When we ask service managers how important technician efficiency is to profitability, they usually say that “it goes hand-in-hand” or “if they aren’t efficient, you won’t make money.” While I agree with this, let’s look at it another way: time.
Here are the top 10 time wasters I’ve seen in service departments:
- Talking (non-productive talk)
- Waiting for the first job of the day
- Getting authorizations from customers
- Waiting on advisors
- Waiting in line in Parts
- Looking for or waiting on special tools
- Walking to Parts and back
- Phone calls, texts, e-mails, and using tablets or laptops
- Arriving late or leaving early
How many hours lost?
I ask managers to make this list during each of my training sessions at the NCM Institute, and then I have them assign time lost by activity. Sure, there are minor variations each class. But what doesn’t change is that we routinely come up with 2½ to 3 hours each day that are spent NOT working on vehicles!
I know it is unreasonable to think that every minute can be spent on productive work, but how many of these lost minutes can we pick up?
Getting time—and money—back
Let’s look at an example: We will figure an average shop of 12 technicians and gain just 15 minutes a day in actual production. We will use an $85.00 an hour effective labor rate and a gross profit percentage of 75%.
The numbers would look like this:
12 technicians x 15 minutes a day = 180 minutes of production gained a day (+3 hours/day)
3 hours gained x $85.00 ELR = $255.00 in labor sales gained per day
$255.00 x 75% gross profit (labor) = $191.25 labor gross gained per day
$191.25 x 300 business days per year = $57,375 additional labor gross profit per year
Add in corresponding parts gross generated from labor sales, and you could earn more than $95,000 in additional fixed gross profit per year (that is figured at 100% efficiency ... if they are at 125% efficiency, the numbers are even larger!) All of this from gaining just 15 productive minutes per day from each of your technicians.
Take the time to evaluate all of your technicians’ daily time wasters. Find ways to reduce the wasted time. Ask them for ideas and creative solutions. (And, once they know you are paying attention, some of the time wasters may just disappear.)
Go ahead, do the math with your own numbers and find your potential: you’ll be amazed!
Learn more from the NCM Institute and Steve Hall in our Service Management and Parts and Accessories Management courses.