What’s the easiest way to make that kind of money?
It’s not increasing you labor rate.
It’s not increasing your parts margin.
It’s not cutting costs.
It’s not trying to increase car count.
What is the secret? Improving your shop’s productivity! The statistical productivity average for shops is around 65%, depending on which report you read. That means the average technician will produce about 26 hours of work for every 40 hours scheduled. 14 hours per week, or 2 hours per day, is lost time that can never be used again.
Not Just the Technicians
Improving productivity is not just in the techs’ hands, but in the hands of your whole team. Your service advisors, other staff, and you play important roles in the overall productivity of your technicians. However, in this article I will focus on technicians. I would encourage you to get the whole staff together to consider the workflows in your shop that keep the productivity numbers low and could boost what you will read in this article.
Before we go any further, I will show you the formula to get $31,200 with just a small improvement in productivity. I will be using simple numbers for demonstration and your shop’s mileage may vary (This does not include additional parts sales that come with efficiency). I will use $100 shop rate and 3 techs scheduled at 40 hours per work week for this illustration.
120 hours X 65% = 74 hours X $100 = $7800 in labor produced.
Now let’s say you increase your productivity to only 70% – less than a 10% increase.
120 hours X 70% = 84 hours X $100 = $8400 – $7800 = $600 per week increase.
$600 a week x 52 = $31,200.
All this for just a measly increase of less than 10%. This increase in income % will be the same no matter what your productivity is now. What would you do with that additional income? This is a real example; I have done it in my own shops and with the shops I help.
The Easiest Way
Here’s the easiest way to get an average of a 10% increase in your shop’s productivity at no cost (except for a few minutes of your time): track it and report it! Yup! It’s that easy! With the new Manager SE update 8.4.0.85 you now have a new and easier way to track the time a tech spends on each job.
How and why does tracking and reporting get you an increase? Because of our human nature. It is in our DNA to desire to do more to improve ourselves and our natural competitiveness. But to start this, we need to know where we are and where those around us are in relation to the numbers. This could be anything like money, a bigger home, fancier car or just about anything.
Let me give you a simple example of how I made it work in my shops (and I didn’t have a software program to help). I made a simple chart with the technicians listed at the bottom and $ on the side. Each morning I listed the number of $ sold the prior day by each tech. Nothing fancy and it did not include hours. What happened was my techs became very anxious every morning to see where they were. And without any other encouragement, they started trying to do more than the others. Later, I learned to track hours was fairer to the B & C techs, but that took more time for me as, I stated earlier, I did not have a point-of-sale program – it was the dark ages! But my productivity improved immensely, and eventually my techs earned better pay through my bonus schedule, which kept the numbers growing.
So, there you have it: tracking and reporting is the first and easy step to improving your shop’s productivity. But to take it further, you need to add some incentives for the team, including the Service Advisor. Those incentives would be bonuses or increased hourly pay when certain levels of productivity are attained.
Danger! Danger!
WARNING: you will get pushback when you start asking your team to start punching in and out of the time clock for the first time. They won’t like being tracked for many reasons, so you need to introduce this new procedure carefully and properly.
I would suggest that you first come up with some reports that show your current productivity. You must assign a tech to every repair job. Then print the Tech Hours report. This will show how many hours are sold per day. Divide the hours on the report by the hours available to get your percentage of productivity. Now you have something you can show your whole team and start the conversation about the need to improve the shop’s productivity. Emphasize that it is something everyone on staff needs to pitch in and help. This would include shop organization, parts ordering, dispatching and more.
Handle this well, and you will be on your way to increased productivity, profitability, and overall improvements in shop operations. A happy team and a happy owner are a by-product of this, as well.
You can email me at [email protected] or give me a call at 408-221-1165 to schedule a call for an up to 30 minute no obligation session.
Author: 1 Week 1 Thing
Jeff is an automotive consultant with ESI Training who provided this shop tip. Reach out to your Local Mitchell1 Rep for Mitchell1 software.
