Service Productively Efficient

Finally, a subject I can relate to-service! I talked with dealers around the country about this subject many times. Whether it is the question “Should I get into the service business?” or yet another “How can I get more out of my service department?” almost everyone wants to know more about the fixed operations. Let’s make the assumption you have a service department. With that, we’ll tackle how to get more out of your existing service department.

In order to improve the numbers, you need to first know what those numbers are. As we’ve discussed before, the inventory of the service department is time. Unlike the oldest used vehicle on the lot, the unsold hours won’t be there in the morning when you get in. So, if you want to get the most out of every hour available, you must focus your efforts on the items that effect those hours the most. There are two numbers that your managers must pay very close attention to: productivity and efficiency. I’ve talked about this previously, but it’s worth repeating. Productivity measures how often the technician turns a wrench while they are at the dealership. Your managers must recognize what activities or distractions inhibit the technician from turning a wrench and reduce them. Efficiency measures the ability of the technician to turn a wrench. The only way to improve efficiency is training.

We’re done with the review so let’s go forward. I have more questions. Is your management team (that’s both the parts and service manager) focused on flat rate hours? Does your service manager know what the shop is capable of doing each day, week and month? Amazing enough, most service managers think they know, but seem pleasantly surprised when we dig into it. All service managers understand dollars and hours per repair order and CSI.

Unfortunately, very few get the financial training that will help them get to that next level. Is your advisor’s incentive plan focused on the inventory of the service department? Finally one more question. Do the parts counter people incentive plans have any part of them focused on the flat rate hours the shop turns? If all these questions were answered affirmatively, you can stop reading. However, if you were one of those dealers that asked that question “How can I get more out of my service?” let’s get some answers to those questions above.

Many dealer principals and general managers think flat rate hours only pertain to service technicians. If a technician is able to turn a wrench 85 percent of the time, he is in the shop; he then will work just short of 7 hours (6.8 hours). Furthermore, when they turn the wrench and beat the clock at an industry average of 120 percent, they are able to produce 8.2 flat rate hours per day. Multiply this number by the number of service technicians you have then by the number of days in the week you’re open and finally multiply this number by 4.33 weeks in a month and you have your basis for success in your shop. Knowing this is your manager’s first step, and then managing the productivity and efficiency of the techs will start to answer that question you asked earlier (getting more out of the shop). Does your service manager know how many hours the shop can do today, this week, and this month? Knowing this, he can take the above number and divide it by the number of service advisors you have and you have the starting basis for their pay. I personally like to pay more for customer pay hours sold vs. warranty and internal. The only unanswered question we asked earlier relates back to the parts personnel. The back counter people should also have part of their pay based on the same number we just covered above. Have you ever heard about your service technicians whining about the wait at the back counter? This will take care of that problem in a hurry! Isn’t it wonderful how the plan comes together in the end?

Understanding the only thing you have to sell in the service department is time, then focusing all the personnel responsible for selling that time (incentives) and making sure your manager gets every minute of every hour out of the four walls he has, will help you answer that question “How can I get more out of my service department?” Once your service department gets productively efficient, yourbottom line will grow pleasantly plump!