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The True Cost of Comebacks

 

Comebacks are a hot topic today, particularly with the frustration over poor quality parts. You need to track all comebacks, determine the reason (Tech error, part error, training issue, other) and then calculate the true cost of the comeback.

 

Here are a few things to consider:

- The loss of time when performing the comeback; time that the tech can performing other work and generating profit

- The misc costs, such as overhead costs, supplies, cleaners, etc

- Towing costs, rental, etc

- Cost to morale

- Reputation damage

- Reduction to your profit margin

 

For every part issue, you need to inform your supplier, whether it's NAPA, CARQUEST, Advance Auto, O'Reilly's, or any other. Sit down with suppliers on a regular basis. Dont return defective parts until you have listed the parts and maintain a report. Document everything.

 

Part issues are increasing. Every shop owner I speak to is frustrated over this.

 

Remember, comebacks kill your bottom line, the more comebacks you have, the more its killing your profits.

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  • Have you checked out Joe's Latest Blog?

         13 comments
      Most shop owners would agree that the independent auto repair industry has been too cheap for too long regarding its pricing and labor rates. However, can we keep raising our labor rates and prices until we achieve the profit we desire and need? Is it that simple?
      The first step in achieving your required gross and net profit is understanding your numbers and establishing the correct labor and part margins. The next step is to find your business's inefficiencies that impact high production levels.
      Here are a few things to consider. First, do you have the workflow processes in place that is conducive to high production? What about your shop layout? Do you have all the right tools and equipment? Do you have a continuous training program in place? Are technicians waiting to use a particular scanner or waiting to access information from the shop's workstation computer?
      And lastly, are all the estimates written correctly? Is the labor correct for each job? Are you allowing extra time for rust, older vehicles, labor jobs with no parts included, and the fact that many published labor times are wrong? Let's not forget that perhaps the most significant labor loss is not charging enough labor time for testing, electrical work, and other complicated repairs.  
      Once you have determined the correct labor rate and pricing, review your entire operation. Then, tighten up on all those labor leaks and inefficiencies. Improving production and paying close attention to the labor on each job will add much-needed dollars to your bottom line.
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      Jim Fleischman, Automotive Alley, Arcade, NY. Listen to Jim’s previous episodes HERE. Deidre Parker, Chloe's Auto Repair, Woodstock, GA.
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