In the last issue, we calculated some vital measurements for managing service or body shop profitability:
Monthly expenses that must be covered by each technician to break even. Monthly labor sales that must be covered by each technician to break even. Monthly production hours to be produced each technician to break even. Daily production hours to be produced by each technician to break even.
Daily technician output percentage to be produced by each technician to break even. Labor gross profit dollars that must be generated to create a 20% net profit.
All of these calculations are related to technician time management. Since time is the only inventory that a service or bodyshop operation has, "inventory management" for these entities is relegated to "time management."
Consider that the costs (bills you pay) for a stall covers 30 days per month, 24 hours per day, or a total of 720 total hours of rent, insurance, utilities, depreciation, telephone, etc., etc. Most technician organizations work one shift of eight hours, with 20 days of average actual tech attendance, which equates to 160 hours of time, devoted to paying the bills. That means that only 22 percent of the available stall time is used to pay the bills for 100 percent of the available stall time!!
It is easy to see why the proper management of those precious 160 stall hours is crucial for expense break even, and hopefully generating a profit. So what time management measurements should be made?
Productivity: the starting point
To begin with, the amount of time a tech actually spends being productive must be measured. Of course, this requires regimented clocking procedures starting with a time card that is punched the minute the technician is ready to begin work. If a technician needs to have morning coffee, including a talking tour of the facility, then he or she should arrive well before the allotted starting time, and not clock in until he or she is ready to go to work.
The rule is simple: If management's pre-determined starting time is 8 a.m., then at 8 a.m. the technician should clock in on an attendance card, and then on a repair order as soon as possible.
Productivity measurement: Working Attendance Hours/Actual Hours Clocked On A Repair Order
Of course the maximum could only be 100 percent, and the closer to that figure, the better the stall income that can be generated. A minimum target for productivity is 90%. Any technician that continually falls short of 90 percent is not meeting the responsibility for bill-paying that goes with the assigned right to occupy the expensive stall space he or she has been given. Remember that a 10 percent loss is 16 hours per month of lost time that can never be recovered!
If management is not measuring the difference between attendance time and applied time (clocked on a repair order), a vital measurement of technician performance is being already being ignored.
If in fact, one or more technicians are not meeting the minimum 90 percent productivity figure, several reasons typically cause this loss. Some may be the fault of the technician, but some techs may be forced into a low figure.
A common condition lies in poor dispatching techniques, including poor or no pre-planning of the workload. In some cases, the department opens at the same time the technicians begin work, which leaves no time for planning an immediate productive start for the technicians. There must be at least a half-hour of preparation before the technicians begin work, as well as some pre-planning the evening before by the technician support staff.
Other problems begin with lack of discipline concerning beginning times, break times, lunch times, and ending day times. If the shop is to begin the 160 hour countdown at 8 a.m., then there should be the sounds of work happening at 8 a.m., not a lull until 8:20 a.m. In other words, technicians should have arrived at least 10 minutes earlier to prepare for an 8 a.m. beginning of their 160 hours of work time.
Break management is often lax and situations like unnecessary food trucks arrive at inopportune times, causing entire production staffs to stop working so they can wait in line 10 minutes, so they can take a 10 minute break.
Waiting rooms that have views into the shop create unhappy customers when they see the entire technical staff taking priorities other than completing their vehicles.
There can be many reasons for low productivity, but none of these matter if productivity is not measured and managed so that the true results can be identified. In part three we will examine another important measurement of the service and body shop time inventory: technician efficiency.