Boost profits this season by taking a good look at how your technicians spend their time!
Gauge the Amount of Precious Dollars Lost on Daily Tasks
A minimum of 90% of a technician’s day should be billable hours, so any non-revenue generating task they perform can cause your dealership to lose money. For instance, many dealers use their technicians to perform duties such as shop clean-up, building maintenance, snow removal, unloading trucks, putting away parts, etc.—jobs that take your techs away from generating revenue. Even time spent waiting for parts to be pulled when the parts department is busy is considered “non-wrench-turning” time.
Tracking 100% of what you pay your technicians through a well-designed time management system is essential to increasing service department profits. For example, by setting up monthly work orders for non-billable tasks in your system you can quantify the value of your technicians' non-productive time. Billing those monthly work orders out to the relevant departments allows department managers to see where time is being spent and determine whether staffing changes might need to be made. For example, if you find your technicians are spending a significant amount of time waiting to receive requested parts, you may find that it makes more business sense for you to hire a parts runner at a lower wage to compensate for their lost time.
Work Orders Categorize Labor Hours
Here’s how it works: In your dealership management system, set up monthly work orders for the following items: shop clean-up, building and facilities maintenance, unloading trucks, parts support, waiting for parts, misc. sales support, etc. You should also set up monthly work orders to be used to adjust billable time: excess time, flat rate adjustments, and customer loyalty adjustments. Your technicians can easily clock onto these work orders using a computerized time clock, and you can track their billable vs. non-billable hours to the minute. The ability to duplicate these work orders also saves time and makes things more efficient for the service department. By tracking your technicians' time, you are sure to pinpoint areas where their time can be more effectively utilized.
Get it Measured—Get it Fixed!
Here’s a “showcase” example of how simply analyzing your technicians’ tasks can help you discover revenue-boosting changes you can make in your business. A dealer in Nebraska kept lamenting over how he needed a new building because he simply did not have space to display his smaller equipment inside. Because of his lack of display space, six of his technicians spent close to an hour per day bringing equipment in and out of the store to set up outside. Through the use of his dealership management system, the dealer discovered he was losing nearly $100,000 billable hours per year from time spent on this daily task alone—beyond what a mortgage loan on a new building would be! By hiring high school students at a lower wage to do the same job, he got his technicians back in the shop doing their work, and utilizing the increased revenues soon got a brand new building!
While every dealership is unique, almost all have “holes to fill.” Don’t let billable time literally slip through your technicians’ hands! Get a computerized dealership management system in place to start tracking time and find these “holes” right away. Most dealers who implement this type of system see significant increases in service technicians’ efficiency and in their bottom-line profits!
Charter Software’s dealership management system, ASPEN, allows you to create service codes with specifically assigned labor categories which can be used to distinguish revenue vs. non revenue tasks, and determine the default charge out rate for each. These category settings such as customer, warranty, setup, reconditioning, rework, customer loyalty and other non-revenue generating activities are all customizable in ASPEN.
The ASPEN Service Module also allows you to print a report any time to use for evaluating service department efficiency by comparing hours paid to revenue hours. Many dealers use this report to pay bonuses and incentives to employees in the service department.