Work In Progress
Work In Progress represents income that is at risk of being lost to the Service Department.
Work In Progress refers to repair orders (Warranty, Retail, or Internal) not finally costed and allocated for payment. Usually, within a 12-hour period, this is could be an operational delay in processing warranty and internal jobs and is part of the routine costing cycle. However, there is a danger where repair orders that are not finalised will be written off resulting in a loss to the dealership.
The most crucial rule with regards to work in progress and preventing write-offs is:
The vehicle must be on the premises and may not be released until the job card is closed and costed, and the dealership has received full payment for retail work.
The Work in Progress Report
Depending on the DMS (Dealer Management System) there are several reports allowing for the management of Work In Progress.
The reports are generated based on algorithms utilising:
- Warranty Aging.
- Warranty WIP.
- Warranty Claim Status.
The Work in Progress report identifies vehicles whose job cards are open, indicating that the job cards have not been finally costed.
The Work in Progress Report must include:
- All sublet jobs.
- All warranty work not costed.
Job Cards that are open must:
- Not be closed off until the work is finished and must not be closed off for month-end.
- Be closed off as soon as the job is completed.
Checking the Work In Progress
Every item in the Work In Progress reports older than 3 days must have a justification:
- A logged technical assistance reference number.
- Backorder tracking number and ETA.
- Claim number and status.
- Name and details of the sublet service provider and ETA.
- Name and details of the party to provide authorisation and explanation for the delay.
The Service Manager and Dealer Principal should conduct random checks of WIP’s older than 3 days:
- Confirm the delay with the manufacturer’s Technical Support and action.
- Confirm the delay with the manufacturer‘s PDC and action.
- Check the Warranty Report status and action.
- Confirm with the sublet service provider and verify the ETA.
- Confirm with the party and resolve the delay.
Work In Progress Report Benchmarks
The benchmarks presented below are widely used within various dealer groups operating in South Africa.
- The total value of the parts column should be less than 1/4 (1 week) of the previous month’s parts sales.
- The total value of the labour column should be less than 1/4 (1 week) of the previous month’s labour sales.
- Labour may not be zero on any job card where there is a parts amount. If so, it means that a part has been drawn without charging any labour to install. Has the part been actually fitted or is it booked out of the Parts Department but not installed?
- The total number of Work In Progress jobs should not equate to more than an average of 2 days bookings.
- The oldest job should not be more than 4 weeks old. Investigate why.
- There must be a valid reason why any job is open for more than 3 days unless:
- Parts: The required parts are not present but have been ordered.
- Technical: A request for technical assistance has been submitted to the manufacturer.
- Workload: The loading of the workshop is over 100% of the available time.
- Warranty: The claim is not approved, but the claim has been loaded and is pending.
- Customer Delay: The customer has delayed completion of the work by not granting authorisation or whilst raising credit.
- Sublet: The vehicle is awaiting completion of a sublet repair eg. engine machining.
- Legal: There is a legal dispute pending finalisation..
For assistance in controlling your Work In Progress Contact Amatz Automotive for a comprehensive solution to your Dealership Development.
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