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Seeking More Billable Hours in Service...
How Fixed Ops Systems Prevent Huge Bottom-Line Improvements
How to Search and Destroy the Barriers to Easy Profit Growth!
The following is adapted from a presentation of Gregg Criss a frequent DealerEdge Fixed Ops contributor and from a chapter in a current DealersEdge Guide... detailed below
How to Define Profit Efficiency in Your Shop?
If you complete tasks in a shorter period of time you provide opportunity for these results:
More billable tasks can be completed.
More billable hours per clock hour of technician clock hour.
More Bottom Line Profit!
Increasing Billable Hours
Whether you’re a flat rate shop or an hourly shop, increasing efficiency should result in more billable hours.
Many standards have been set for Billable vs. Clock hours, but in every case, the goal is to create more billable hours than clock hours.
Most opportunities are going to be derived from identifying non-productive time and removing it from your work processes.
To illustrate his point, Greg offered this profile of what many technicians experience every day:
Technician Bob is at his bay, ready to work when the shop opens at 7 AM.
Bob receives his first job at 7:15. (0.3 billable hours lost) Consider the real and measurable impact to the bottom line of losing just 0.3 billable hours.
0.3 hrs X $100 labor rate = $30
$30 X 10 technicians = $300
$300 X 5 workdays = $1,500
$1,500 X 50 workweeks = $75,000
So, if each technician loses just 0.3 of billable time each day, it adds up to $75,000 of lost opportunity revenue annually.
Since the typical billable technician loses much more than that on the average day, imagine what the real cost of idle time might be for your shop!
So, where do we start looking for opportunities to recapture that lost time?
It starts by critically looking at your processes and asking yourself:
Is your service process working as it was designed? If not... why not?
Are technology tools provided by the dealership being used effectively? (if at all)
Common Roadblocks in the Service Department Process:
Do you see any of these time wasters in your shop?
Technicians walking to the Advisor or Dispatcher to receive their jobs.
Technicians walking the lot to locate assigned vehicles.
Technicians stopping after completing the MPVI (Multi Point Vehicle Inspection) and then walking to Parts for pricing and then walking again to the Advisor for estimate completion and customer approval!
Each step represents opportunity to recapture unsold time.
Is all of this walking around necessary? We know that it’s seldom Billable!
If so, what can be done to reduce the amount of time spent walking around?
Technology can be extremely useful for accelerating communications and keeping technicians at their stations where they CAN produce billable hours.
Common Roadblocks in the Parts Department Process
How can we make the Parts department more efficient?
Greg offered these thought starters:
Electronic Parts Requests / Communications vs. Walking to the counter and talking to the counterperson. Phones are not that new and high-tech… but connected electronic communications are also possible… text? email?
Can you pre-pick parts such as recalls, maintenance, SOP, etc.
Can you stage billed parts for immediate technician retrieval. Is there a way to reduce or eliminate wasted time at the technician’s parts window?
Or perhaps better yet, can you deploy parts delivery to the technician's stall by a less costly and non-technical person?
Estimating How Much Improve Efficiency in Fixed Ops is Worth
As an example of how to approach this type of estimate, Greg offered this argument for delivering parts.
If 6 minutes per repair order at the Parts window can be eliminated and the technician works on 6 jobs per day, 36 minutes of billable time become available.
Assuming 12 technicians each saving 36 minutes that will be 432 billable minutes per day. (7.2 billable hours per day)
X 5 workdays = 2,160 minutes per week
X 50 work weeks = 108,000 minutes per year = 1,800 hours
1,800 hours X $100/ hour = $180,000 of additional labor revenue is possible.
Not bad for saving only 6 minutes per job.
Other Benefits of Increased Efficiency
Technicians have been in short supply for about as long as there have been dealerships, and never more so than today. So, consider how your need for techs could be reduced if you increased your efficiency?
As the prior example illustrates, you might add 7.2 billable hours each day by simply reducing the need for technicians to wait for parts.
That is almost the equivalent output of adding one technician… without the extra payroll, benefits, and onboarding costs.
From small changes, come seemingly small benefits. However when you are nibbling at the margins the multiplier effect then produces a huge difference.
As Greg has demonstrated, simply making your daily processes more efficient can produce huge results on the Fixed Operations annual bottom line.
As mentioned above, this snippet was adapted from just one section, of one chapter of a valuable DealersEdge Guide filled with this and other performance improving techniques and suggestions.
From the DealersEdge publication: “Fixed Operations Management Skills Guide.” Receive full details on how you can get a copy via the links below.
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