CAN YOUR SERVICE DEPARTMENT RUN LIKE THIS?
Yes it can, once you begin to understand...
THE FUNDAMENTALS
Every decision that we make, as it relates to improving profitability, must include the Elements of the two Fundaments of Service Department Profitability. You cannot change the profitability outcome without changing a part of these fundamentals.
Fundamental #1 - Production Capacity
Fundamental #1 - Production Capacity includes the five elements that cause technicians to produce billable flat rate hours. These elements include: Hours Worked per Day, Days Worked per Month, Calendar Utilization, Productivity and Number of Technicians. Producing additional labor hours will require changes in one or more of these elements. Understanding these five elements will place you in a position to improve.
Fundamental #2 - Conversion
Fundamental #2 - Conversion is the process that we use to transform labor hours produced in Fundamental #1 into labor dollars, gross profit and, ultimately, net profit dollars. Conversion consists of five elements that affect the outcome of this conversion. These elements include: Effective Labor Rate, Gross Profit Percentage, Labor Adjustments, Expenses and Additional Gross Profit.
To learn more about the Fundamentals and other Best Practices, read my new book: "The Automotive Service Manager's Bible".
MANAGEMENT TECHNIQUES
Effective management is smart management. Most service managers spend their days in a "reactive" state. Responding to each problem as they arise, hoping that things will get better. This technique is called "Consumed in Current Reality" and expecting different results is called "Insanity", doing things the same way, expecting different results. One of the secrets to moving out of this state of being consumed is to carefully choose the important processes that create improvement: 1) Solicit input from your team; 2) design the technique to be used in monitoring these processes and put it in writing. Remember: "Any system left to manage itself is in a constant state of decline". A huge mistake that managers make is to implement a new process, without creating a plan to monitor performance, then wander why the process failed. These two management techniques can help you manage the process and your time, when used in conjunction with one another:
Structured Operating Technique
This process should be considered, when possible, for every process that you implement. This is a process that is structured to self-police its activity. An example would be a flat-rate-pay-plan or a can-for-can shop supply process. In the can-for-can process, a technician has to turn in, to the parts department, an empty can of cleaner, lubricant, etc. in order to get a new can. Process takes care of itself, right? Almost. We call this the "Pendulum".
Operational Operating Technique
The Operational Technique requires constant management involvement and intervention. An example would be requiring a requisition for all shop supplies. In this case, you may be constantly interrupted for an approval. We call this the "Juggler". How many of these balls can you have in the air at one time? This is what causes managers to be consumed with current reality. While necessary, the challenge is to minimize the time spent using the Operational Technique.
Very successful managers find ways to balance these two techniques. In the example of the can-for-can, the process manages itself, to a point. The daily activity requires no management intervention, but if left unchecked, shop supplies could be abused. Let's say that Jim and Bob are both transmission technicians and produce about the same number of hours. While Jim and Bob always turn in an empty can of cleaner, Jim averages 10 cans of cleaner per month and Bob averages 4 cans per month. Why? A monthly audit would trigger that question. So now you have a Structured Technique that has a monthly Operational Technique. Rather than being interrupted several times every day, the manager designates 30 minutes of time, each month to audit the results. Even a pendulum requires a level of maintenance.
To find out more about these and other techniques and best practices, read my new book: "The Automotive Service Manager's Bible".
OUR MISSION
"We assist dealerships in developing and sustaining profitability and customer delight by creating a focus on functional opportunities that the business would not otherwise see!"
WHY DO WE EXIST?
"We exist to develop Parts, Service and Body Shop Managers into Fixed Operation Superstars!"