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Understanding the Service Numbers Part One |
 Understanding Service Numbers seems like a very basic responsibility for a Service Manager, doesn't it? By numbers, I mean Labor Sales, Gross Profit, Hours per RO, Productivity, Efficiency, Effective Labor Rates, Maintenance Penetration, Time Availability, etc. In my travels all over North America, more often than not, I find Service Managers simply haven't had the training to understand these and the rest of the service numbers. That doesn't mean that they don't know what the numbers are (in many cases, they can quote me their own numbers) they simply don't know how to analyze or affect change to those numbers within their day to day service operations.
In this series, I will endeavor to unlock an incredibly important aspect of service training, which for the most part, has been largely ignored by the industry.
Let’s examine Gross Profit percentage. It is somewhat simple, I agree, to calculate gross profit - Labor Sales less labor costs equals gross profit. Many Service Managers have decided to dispatch the lower labor sales jobs (Oil Changes, Tire Rotations, etc.) to the lower costed technicians (apprentices). Naturally then, they dispatch the higher labor jobs (head gaskets, transmissions) to the higher costed techs. This would seem to be the answer to ensuring high gross profit levels and, on the surface, (and the financial statement) it does!
But how are these numbers impacted when business is slow? Since there is typically more maintenance than repair work (at a lower GP %), you have some tough decisions to make. You must either dispatch your maintenance work to higher costed technicians - sacrificing your GP% level - or have the higher costed technicians stand around waiting for a higher labor sales job - sacrificing your productivity percentage.
In other words, your higher costed technicians are better producing technicians (higher efficiency = more jobs dispatched and completed). Using them on simple jobs would force you to sacrifice your GP% every time, wouldn't it? So the numbers contradict the processes we typically employ, and if you don't understand how to react to this contradiction your entire operation will suffer.
At Auto University, our Fixed Operations specialists will work with your Service Team. We will help you understand and work through these challenges by customizing a solution specifically for you. The solution(s) will be based on all of the factors of your operation-GP%, Hrs/RO, ELR, maintenance penetration, productivity, efficiencies, costs and pricing to ensure your operation is successful overall, and not just an operation with a high GP% level!
Click here to find out how to learn how to understand more about the Service Numbers.
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For more information or should you have any questions please contact:
shawn.ryder@autouniversity.com© 2008 Auto University - A Division of Ted Ings Group, Inc. All Rights Reserved 
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