Clean Up Service Profits

Two Tricks To Increase Service Department Profitability

Service departments are like pit stops at the Daytona 200. Pit stops require every team member to have a specific job, and they have to do it right the first time, or the whole team loses. When I was racing, I always looked for ways to shave tenths of a second off my pit stops. I always hunted the small stuff, because tenths of a second would build to whole seconds. It always seemed like it was the small stuff that slowed down a pit stop or got one of my mechanics hung up.

Service departments can only bill one thing and that is time. So like a race, service departments only have a finite amount of time they can bill during the day. Your department is in a race against the clock to complete as much work as possible during any given day. Every minute not billed is lost forever, so you need to concentrate on billing as many minutes as you can. Minutes build to hours and hours build to dollars.

One of the most common issues I see in service departments is a lack of organization. Usually there are tons of used parts laying around and piles of stuff that have not been used in years. I have three simple clean shop rules. If it is not:
1. A tool that you use to work on units …
2. A part that is about to go onto a unit …
3. A part that just came off a unit and is waiting to be tossed in the trash that night …
… Then why is it in your shop?

When I see mechanics having to move junk around just so they can get at things like the tire machine or bench grinder, I cringe. Every second they take to move something is a second they could be doing something else. The only time a mechanic is making your shop money is when their wrenches are turning.

If you have a nice clean shop and everything is organized, you might be losing some time if your technicians aren’t focused on the job at hand.

During one consulting job, I was called over to assist a mechanic in diagnosing an engine fault code. The mechanic had just reassembled an engine and the fault code indicated a camshaft position sensor error. I asked the mechanic if that error was present before the complete tear down and he said no. I informed him he should take the cams out and put the exhaust camshaft back in the exhaust side and the intake camshaft back in the intake side. His response was unforgettable to me. “I know these cams are in right because Sammy was over here talking to me while I was putting them in.” I knew right then what the problem was. In the end, the mechanic spent four hours chasing down an electrical problem and then decided to take my advice and swap the camshafts back into their proper position.

If your shop has problems like the example above, try building some walls between the mechanics. Many times there is a specific process to repair a vehicle, and when you interrupt a mechanic, you interrupt that process. When a mechanic gets distracted, they can get lost in the process and forget things. Your service manager and other employees should not interrupt a tech at all costs.

A clean shop and a focused team will go a long way towards increasing your shop productivity. Here are some concrete methods to measure your success:
1. Purchase a time clock that punches in military time and tenths of an hour. Require every technician to punch in and out on every job, including when they take breaks or if they need to break off the job to do something else for a minute. You can have them use the back of the R.O. to start or purchase time clock flag sheets.
2. The time you billed the customer divided by the time it took your mechanic to complete the job will give you a proficiency rating. Proficiency is used to determine how well you priced each job. This will also tell you how low you can price standard jobs and still be profitable. This will also tell you how well each mechanic did on each particular job.
3. The next step is to take the amount of time the mechanic is on premises during the week and divide it by the amount of hours he turns in a week. This will give you their efficiency rating. Efficiency is used to determine if a mechanic should have a job. A typical “A” mechanic doing “A” level work should be in the 40 to 50 hours per week range. The typical good “B” mechanic doing service work to “B” level work should bill 45 to 55 hours per week.

The reason a “B” level mechanic can outturn an “A” level mechanic is due to the difficulty of the work. If you have a mechanic that is well above these numbers, you should determine if they are really doing the work, or if you might be over-charging a little. If they are well below these numbers, you might need to ask yourself if they are right for the job.

Measuring your techs can also be fun. Try starting a monthly competition among techs with a spiff for the winner, like $100 towards his bill on the tool truck.

If you keep your department clean and measure your techs, you will have a good foundation to building profit.

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