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Beat the four enemies of an efficient service business

With depressed car sales, 2009 will bring an increased emphasis on aftersales and, in particular, service and workshop activity. But in many dealerships four barriers in particular often act as a drain on profits:

• Work in progress
• Diversionary time
• Over-age warranty claims
• Escaped cash

Last month we looked at work in progress, this time we focus on diversionary time.

Often called ‘non-revenue time’, sometimes confused with ‘idle time’ and often ignored, diversionary time refers to the time spent by a technician who is available for work but whose time cannot be recharged to a job.

Holiday, training and sickness are ignored when calculating this ‘utilisation’ KPI as follows:

Hours working productively
——————————- x 100%
Hours attended & available

Some lost time is inevitable, so set the benchmark accordingly. Assuming you have service supervision (foreman, manager, advisers, etc), a figure of 95% is reasonable and still represents a loss of 24 minutes per day.

Diversionary time is expensive. If your shop is busy and hours can be sold, a loss of £120 or more per hour – or £2 per minute – is a fair estimate including lost parts profit, oil, etc.

So, theoretically, we are admitting we will lose £48 per technician per day. What we don’t want to do is lose any more!

Looking at franchise composites and other data, utilisation ranges from the low 90s down to 66%, so in the worst cases one third of the technicians’ time is lost to activities which don’t earn a bean.

So, why is there a problem? There is certainly a problem with measurement. Dealerships boasting high utilisation often seem to have low productivity. Closer inspection often reveals that plenty of unrecorded diversionary time exists and, while working, the technicians are pretty efficient. It’s when they’re not that the problem arises.

“It really isn’t difficult if you make a little effort to analyse each day’s hours from the time records”

Every garage is different, so the first place to start is to accurately record and measure diversionary time. It really isn’t difficult if you make a little effort to analyse each day’s hours from the time records.

Many such analyses have discovered, for example, that technicians are waiting for work first thing in the morning. Solutions have included staggered start times, pre-picked parts, a ‘go-for’ to help with bringing in vehicles, etc.

Sometimes the problem is at the day’s end, when there is no more work to do. Genuine slack may be the cause, but often it is down to workshop loading. Check your system. Are you loading 100% of available hours, or do you keep some time in reserve ‘just in case’? Remember the cost of this unused time!

Other problems might include diagnostic time, road tests, waiting at the parts counter, etc. Some might be avoidable, others not. Remember, you benchmark for 24 minutes a day so expect some problems. The important thing is to measure, quantify and qualify the lost time.

• Who, when, why?
• Does it affect all technicians or just some?
• Is it worse on a Saturday morning or Friday afternoons?

When you study it carefully, solutions will often appear. And at £120 per hour, you just cannot afford to ignore it!

Your action plan
• Accept that some lost time is inevitable
• Set a benchmark for diversionary time
• Find out if technicians often wait for work in the morning
• Check your workshop loading system
• Involve your staff in coming up with solutions