A matter of time

BOB O'Connor does not believe in wasting time — or words.

In an interactive workshop at the TARA spring meeting in Phoenix, O'Connor asked an audience member a question. The response he got from the audience was “it depends.”

“Depends?” O'Connor repeated the answer he had just received. “That's what old people wear. I want to know what you think.”

In a six-hour session titled “Technician Time Management,” the consultant and former owner and operator of a variety of truck and automotive shops provided insight into how to view, evaluate, and maximize shop productivity.

Shops can know exactly their sales potential by multiplying the number of technicians the shop employs by eight hours per day. This number is then multiplied by the number of days the shop will be open (presumably five) and then by 4.3 (the average number of weeks in a month). A shop with three technicians would have 516 hours available per month, or 6,192 per year.

The precise number, however, is not quite that simple. It will be reduced by vacations, holidays, employee turnover, illness, and training.

Not all time is created equal. In O'Connor's view, the time technicians spend fall into one of four categories:

  • Available time — the number of hours a technician is on duty to perform a job that generates revenue.

  • Actual time — the “punched” time that a technician spends on a job.

  • Sold time — The time the customer is charged for the work performed by the technician.

  • “E” time — the time the technician is on the clock but not performing billable hours. The “E” stands for expense — money the company must pay without getting revenue in return. This is where the potential increases in productivity can be found, O'Connor said.

In search of waste

O'Connor offered several places management could look for wasted e-time.

  1. Personnel

    Given a choice between someone with a desire to work and someone who knows how to work, hire the one who wants to work. They can be trained more easily than the skilled technician can be motivated.

  2. Equipment

    Make sure technicians have what they need to do the job and are well trained in using it.

  3. Facility configuration

    Is your shop arranged as efficiently as possible? Consider, for example, having a parts room near the middle of the shop. A parts room located at one end of a 200-ft building is built-in inefficiency. O'Connor said he has seen shops that use golf carts to deliver parts so that technicians can continue to work.

  4. Training

    While technicians typically receive some training, service advisors frequently do not. “It's amazing how little training these guys receive compared with technicians,” O'Connor said. “Have you trained your service advisors to sell add-on items?”

Productivity vs efficiency

Most shops do not tract “E” and actual time, frequently misunderstanding the difference between “shop productivity” and “shop efficiency,” O'Connor said.

According to O'Connor, shop productivity is “management's ability to provide a flow of enough customer pay work to profitably maximize the technician's available time.” It can be calculated by dividing actual time by available time and multiplying by 100. The benchmark for productivity is 90%.

Shop efficiency is “the ability of all technicians combined to accomplish assigned tasks (actual time) within the times allotted (sold time). Efficiency is calculated by dividing sold time by actual time and multiplying the result by 100. The benchmark for efficiency is 125%.

“If your service advisor used to be your best technician, he may be imposing his own skills into the mix,” O'Connor said. “If he used to be able to do a job in eight hours, he may be selling it for nine. This affects the average technician's efficiency. Plus, it's amazing how many shops fail to tell their technicians how long a job should take. If they are paid hourly, they really don't have much incentive to do the job quickly.”

Applying the benchmarks

O'Connor applied these benchmarks to conclude that a shop with five technicians should be responsible for 45 sold hours each day. Here's how:

  • Each technician should have eight available hours each day.

  • Productivity should be 90%. Therefore, he has 7.2 productive hours (8 × 90%).

  • Efficiency should be 125%. Therefore, each technician should be able to handle nine sold hours per day (7.2 productive hours × 125% efficiency).

  • If the shop has five technicians, it should be able to handle 45 sold hours per day (nine sold hours per technician × five technicians).

How many jobs must a shop complete each day in order to fill those 45 sold hours? Some possibilities can be seen in the table below:

For even the fastest of shops, O'Connor believes it is unrealistic to think that a shop could process 22 vehicles per day. The main idea is that the more labor-intensive the trucks, the fewer vehicles must move through the shop each day.

“My definition of a zoo is an overactive shop trying to work on too many vehicles,” O'Connor said.

Scheduling workflow

For shops that do a lot of repair work, handling appointments is critical. O'Connor suggested that shops maintain a 20% reserve of labor hours in order to be able to accommodate drop-in or emergency customers. If a shop has 40 hours available, eight hours should be held in reserve.

“Load your shop to capacity, minus the reserve time,” O'Connor said. “Service and repair appointments provide you with a means of selling repair shop time efficiently while offering convenient service times for customers. Appointments also provide you with the necessary advanced information to assist you in maintaining a steady flow of work in your repair shop.”

O'Connor offered this advice for making service appointments:

  • Avoid making firm estimates over the phone. Estimates must be made after seeing the truck or trailer.

  • Maintain the appointment schedule throughout the day.

  • Start the day with 20% reserve time and then fill in as the day progresses.

  • Do not sell time you do not have. “What if your vacation schedule is in the lunchroom and you are selling labor at the front counter?” O'Connor said.

Dispatch control

O'Connor demonstrated a spreadsheet for use in controlling the flow of trucks and trailers into the shop. The spreadsheet included columns for tracking such customer information as new or existing customer, whether he was a drop-in, and if he kept his appointment or was a no-show.

“If you get a high number of no-shows, your sales guy is not effective,” O'Connor said.

If the repair customer does not show up within 30 minutes of the appointed time, O'Connor suggested calling him and finding out if they still plan to bring in the truck or trailer. If they want to cancel, find out why.

Among the other dispatch advice O'Connor offered:

  • Fill out the dispatch control sheet as the vehicle moves through the shop — not at the end of the day. This helps management make adjustments as the day progresses.

  • Monitor the vehicle's progress. If you discover that you can't meet the agreed upon delivery time, let the customer know immediately.

  • Let the customer know the vehicle is ready only after all work has been performed, the quality inspection has been done, and the repair order is complete.

The repair order

Communication is key to running an efficient truck and trailer repair operation, and the repair order is the focal point of that communication.

O'Connor suggested that the repair order be routed as follows:

  1. The estimate copy goes to the customer at the time the repair order is signed.

  2. The original and customer copy are held in a clean, orderly area.

  3. The shop copy is detached from the rest of the copies and assigned to a technician.

O'Connor made some comments about the language used on repair orders. For example, when describing the problem on the repair order, use the phrase “Customer states that…” The logic behind the language is to portray what the customer says is happening and to leave the diagnosis of the problem to the technician.

Another nuance is the use of the word “advise.” It is the role of the technician to diagnose the problem and to advise the customer regarding a solution.

“Present the customer with facts and opinions from which to choose,” O'Connor said. “But you must find out the customer's primary concern. You do that by asking him questions. Your recommendations must be consistent with the customer's concerns. Is he the type of guy who values fancy wheels, or is he there mainly to fix bad brakes?”

How much time?

Earlier in the session, O'Connor recommended that technicians should diagnose customer problems using a written procedure. However, he also respected the ability of technicians to identify the source of a problem on their own. A member of the audience asked O'Connor how much time a technician should be given to diagnose a problem before using a written procedure.

“Quote the customer a dollar figure based on your hourly rate,” O'Connor said. “Then give the technician a time budget. Allow the technician a percentage of the time you have budgeted. If he can't diagnose it in that amount of time, he should refer to the written procedure.”

How valuable is a technician's time? O'Connor calculates it this way if a shop sells 80 cents in parts sales for every dollar it sells in labor:

Hourly labor rate (example: $50) × Parts-to-labor ratio (80%) = Parts revenue per hour ($40)

Parts revenue per hour ($40) + Hourly labor rate = Hourly revenue ($90)

Hourly revenue ($90) ÷ Minutes per hour (60) = Technician's value per minute ($1.50)

“Every shop owner should be able to spit out this number instantly,” O'Connor said.

He encouraged shop owners to have technicians working on customer vehicles and not on tasks that do not produce revenue. The exception: clean-up.

“Clean-up is part of the job,” he said. “If I give you a clean bay, you need to return a clean bay to me. But if you are having a slow day in your shop, call customers who may be interested in bringing in a vehicle. Promise to give them VIP treatment, but get work into the shop that generates revenue.”

O'Connor demonstrated effective design and usage of timecards. His design had columns for sold time, “E” time, and actual time. In one case, the technician's available time was eight hours, but his total actual time was 5.4. O'Connor's standard: 7.2 hours.

“It's easy to blame the technician when ‘E’ time is high and total actual time is low,” he said. “But low actual times are more often the fault of management.”

O'Connor recommends having one time clock for every two bays in a shop.

“Time clocks cost less than paying a guy to walk around,” O'Connor said.

He also said that if a technician needs more than one time clock per day to log his activity, he is moving too much.

“The more movement you have in a shop, the less efficient it is,” O'Connor said.

Measuring technicians

With detailed information from their time cards, management can get a clearer picture of how technicians are performing — either by keying the data into a spreadsheet or a piece of paper.

In much the same way that overall shop performance can be quantified, tools can be applied to individuals. These include:

Technician productivity = Actual time ÷ total available time × 100

The result should be 90% or higher

Technician efficiency = Total sold time ÷ total actual time × 100

The result should be 125% or higher

O'Connor cautioned, however, that evaluating technician performance involves more than looking at the numbers.

“There may be favoritism in the way jobs are assigned,” he said as an example. “You need to look carefully at the time cards of each of your technicians. One of your technicians also may be overloaded. It's possible to be more efficient with less work to do. And it may be that the technician who is the least efficient simply needs more training.”

Improving efficiency

One of the easiest ways to improve efficiency in the shop is to have detailed job descriptions for all personnel.

“The top reason why technicians leave is that they did not know what management expected of them,” O'Connor said.

Other suggestions included:

  • Assign tasks according to skills

  • Work that requires less skill should be performed by those who earn less money.

  • Have parts pulled before the job is assigned.

  • Have trashcans and scrap iron containers nearby. An option is to throw everything on the floor and pay someone on an incentive basis to keep the shop clean.

  • Provide adequate number of air hoses and electrical outlets close to the work area.

  • Keep shop equipment in good repair and accessible.

  • Replace obsolete equipment.

Selling diagnostic labor

For those shops that do a lot of diagnostics, O'Connor suggested offering the diagnostics and the repair as two separate jobs.

“A certain percentage of your repair customers will not have you fix the problem,” O'Connor said. “If the diagnostics expense is built into the cost of the repair, you lose. Separate the diagnosis from the repair.”

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