The Workshop’s Potential Earnings are derived from selling labour hours, so it is important to understand how many potential hours are available for sale each day.
Potential time available from technicians
- Technician 9 hours
- Apprentice 1st Year 2.25 hours
- Apprentice 2nd Year 4.5 hours
- Apprentice 3rd Year 6.75 hours
- Apprentice 4th Year 8 hours
- Working Foreman Negotiable hours
The number of hours available each day in the workshop is dependent on the number of technicians and apprentices, and if applicable a working foreman’s agreed hours.
These available hours are referred to as “Workshop Loading” and are booked in advance.
The number of days in advance that the workshop is booked is referred to as “Lead Time” and should not exceed 3 days. If lead time exceeds 3 days then perhaps the dealership is booking incorrectly or is short-staffed for the available work. Excessive lead time may result in lost labour sales with the customer attempting to make a booking at another dealership’s workshop.
Workshop loading (advance bookings) determines the ability of the workshop to fully utilise the workshop’s available hours and to maximize the potential labour sales for its productive staff complement.
Bookings must always be made on potential available hours and must never be allocated on Jobs Per Day. The consequence could result in either too much work, with unhappy customers as vehicles have to stay over, or in too little work resulting in excessive technician idle time.
Loading a workshop correctly drives the utilisation of its capacity.
There are a number of benchmarks for Workshop Loading, usually at 80 – 85% of available capacity.
The reason cited for the figure not being 100% is to allow for “Carryovers”, “Walk-ins” and Tow-ins”. However, many dealerships book to 100% capacity to compensate for no-shows.
Idle Time is the time bought from a technician that was not actually spent working. Accurate technician clocking is crucial in determining if there is a problem with technician utilisation.
Idle Time and Utilisation
If a technician has excessive Idle Time:
- is the technician being allocated enough work?
- is the workshop booked to its potential available hours?
- is the technician’s time wasted collecting parts, getting the vehicle into his work-bay, or other operational inefficiencies?
- is the technician doing tasks other than selling labour?
- is there technicians time unaccounted for performing work without a repair order?
Productive hours are all the hours actually spent clocked on retail, warranty and internal work.
Note: different hourly rates are charged for retail, warranty and internal work.
This refers to time where non-productive labour is performed, for example, workshop maintenance, downtime/idle time, rework on comeback repairs, training, rectification work (= free rework performed without a job card).
This is the time that all productives are available to work (including breaks).
Hours not present
This includes hours for holiday, training, and illness (in some DMS systems this can also be represented as non-productive hours).
This is the number of hours paid by the dealership (including annual holiday, training, illness, etc.).
Productivity, Efficiency and Utilisation
The workshop must maximise its labour sales according to the hours available. As a measure of the workshop’s achievement of its budgeted target, management monitors and measures individual technician performance and workshop bay utilisation.
This is done using 3 available technician metrics.
- Available hours (hours that the technician is available to work according to their MU factor).
- Sold hours (Labour Time Schedule – or Flat Rate Time – which is hours that can actually be charged for the hours worked).
- Worked Hours (the actual hours the technician spent working.)
From the above 3 distinct Key Performance Indicators are calculated:
Technician Labour GP %
Technician Labour GP%= (Utilisation * Efficiency) * Labour Rate / Labour Cost
Productivity is the driver of Technician Labour GP%.
Technicians who can work faster than the flat rate manual AND are kept busy (high utilisation) will generate higher Labour GP%.
Labour GP% is dependent on:
- Dealership Labour rate/hour.
- Technician Labour cost.
- Technician Efficiency.
- Technician Utilisation.
- Correct technician Clocking.
- Accurate Costing.
If Labour GP% is low then:
- Technicians are not fully utilised.
- Technicians are taking too long to complete repairs/servicing.
- Technicians are not clocking correctly.
- Job card is not costed correctly: Are all tasks billed, and costed as per the Labour Time Schedule?
- Service Advisor / Technician is not taking advantage of upselling opportunities.
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