Using IDS Astra G2 to Measure RV and Marine Service Productivity

How Much Money is Your Service Department Bringing in Versus Your Cost of Goods Sold?

I have heard of all types of methods and names for measuring technician and service department productivity.  I really don’t care what you name it, but the real measure of productivity is: how much money my service department is bringing in to the dealership versus my cost of goods sold.  So, let’s take a look at how we can measure real productivity.

Some of the ground rules:  You may have multiple labor rates, warranty, internal, PDI or Rigging, we will use hours produced and hours paid as the fixed measurement.  Determine what really brings dollars into your marine or RV dealership.  I believe PDI and Rigging paid for by the sales department is actually the sales department selling labor for the service department.  The sales department cannot deliver a boat or RV without it.  Thus, it is bringing money in.  On the other hand, setting up a show, mowing grass, plowing snow, and repairing the sink in the break room do not produce any cash.  These activities need to be done and often a technician from your shop is less expensive than hiring it out.

Calculate all the hours within a time period which you collected money for and divide by the hours you paid the technicians for.  This equals your productivity!  Example: last month my 4 technicians billed out 500 hours.  I paid them for 640 hours.  500 /640 = 78.125%

The 500 hours I was paid for equaled $42,569 due to different labor rates for warranty and PDI/Rigging.  Dividing the $42,569 by the hours billed equals $85.13, my effective labor rate based on productive hours.  Or, $42,569 divided by 640 hours equals effective labor rate by all hours $66.51.

You now have two measurements which can be used to increase your bottom line in Service.  First, your effective labor rate which is affected by the different labor rates you collect, i.e. warranty companies, retail, PDI.  Is there anything you can do to raise them?

The second measurement is productivity of your technicians.  Productivity is affected by the flat rate you use and the efficiency of the technician compared to individual jobs on flat rate.  Interval time – the time lost between jobs moving work in and out of the shop, parts requisition, break time and internal jobs that do not produce income also has a large impact on productivity.

Measuring and analyzing each area of productivity will help you determine areas for improvement in productivity for your service department.

One area to focus on is your interval time.  You can reduce lost time due to moving work in and out of the shop by creating more labor per work order or per vehicle.  Create canned jobs and service packages for your Service staff to sell to your customer.  By adding jobs to a work order you increase the time sold on the work order raising the average work order labor sale amount, increasing the time the unit stays in the shop, decreasing interval time or moving work in and out of the shop.  The more jobs and labor per work order, the more efficient the work order will be, the more efficient the technician will be.

The Bottom Line:

If your technicians are using IDS Astra G2 Service Scheduler, use the “Mechanic Efficiency – Premises Time” report in the service department. This report will give you the premises time, total WO time, and Collected time by date.  This is all the information you need to calculate your technicians Productivity and Efficiency.

If your techs are extremely efficient, comparing WO time with Collect time, but have a large discrepancy with Premise time to WO time, then you are losing time to interval, breaks and other items you may want to start to measure.

Analyze where your technicians’ time is being spent and focus on making that time productive.  A 1% increase in productivity for 4 technicians at $100 per hour will increase your annual revenue by $8000.

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