the actual work-flow process, much the same way the Japanese did decades ago when analyzing how to improve the efficiency of the assembly line, in order to find the waste in shop production. As each problem is solved, more profit is generated to the bottom line.

[LarryM]

I agree. Increasing shop productivity is more complicated than the actual time the technician takes to complete a job. We all know that a tech can beat the book time on most jobs, so why would productivity be lower than normal in a given shop?

 

To elaborate on Evan’s remarks; wasted time between jobs, techs performing tasks that are not productive, time wasted finding the right tools or equipment, receiving the wrong parts, on and on, all contributes to lower than normal productivity.

 

I too agree that shop owners need to do an analysis on the actual work-flow process, much the same way the Japanese did decades ago when analyzing how to improve the efficiency of the assembly line, in order to find the waste in shop production. As each problem is solved, more profit is generated to the bottom line.

 

While I agree that there are many factors that effect productivity and it would be great to have a Dr. Deming time study expert on our staff, that is not usually possible from a cost standpoint. But we actually have the experts working for us already! I have found that if I work with the staff individually to find out why they think their productivity is down, they can usually pinpoint the areas that need attention. While it is true that their idea of fix may not take into consideration elements they don't understand, like the cost to fix certain problems, between them all they can usually nail down the areas that need improvement, especially when it effects them personally. It is then up to me to come up with a cost effective solution.

 

I found that the first step in improving productivity is to make it obvious to everyone that there is a problem so that they can make changes in their own behavior if necessary. If just changing the behavior is not enough then a discussion per above will usually tell me exactly where I need to look. Many times it is not what I want to hear, since it means I must change something we are doing as a company, or buy a piece of equipment, or pay for training, etc.. The problem must first be obvious and identified, and they steps can be taken to cure the problem.

 

My primary reason for developing QuickTrac productivity software was to make productivity easily understood and constantly on display for everyone in the company. If my facility is put together right, my processes are effective, and my customer load is sufficient the team will keep us above 120% productivity all the time. The first three items are my responsibility, as is finding the right team members, from there on they will see it happens.

[Joe Marconi]

While I agree that there are many factors that effect productivity and it would be great to have a Dr. Deming time study expert on our staff, that is not usually possible from a cost standpoint. But we actually have the experts working for us already! I have found that if I work with the staff individually to find out why they think their productivity is down, they can usually pinpoint the areas that need attention. While it is true that their idea of fix may not take into consideration elements they don't understand, like the cost to fix certain problems, between them all they can usually nail down the areas that need improvement, especially when it effects them personally. It is then up to me to come up with a cost effective solution.

 

I found that the first step in improving productivity is to make it obvious to everyone that there is a problem so that they can make changes in their own behavior if necessary. If just changing the behavior is not enough then a discussion per above will usually tell me exactly where I need to look. Many times it is not what I want to hear, since it means I must change something we are doing as a company, or buy a piece of equipment, or pay for training, etc.. The problem must first be obvious and identified, and they steps can be taken to cure the problem.

 

My primary reason for developing QuickTrac productivity software was to make productivity easily understood and constantly on display for everyone in the company. If my facility is put together right, my processes are effective, and my customer load is sufficient the team will keep us above 120% productivity all the time. The first three items are my responsibility, as is finding the right team members, from there on they will see it happens.

 

Words of wisdom and well said. I agree that much of the information on how to boost productivity and efficiency can be found within the walls of our own facilities, by enlisting the help from our experienced staff.

 

When I was in the planning stages for our second shop I did just that. My entire staff met on numerous occasions to discuss where the productivity problems were. We discussed everything from work flow from service writers to techs, placement of oil filters and other parts, part delivery, bay configuration, shop layout, air lines, drop lights, time wasted between jobs, on and on.

 

The truth is you can increase production by fine-tuning your operation; a little change can make a big difference.