An Eye on Repair Shop Productivity
Last week, your effective labor rate took center stage, but now we're turning our focus to repair shop productivity.
In an ideal world, everyone would be 100% productive all the time. Unfortunately, we're only human and haven't been able to achieve that goal. But that doesn't mean your shop can't be more productive than it currently is, just that you have to be very strategic about how you go about implementing changes to improve it.
What is Productivity?
Productivity as a metric is commonly thought of as a measurement of inputs and outputs—how much time and/or resources it takes to achieve the desired output.
Okay, so what does that mean for your shop? Productivity can be broken down into smaller pieces, namely overall shop productivity and individual technician productivity. Repair shop productivity can best be determined by dividing the number of technician hours available to be billed (most likely 8hrs/day multiplied by the number of technicians you have on staff) by the actual number of billable hours worked on a job.
This number allows you to better evaluate down-time and why it happens. Is there not enough work coming in? Ineffective processes? Trying to root cause this can help you decide on a way to improve.
When you're looking at boosting productivity amongst your employees, the first thing that might come to your mind is that they'll want more money. Surprisingly, that's not the main thing most employees want. Think about some of these other ways to boost productivity that might make your employees happier in the long run and actually save your shop some money.
Ensure Proper Training and Equipment
It's hard to complete a job you haven't been trained to do, or without the necessary tools to do so. Evaluate what the environment is like in your shop. Are your technicians current on certifications? Are there trainings or refresher courses you could have them do that would not only make them more confident in their job, but make them more productive overall? This might cost you some money upfront, but the boost in morale and productivity should help regain those profits in no time.
It's the same with tools and equipment. Do your technicians have to use outdated resources to complete jobs? Updating the technology in your shop can help them complete their jobs more quickly and easily, increasing the number of hours available to sell to customers.
Work on Definite or Improved Standards and Processes
Do you have set processes in places to ensure everyone is completing jobs up to the standard of your shop and working as efficiently as possible? If so, make sure these processes are actually working as intended. Evaluate them for flaws or possible work stoppages. Try to see where improvements can be made to save everyone time in the shop and prevent lost hours.
If you don't have standards in place, it might be a good time to do so. It would better help you track how everyone's time should be spent, as well as more easily locate and resolve any issues that might arise. You'd be surprised to see overall productivity increase as well, as your employees can be more sure of exactly what is expected of them and act with confidence.
Rethink Shop Organization
Think about how your shop is currently set up. Is there a logical flow? Are your technicians easily able to locate and use the tools they need? Try to identify places where work might be slowed due to poor layout and see if there is way to reorganize. Aim to improve your technicians' ability to continue working without interruptions to go find a tool or part.
Evaluate Lost Time
Try to identify where time is getting lost in the shop. Is it because of the previously mentioned disorganization (either in processes or shop layout), or does it have to do with poor estimates? Make sure that your service manager and technicians are on the same page with estimates and what is expected of them. It's vital that the estimate given to the customer is accurate and achievable by your technicians, or you will be losing both time and money.
Decreasing downtime comes down to how work is organized in your shop. Again, make sure that everyone in the shop is on the same page (this is where processes come in handy). Try to make sure that the right technicians are being assigned jobs and that you're not underutilizing your more skilled techs.
Work to Prevent Employee Turnover
As you may know, employee turnover costs your shop a lot of money. But even more than that, it stalls your productivity. Not only did you lose a skilled employee with the experience to get the job done, odds are you have to hire someone who will require training to get them to that level. That takes time and money, and assumes that you're able to find a replacement rapidly. You don't want to lose business simply because you don't have enough techs to do the work.
On average, employee turnover costs can be as much as $12,000 to $20,000 per employee. That's a lot of money for something you can work to prevent. Think about employing these strategies to help retain employees:
- Foster an environment that promotes and rewards excellence
- Redefine the value of your entry level employees
- Provide a work/life balance
- Listen to and encourage employee input
- Give your employees feedback on their performance, especially when they are doing well
For more information about employee retention, read our past blog.
Get Jobs Into Your Shop
It's impossible for your technicians to be productive if there are no vehicles for them to work on. Make sure that you're doing everything you can to ensure that your bays are filled. Work on establishing good customer relationships for repeat business. Develop a clear marketing strategy to drive in new business. If you want your technicians to do their job, you have to make sure there are jobs for them to do.
Some Things to Note
In their June 2018 issue, Ratchet+Wrench find that productivity is a metric most people are familiar with, but few know how to track. They note that by learning what productivity really is and tracking it in relation to other KPIs (key performance indicators), particularly effective labor rate, you can better identify benchmarks for productivity and increased profitability.
Tracking productivity is a good way to track trends in your business and it provides you with a better way to plan for the future. It does not, however, reveal the whole story. Remember that while productivity can be tied to profit, it does not tell you how profitable your shop actually is. That's why it's important to track multiple metrics to have the clearest idea of what's happening in you shop as a whole.
Closely tied to the idea of productivity is efficiency. Learn about how measuring your shop's efficiency can impact your shop in our next post!
In the meantime, if you want to improve productivity by always having the parts you need, check out our Repair Shop Value Program. You can learn more about all the great benefits here.