Are my technicians efficient and productive? Keeping a record of every operation in the Service Department is one of the cornerstones of successful dealerships.
In this article we will analyze the performance indicator used to measure the Overall Workshop Efficiency.
Indicator #4. Overall Workshop Efficiency
Many dealers wonder how they can become more efficient and, in some cases end up making the wrong decisions such as hiring more staff or investing more money on infrastructure. However, a simpler answer is this 3-step strategy:
The Workshop Efficiency indicator allows you to detect if your technicians are being efficient, i.e. if the time they spend on their tasks is profitable for the dealership, thus avoiding financial loss. How do you calculate this indicator?
Technician Efficiency (%) = Invoiced Hours / Worked Hours
(Worked Hours per week = Number of Technicians * Hours per week)
The following chart shows the situation of a dealership that was invoicing only 160 technician hours, while technicians were being paid to work 400 hours. This indicator was very alarming for dealership management as it showed that more than half of the technicians’ hours were spent on tasks which weren’t producing any revenue.
|Low Efficiency||High Efficiency|
|Increase in revenue||+ $37,750|
All amounts are in United States Dollars.
To face this situation the dealership adopted two new strategies: (1) They introduced new practices and habits to keep track and measure every operation in the workshop, and (2) They decided to implement Autologica’s Job Clock and Technician Panel tools so as to register exactly what each technician was working on in the workshop at all times.
Job Clock: This tool allows technicians to register the time spent on each task, and the hours dedicated to general tasks that are not invoiced. Technicians use a touch screen to specify the start and end time of each operation, which makes it easier for the Service Manager to monitor their activity.
Technician Panel: The Service Manager can monitor what each technician is doing in real time, from the DMS. This tool shows which technicians are working and which are idle, delayed tasks, cancelled tasks, etc.
The information that the dealership obtained showed the cause of the department’s low efficiency, so a series of practices was implemented to improve it:
- Training for technicians
- Improvements in the organization of the workshop (via detailed processes)
- Aftersales technologies implemented with Autologica DMS
The result was an increase in monthly workshop revenue without having to pay for more technician hours.
The indicator discussed in this article focuses on technician performance in the workshop. If low indicator values are detected (e.g. less than 135% of efficiency), the dealer must analyze the performance and take actions in order to improve:
- Train technicians so that they improve performance.
- Have enough stock and tools, to avoid delays.
- Periodically monitor operations in the workshop.
- Train Service Advisors so that they sell more services.
Workshop efficiency is composed of technician behavior, skills and habits in the workshop. To improve efficiency it is important to monitor technicians to know if training or corrections are necessary. The indicator will gradually improve, as will revenue.
In the third part of this article we will discuss the following indicators: Labor Service Gross Profit, Effective Labor Rate and Parts-to-Labor Ratio.