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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 Joe Marconi
This episode is sponsored by AutoLeap. AutoLeap is a cloud-based all-in-one automotive invoice software that helps you supercharge your mechanic shop. Their customers have experienced:
30% increase in revenue by improving transparency and trust
50% reduction in time spent researching and ordering parts
10% increase in profit margins through robust reporting
Click here to learn more about AutoLeap and schedule a demo:
AutoLeap Link: http://bit.ly/3GRgO88
In this podcast episode, Coach Chris Cotton from Autofix Auto Shop Coaching talks about his recent trip to the Sunrise Training Expo in Phoenix, Arizona. He shares insights on various topics related to auto repair shop management, including service advisor best practices, using technology to increase efficiency and productivity, and new products and apps for technicians, service advisors, and customers. He also discusses his experience moderating the owner's round table, where they had a great conversation on various topics such as inflation, the economy, and productivity. Finally, he encourages attendees to stay for the entire event and take advantage of all the opportunities available.
BG Booth [00:02:43] Coach Chris Cotton talks about his visit to the BG booth at the Sunrise Training Expo and the new products and apps they offer.
Service Advisor A to Z Class [00:05:35] Coach Chris Cotton discusses the Service Advisor A to Z class he taught at the Sunrise Training Expo, covering topics such as service advisor best practices, daily responsibilities, and effective communication.
Managing Expectations and Using Technology [00:07:20] Coach Chris Cotton talks about managing expectations and using technology to make service advisors more efficient and productive.
Owner's Round Table [00:09:23] Discussion on inflation, economy, productivity, and the issue of being booked weeks in advance.
Employee Handbooks and Cell Phone Usage [00:10:18] A comment from a 50-year industry veteran on cell phone usage and the importance of being productive.
Importance of Staying for the Whole Event [00:11:10] Encouragement to stay for the entire event, including the owner's round table, and take advantage of all the opportunities.
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Connect with Chris:
An episode of CAMP referenced by Chris. Industry coaches talking about the value of training and expos. https://bit.ly/3NyHYnI
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By Joe Marconi