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General Manager's Weekly Review of Service Operations... Missed Opportunities in the Service Department
As part of your Weekly Routine and Review, here are a few things you should examine in your Service Department/
Here are a few KPI that will assist in identifying the barriers to capitalizing on your dealership’s service opportunities.
Work In Process-
In the service department this refers to the number of customer vehicles that are currently undergoing repairs or maintenance at the dealership but have not yet been completed or delivered back to the customer.
When the labor is sold, it would result in a Debit (reduce) to the Cost of Sale and a Credit (increase) of the WIP. The Problem …There is a big leak in the gross profit barrel called Unapplied Time/Labor. When investigating this leak, it starts with understanding how much technicians are paid for billed work and how much is unapplied?
If you are a typical store, service management runs a booked time report weekly (maybe even daily) and makes sure technician time flags match the report. The week’s flagged/booked time reports are gathered and turned into the office for payroll.
The WIP inventory includes vehicles that are in various stages of repair or maintenance, from those that have just been dropped off and are waiting to be assigned to a technician, to those that are in the process of being diagnosed or repaired, and those that are waiting for parts or other materials to arrive.
Managing WIP effectively is important to ensure that repairs and maintenance are completed in a timely manner, and that customers are satisfied with the service they receive. A high WIP inventory can indicate bottlenecks or inefficiencies in the service process, while a low WIP inventory may indicate that the department has excess capacity and can handle more work.
Carry Overs What is the Average Per Day-
This refers to the customer vehicles that were not completed or delivered back to the customer on the day that the repair or maintenance service was scheduled. Instead, these vehicles have to be “carried over” to the next day or a later date to complete the service.
Carry overs can occur due to a variety of reasons such as unexpected delays in receiving parts, unexpected repair issues or complications, or changes in the customer’s requirements. This can cause inconvenience to the customer and disrupt the dealership’s service schedule, resulting in a backlog of work-in-process (WIP) inventory. It is important to know why vehicles are carry overs as it might suggest an improvement in your process or staffing.
Effective management of carry overs is important to ensure that customer service expectations are met, and that the dealership’s service operations run smoothly. To manage carry overs, service departments may prioritize carry over vehicles for service the next day, allocate additional resources to handle carry overs, or communicate effectively with customers to manage their expectations and minimize the inconvenience caused by carry overs.
Reducing the number of carry overs is a key goal for a dealership service department, as it improves customer satisfaction, increases service department efficiency, and maximizes the use of available resources.
Open Repair Orders-
When a Service Advisor opens a repair order, it creates a record of a transaction in the dealership’s DMS (Dealership Management System). Until that repair order is closed and any needed charges are settled, the repair order will remain “open” in the system. So it is not abnormal to have a number of Open Repair Orders in the system.
The challenge for your weekly review is to make note of number of Open Repair Orders and whether or not that is a reasonable number relative to the size of your shop and the number of technicians.
Open repair orders can hide losses and are not always to be considered “Work in Process.”
Discuss with Service Management any discrepancies or hints of a hidden issue.
Suggested Repairs Declined By Customers-
Part of almost all dealership service process is an inspection of the vehicle for any issues or problems requiring maintenance or repair that were not agreed to by the customer at the time the repair order is written. These are commonly known as Multi-Point Inspections.
As such, the customer must be asked to approve the performance of that maintenance or repair and given the opportunity to decline to have the work performed and decline the cost of that work added to the Repair Order.
Typically the dealership will ask the customer to sign when such services are declined.
These are potential sales that are not realized and are therefore a missed opportunity.
Some declines are inevitable for a variety of customer reasons. However, if the items suggested represent a safety or continued vehicle operation problem, it is likely that the customer will ultimately take the vehicle to a competitor and the competitor will gain the benefit of the sale.
Reviewing the number of “declines” on a weekly basis will again keep you abreast of what is typical for your shop and open a discussion with Service Management about what, if anything, can be done to overcome these “declines.”
Service Advisor Discounts Used-
Many dealerships will give the Service Advisor a certain leeway to offer discounts to customers. Typically there is a limit, or budget, for this type of transaction taken by the Service Advisor without any higher approvals.
Similar to “Declines”, it is important to keep the “normal” amount of discounted repair orders in the weekly discussion. If you know what is normal and typical, this will give you the basis to question unusually high discounting and an opportunity to address the causes and possible corrections to your process.
Manage the Exceptions-
Keeping your eye on these 5 areas weekly will help you gain a needed insight into what is going on in the Service Department, somewhat beyond the KPI you can review on the financials. If you are looking for a deeper understanding of how Fixed Operations works... this is a good start.
The above was adapted from just a small portion of Chapter 3 - Weekly Resonsibilities of a Highly Effective General Manager in the DealersEdge Guide - "The General Manager's Desk Reference and Dealership Operating Guide."
To learn more about this DealersEdge Guide, please see below...
This new DealersEdge Resource will provide the most useful and comprehensive collection of dealership management wisdom available…
Organized and Tabbed style that allows for Quick Reference for dealing with specific daily challenges… or as the GM’s Guidebook, it can be read and studied from start to finish.
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