Compared to labor, selling parts in the automotive industry is straightforward because it’s logical. During repairs, we often find a vehicle that needs a part replaced, we order the part from one of our vendors, we enter what we paid for it into our parts matrix, the system tells us what to sell it for, and voila — logic! When we find out through repair audits that a part slipped through the cracks, we chase down how the mistake happened. When we must get a part warrantied to satisfy our customer, we have an in-house procedure to follow up with our parts vendor. But what process do we have to ensure that labor works just as logically?
Labor Can Only Be Tracked
There’s a sense of follow-up pertaining to parts because they’re tangible items, meaning we can hold them in our hands. Here are two examples: If we order a case of filters, were billed for them in whole, and then we’re delivered half a case, the natural reaction is to call the vendor and ask where the other 6 are. If our inventory is spot-on, and we should have 12 of a filter on the shelf, and now we have 6, we pursue the reasoning for the shortage. Labor, on the other hand, cannot be held; it can only be tracked, documented, and sold. Or maybe there is a way to make it a physical item.
Our industry is so valuable that every 6 minutes on a clock has a charge to it (labor is sold in tenths of an hour), which shows how important tracking is. This leads to us having to know what our goals are pertaining to labor — for each day, each week, and each technician. A good starting point is to multiply the number of technicians you have times their scheduled hours. For example, the number of service technicians in a shop comes to 3 regardless of their experience level. They’re all full-time. There’s no vacation or holidays coming up, so you’ll have 120 hours of possible billed hours to use. Find a place to track this — a clipboard, dry erase board, anywhere it’s accessible to everyone. We want the ability to access the progress as the week goes on. Using this goal of 120 hours needing to be sold by the end of our 5-day work week on Friday, we must sell 24 hours per day.
Use a Countdown Method
Every time a job is sold, add up all billable hours on a RO and subtract from your weekly goal. Don’t do this task yourself unless you’re the salesperson. If you have an advisor, do it, it will give them a sense of responsibility and pride in chipping away at the weekly hour goal. If you haven’t sold 60 hours by lunchtime on Wednesday, you’re projecting to be behind. Keep in mind this is hours sold, not hours completed. Those we’ll track later. To ensure you’re selling enough hours for a job, a good rule of thumb is no job gets sold without the advisor speaking to the technician on span style=”text-transform: uppercase;”>every car. No, DVI notes don’t replace the conversation. This will clarify all prospective parts are covered, but more importantly, enough billed hours are on the work order for that specific job. High mileage, older, rusty vehicles take longer than “book time.” If your tech projects more time is needed than what is called for, adjust accordingly. Make sure your labor matrix is doing its job too. Don’t forget associated sales — fluid changes that go with a job that also has a billed hours value.
The Benefits of a Labor-Tracking Board
Advisors constantly going to a labor-tracking board will create internal competition and better tracking of labor sold as-you-go vs a report on Friday night telling you in black and white what can’t be affected any longer. Using the earlier shop dynamic, it’s understood by everyone that you have 24 units of labor to sell per day, like you may have 24 filters on a shelf to sell. The difference is if you sold 0 filters, 24 will be there tomorrow. If you sold 0 labor, you can’t turn back the clock. This applies to any number you sell below what clock time was available to the shop. That would equate to less than 100% productivity.
Train Your Entry-Level Techs
Lastly, our entry-level techs won’t accumulate billed hours like tenured and experienced technicians, but we could try. Training them on easy tasks like belt, battery, and bulb replacements can add up here and there and give them more self-worth. It is very likely that the low-end technicians won’t hit 100% productivity, so it’s understood the work that our tenured techs produce must outrun their counterparts. Again, clear conversations about enough time billed relating to work sold are imperative.
Non-ATI Members: Want to learn more about tracking labor and other strategies to improve your business? Start with a shop owner event at www.atievent.com. We offer virtual and in-person events, fee-based and free, for both auto repair and collision repair shop owners. Find one near you today!