Dec. 3, 2007: Service department solutions start with a time clock
December 3, 2007
Filed under Archives
These articles recap some of the opportunities uncovered by Gart Sutton & Associates’ powersports specialists during consulting visits.
Install and utilize a time clock for all service jobs. This is a requirement for tracking and measuring the performance of this department. A time clock was located, and installation and use was discussed with the general manager and the service manager.
Measure and report technician efficiency, productivity and proficiency for individual techs and the overall department. A spreadsheet with weekly worksheets for each technician was provided. By entering the billed labor hours (customer, internal, warranty), technician available hours (time they were scheduled to work) and actual hours (time clock time from the repair orders) the sheet will calculate the efficiency, productivity and proficiency for each technician.
Strive to achieve a goal of 70 percent gross profit margin in the department. Labor sales less cost of tech compensation (not including benefits) equals gross profit. This means tech compensation should be 30 percent or less of total labor sales. Attaining this gross profit goal is important in order to ensure coverage of all the expenses of operating the service department. Formulas and benchmarks were provided for non-tech wages and administrative expenses.
Create a repair order for any task that requires a technician’s time. If it is not billed to a customer or warranty, it must be billed to a department on an internal repair order. Profitability can’t be measured unless all tech time is accounted for – remember, all service sells is labor hours.
Uncover and reduce nonproductive tech time, such as pushing bikes. Maximize the time they can spend on billed labor hours. For example: four techs at $70 labor rate, pushing bikes 15 minutes in the morning and evening equals two man/hours/day times 25 days/month average equal $3,500 in potential lost billed labor hours. In one year this can cost a dealer $42,000!
Focus on using a service menu system rather than the hourly rate. Develop a simple, professionally done menu board with basic, repetitive services (such as interval services, fork seal replacements, etc.). Show price ranges rather than detail by model. Create a detailed, by-model menu in a three-ring binder in the write-up area. Hourly rates are a negative in most customers’ minds. What most customers want to know is “how much is it, and when will it be done?” Developing the menu system with pricing based on the value of the service, rather than flat rate, will ensure consistency with all customers, simplify the write-up process and increase customer satisfaction.
Develop a scheduling system that can be accessed by all personnel in the dealership. Dealer staff should be able to quickly respond to a customer inquiry regarding the current status of a unit in for service or repairs.
These are followed by recommended actions that address the issues. The goal is to provide ideas to help improve your dealership.
This multi-line dealership was a recent buy-out that was moved to a large, modern facility. The store is located on a high-traffic highway in a rural area that draws from a nearby city. Projected annual volume is around 400 units. The owners have no previous experience in the powersports business, but they own a successful, high-margin sports equipment business. They are discovering a powersports dealership is a complex business with tight margins.
The goal for this engagement was to identify and establish the processes necessary for the profitable operation of each department. In earlier articles, our consultants reported on the overall dealership situation, the sales and F&I departments and the parts and service departments.
In this article, we examine the recommended actions and describe the activities the consultants employed to assist the dealership with its service department issues.
Schedule pads are available from most of the manufacturers and some office supply companies. Electronic schedule systems also are available and can be accessed by other departments.
Put all dealership processes and procedures in writing. If you don’t put it in writing, don’t expect to hold staff accountable.
Remodel the service department to reflect the same quality of the rest of the store. Quality facilities with clean, uniformed staff have less trouble justifying their labor prices.
Author, speaker and educator, Gart Sutton has been retained by every major powersport manufacturer/distributor. He is a frequent keynote speaker for national motorcycle conventions and state motorcycle dealer association events. Visit www.gartsutton.com.