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Selling To Capacity

In our industry, Hours per RO, whether right or wrong

is one of the key measurement elements in our Service Departments. Service Directors, Managers and staff work very hard to improve the Hours per RO measurement; however, when the Hours per RO begin to drop, often they go looking for a justification of why it went down rather than trying to understand what is really happening. The big picture eludes them.

Assume a 5 technician shop which operates at an unchanged 100% efficiency and 100% productivity. The techs work an 8 hour day. This means that, as a maximum, there are 40 available hours everyday.

If this shop peaks at 2.0 hours per RO, than very simply, 40 hours divided by 2.0 hours per RO means that they wrote 20 RO's.

What is going to happen when they write 30 RO's?

If they maintain their 2.0 hours per RO, they will have 10 carry-overs.

More often than not, Service Advisors inherently want to "finish" all of their customers' vehicles and most likely the Advisors will "hurry" the technicians along in order to complete all of the RO's. As a result, up-sell opportunities will not be taken advantage of and thus 40 Hours divided by 30 RO's allows only for a maximum of 1.33 Hrs/RO.

In order to maintain the 2.0 Hours per RO if 30 RO's per day is the norm, this shop needs 2.5 more technicians or they need 60 available hours every day.

In my travels all over North America, I hear similar "excuses" as to why the Hours per RO are down - "Well, we did a bunch of oil changes today, this week, this month." "Most of our customers' vehicles are newer and aren't yet due for a major service."

Service Managers tend to overlook the fact that their business has grown when the Hrs/RO goes up, and are hesitant to hire more technicians to maintain the growth. They justify this decision by indicating that business tends to slow down in "Insert Month here", or they don't want to hire a tech and have to lay him off after the busy season, or they're hesitant that the current techs' hours will suffer when business slows down.

I refer to these phenomena as, "Selling to Capacity." If I have 40 hours available to sell everyday, I will sell only 40 hours whether or not I write 10 RO's or 50 RO's. I will always sell the 40 hours. Don't get caught selling to capacity - hire the techs - grow your business - its fun!