Managing availability and usage of shop labor can have a profound effect on profitability. In fact it’s one of the most often overlooked yet potentially impactful areas of business activity in an auto repair shop. These types of measurements require time reporting and time reporting has a cost. But if the information is put to use it can prove to be a worthwhile investment. Time reporting can provide an accurate measurement of how well time is being used and provide information that will support improvements. Efficiency measurements tell us how well the technician did versus the time billed to the customer. Proficiency measurements tell us how well the shop used the available technician hours. Striving for the best possible ratios in these areas will result in higher profitability for the business and its employees. Furthermore, providing incentives for achieving certain levels of efficiency and proficiency can ensure business success.
The Cost of Reporting
The time spent reporting when jobs were stopped and started as well as time spent not working on jobs is an expense that is absorbed on some level. But if technicians have easy access to computers and clocking on and off of jobs on repair orders doesn’t take a lot of time then the cost is minimal. If the technician works from a computer screen rather than working from paper to determine what jobs to do then time reporting can take place in the normal course of work and the impact is negligible. This responsibility falls on shop management. If work flow is optimized then time reporting will naturally become part of the process.
Efficiency is a measurement of how well the technician performed as compared to the time the customer was charged for a job. So the source of the initial estimate is critical in this situation. Using an accurate labor guide to determine the amount of time required to perform a specific repair on a vehicle will generally ensure a good starting point. The amount of time required for repairs that have been performed a number of times in the past can be based on history. The key is to have a starting point that is consistent.
Proficiency is a measurement of how well the business utilized the labor hours that were available during a given time period. It is an indicator of how well the shop is running. One hundred percent proficiency indicates that technicians spent all available hours doing repair work. Evaluating proficiency enables the shop to identify areas that can be improved and pinpoint processes and procedures that can be modified leading to greater profitability for the business and its employees.
Compensating employees for higher efficiency and proficiency ratings is a model employed by many businesses. It’s important that incentive plans include responsibility for quality problems and customer relations. Higher levels of efficiency that result in higher levels of comeback work will negatively impact the long term viability of the business. Likewise, overselling to increase proficiency will result in higher customer attrition rates. All factors and impacts must be included in the evaluation of results.
Taking Advantage of the Opportunity
In order to make the most of these measurements care must be given in the reporting of time utilization. Processes must be put into place to use the information to make evaluations and identify areas in need of improvement. Including employees in the evaluation process will bring a perspective that may not be readily visible to management. Evaluating efficiency and proficiency should be continuous. Opportunities for improvement should be captured so benefits can be realized by the business and its employees.