Fixed OperationsFixed OperationsA Basic UnderstandingA Basic Understanding

Areas Of EmphasisAreas Of Emphasis

Controlling ExpensesControlling Expenses PersonnelPersonnel PolicyPolicy AdvertisingAdvertising Other SuppliesOther Supplies

SalesSales Labor Sales (Hours)Labor Sales (Hours) Parts SalesParts Sales Customer Pay, Warranty & InternalCustomer Pay, Warranty & Internal

Shop Production Shop Production CalculationsCalculations

ProductivityProductivity EfficiencyEfficiency ProficiencyProficiency

ProductivityProductivity Booked Hours/Actual Hours Worked Booked Hours/Actual Hours Worked

(Clock Time)(Clock Time)

Enemies of Productivity:Enemies of Productivity:Time Spent Waiting In PartsTime Spent Waiting In PartsTime Spent Waiting For Time Spent Waiting For

Authorizations from Service AdvisorsAuthorizations from Service AdvisorsIdle Time – No WorkIdle Time – No Work

EfficiencyEfficiency

Booked Hours/Time Actually Working On Booked Hours/Time Actually Working On Job (Punch Time)Job (Punch Time) Efficiency calculates how quickly and Efficiency calculates how quickly and

efficiently a technician completes jobs based efficiently a technician completes jobs based on the time the job pays.on the time the job pays.

Efficiency is only effected by the difficulty level Efficiency is only effected by the difficulty level of the job and the technician’s skill level.of the job and the technician’s skill level.

ProficiencyProficiency

Booked Hours/Shift HoursBooked Hours/Shift Hours Shift Hours are the hours the technician is Shift Hours are the hours the technician is

scheduled to work. Usually 8 or 10scheduled to work. Usually 8 or 10 Shift Hours are easier to track and calculateShift Hours are easier to track and calculate

PROFICIENCYPROFICIENCY

ProficiencyProficiency is the easiest to calculate because is the easiest to calculate because Actual Hours Worked & Punch Time are not Actual Hours Worked & Punch Time are not always accurately tracked and not as easy to always accurately tracked and not as easy to calculate.calculate.

Bottom Line: No matter which way they calculate Bottom Line: No matter which way they calculate it, it is important to know how it is done so that it it, it is important to know how it is done so that it is a consistent, apples to apples comparison is a consistent, apples to apples comparison from month to month or year to year.from month to month or year to year.

Booked TimeBooked Time

Also referred to as Flat Rate TimeAlso referred to as Flat Rate Time Chilton, MotorChilton, Motor Factory Warranty TimeFactory Warranty Time

Effective Labor RateEffective Labor Rate

Total Labor Sales/Total Hours BookedTotal Labor Sales/Total Hours Booked CustomerCustomer WarrantyWarranty InternalInternal OverallOverall

Increasing Effective Labor Rate Is Key In Increasing Effective Labor Rate Is Key In Today’s Service MarketToday’s Service Market

Loss Of ProductionLoss Of Production

1 Technician absent for one – eight hour 1 Technician absent for one – eight hour day.day.

At 100% ProficiencyAt 100% Proficiency 8 Hours X $85 (Effective Labor Rate) = $680 Labor8 Hours X $85 (Effective Labor Rate) = $680 Labor If Parts Sales is 1:1 = $680 PartsIf Parts Sales is 1:1 = $680 Parts Total Lost Sales For 1 Day = $1,360Total Lost Sales For 1 Day = $1,360 If Fixed Gross Profit is 50% of Sales = $680 Lost GrossIf Fixed Gross Profit is 50% of Sales = $680 Lost Gross $680 X 5 = $3,400 Lost Gross Profit Per Week$680 X 5 = $3,400 Lost Gross Profit Per Week

Loss Of ProductionLoss Of Production

If Each Technician Spends 1 Hour per Day If Each Technician Spends 1 Hour per Day waiting in parts or for authorizations:waiting in parts or for authorizations:

5 Hours per Week X $85 = $425 Lost Labor Sales5 Hours per Week X $85 = $425 Lost Labor Sales $850 Lost parts & labor sales$850 Lost parts & labor sales $425 Lost Gross Profit$425 Lost Gross Profit Multiply by 10 technicians = $4,250 Lost Gross Multiply by 10 technicians = $4,250 Lost Gross

Profit per WeekProfit per Week

Increasing Sales & Gross ProfitIncreasing Sales & Gross Profit

Rate & VolumeRate & Volume Volume = HoursVolume = Hours Rate = Effective Labor RateRate = Effective Labor Rate

Variable Labor RatesVariable Labor Rates Lower Hourly Rate Charged for Competitive Lower Hourly Rate Charged for Competitive

ServicesServices Higher Hourly Rate Charged for Captive Services Higher Hourly Rate Charged for Captive Services

(Services that are more High-Tech)(Services that are more High-Tech)

How To HelpHow To Help

Develop Specials That Help Increase Develop Specials That Help Increase Effective Labor RateEffective Labor Rate

Make sure they are telling and selling VALUE by Make sure they are telling and selling VALUE by including every extra a customer receives with a including every extra a customer receives with a particular service.particular service.

Group several services together as a Package in Group several services together as a Package in order to increase effective labor rate by adding order to increase effective labor rate by adding more value.more value.

Focus on services that add value, but not cost to Focus on services that add value, but not cost to the service specialthe service special

QUESTIONS???QUESTIONS???