Extended hours are always a challenge, should I or shouldn’t I? What battles will I face with my people if I decide to extend hours? These are some really tough questions. In this 4-part series, we hope to answer most of your questions about extended hours, offer some methods to help you to determine whether or not you have the need for extended hours, and offer some configurations for implementation, if you decide that extended hours are the right choice.
The most important words in our business today are “Customer Retention”. For years we have watched tremendous changes in our industry. Improvements in vehicle quality have eliminated much of our maintenance, warranty and repair work. Global competition has increased the number of choices that our customers have. Convenience has never, ever, been more important to us as consumers. Think about the ways that you select products based on convenience: Drive-thru windows for fast-food or banking; lawn and pool service; internet bill-pay; remote controls; just to name a few. Banks that once were open 9-5, Monday through Friday are now open full days on Saturday, even Sunday! We live in a busy society. We all knew this was coming. The industry experts had been telling us this for years. But many of us ignored it because we believed that weekend and extended hours would only add to the 60+ hours that we, as managers, are already working. As a result, our customers have continued to disappear to the independent service providers because the ISP’s are willing to do what we have not been willing to do.
Wal-Mart stores, the largest retailer in the history of the world, are generally open 24 hours a day, 7 days a week. Do their store managers work 24/7? Bet not! And that’s because they have designed and implemented processes to make the extended hours work without overworking themselves and their staff.
In this series of articles we will discuss “ways” to satisfy your customer’s needs and desires without overworking yourself and your staff. This is part 1- In this part, we’ll discuss supply and demand problems and how to analyze the causes and implement solutions. The future articles will address:
- Part 2 – We will discuss methods to “Test the Market” to determine if extended hours are a good option for your dealership. And we’ll offer tips to performing a successful implementation of extended hours.
- Part 3 – We will explain different methods of extended hour options that will not change the work week but will improve production capacity.
- Part 4 – We will explain different methods of extended hour options that can be implemented to modify the work week to not only increase production capacity but to increase hour availability as well. These schedules include late hours, Saturdays and/or Sundays. Not only can you increase your hours available to your customers, these options might be a great way to overcome facility restraints.
Determining the Need for Extended Hours
There are two basic reasons to consider extended hours:
- If you have too much business – Extended Hours can create more capacity and improve customer retention
- If you don’t have enough business – Extended Hours will encourage more traffic and improve customer retention
OK, now 1 and 2 should just about include everybody! With these principles understood, let’s look at a more scientific approach to determining your need for extended hours.
There are several methods to evaluate this. You should consider using all of these methods. The more of these methods that you use, the more likely you are to get it right the first time. And remember, it’s always better to get it right the first time!
Evaluate Demand versus Capacity
- Do you have too much business?
- Your production supply (shop flat rate hours) should always exceed the demand (customers). Think about this – If your grocery store averages selling 20 loafs of bread per day and is restocked each morning, how many loaves of bread should the store carry? More than 20, right? Because 20 is an average, they likely sell 23-24 loaves on some days and sell 16-17 on other days, right? If they only stocked 20 loaves, they would run out of inventory on some days. If you went in to that store a couple of times late to buy bread and they were out, what would you do? You would probably find a new bread source, right? The same logic applies to your labor supply. You need to minimize the risk of running out of production. If you regularly run out of production supply, your customers may find themselves a new vehicle repair source. Until technicians understand the concepts of this argument, they are not likely to be big fans of the logic. Technicians are generally very logical people. When the logic makes sense, they are typically very cooperative. If your business consistently exceeds your production capacity, you are said to have a “capacity overload” situation or condition.
- How many days are you booking out appointments for services and minor repairs?
- How many “Jobs” do your techs work on each day? The average technician at the average dealership works on 4 – 4 1/2 vehicles per day. To calculate your average, simply divide the number of vehicles you serviced last month by the number of working days divided by number of technicians. So, based on the average, for every 4-5 vehicles that are not scheduled within two days, there may be a need for an additional technician.
- How many carryovers do you have each day?
- For every 4-5 carryovers that are not held or in-progress, there may be a need for an additional tech. Or can this be solved by increasing the production of your current staff. If your production is already good, do you have enough stalls to accommodate these additional techs? If not, extended hours might be a good choice. In addition to your known capacity issues, consider the following:
Menu Sales – If your service department is in a “capacity overload” situation, you are likely losing menu sales opportunities. How effective are your advisors going to be at selling when they can’t get out what the customer is requesting in a timely basis? When these selling efforts fail, service customer retention suffers.
Inspection Sales – Again, if you are in a “capacity overload” situation, technician and advisor efforts in recommending and selling additional needed items will deteriorate. The pressure to turn out volume will be seen as a deterrent to inspecting vehicles by the technicians. This capacity overload condition also supports the belief that advisors can’t sell, because they are afraid to add additional hours to the already over-loaded shop. Once again, when a customer gets in their car on Sunday morning to a dead battery, your retention just suffered another tragic loss.
Productivity -This “Demand versus Capacity” issue that we just discussed assumes that the productivity of your shop is already good (100-120% +). Productivity is usually defined as the Flat Rate Hours Produced divided by Available Clock Hours. If your service department’s overall productivity is not good, you may consider implementing production improvement methods prior to hiring additional techs. We’ll discuss some of these methods in the next section. If your shop’s productivity is good, and you do not have space to add additional technicians (1.25 stalls per tech or less), extended hours is likely your only option. When calculating technician productivity, be sure to include anyone who flags labor. As the huge majority of dealerships do, don’t calculate your productivity just on the highly skilled technicians that produce 120-150+%. Calculate on everyone who uses your valuable facility to produce labor.
Production Improvement Methods
Implementation and utilization of production objectives can improve the production of our current staff. For example, increasing production in an 8-10 technician shop by 10% has the same effect as adding one technician. Establishing Production Objectives essentially involves determining the average hours produced by each technician over a given period of time and applying a “kicker” increase that the technicians individually agree on.
While production objectives are an extremely effective way of increasing shop production capacity, objectives are not maintenance-free. Production objectives require constant feed-back from management. We, as human beings, are goal driven by nature. If no one is paying attention to the goals then they aren’t goals. Daily production meetings are an absolute necessity in improving productivity through production objectives.
When implemented properly, production objectives become a great source in building employee retention and loyalty. The technicians no longer feel like a “loner”. They feel that now have assistance in helping them accomplish their personal financial needs.
Objectives are also very valuable for scheduling and loading the shop. How can you effectively schedule and load the shop if you don’t know what your capacity is? The accumulation of a group’s objectives or a shop’s objective for a period of time (day, week) is the amount of work that you can schedule and complete in that same period. Unworked carryovers tend to occupy parking space, create no revenue (until worked on), create rental expense, pose potential theft liability on the dealership and aggravate customers who would rather have their vehicle at home.
Elimination of dispatch “bottlenecks” – Many times productivity is damaged due to dispatch “bottlenecks” which include: wasted time for technicians waiting for jobs; improper skill-match due to dispatcher’s pressure to get-the-work-out and dispatchers/ advisors taking care of their favorite techs. Even with the most sophisticated dispatch systems, advisors and technicians find ways to manipulate the dispatch “rules”, causing unfairness and reduced productivity. Advanced production systems have been designed to address these specific issues.
What is your work-mix? If your dealership is operating in a “capacity overload” situation, you will likely find that your maintenance and light repair are diminishing. Your advisors have slowed down or stopped selling and your customers have found more convenient alternatives for these services. These are the services and repairs that technicians are most efficient at. Increasing your capacity will help to improve this situation and therefore increase the productivity of your shop. Many times, managers in this “capacity overload” situation consider themselves to be lucky because they are realizing high effective-rates and high hours-per-RO, by not doing maintenance work. The problem with this scenario is that your service customer retention is slipping away. Your customers are going to have their maintenance performed where it is convenient to do so and they will eventually have their repairs performed by the same.
Clock Hours Available
If production improvements methods are not attainable and technicians are in short-supply, you might consider increasing the available man-hours. You could open a half-hour earlier, stay open a half-hour longer, reduce a 1- hour lunch break to a half-hour and maintain the current opening and closing times or do all three. These might not seem like drastic moves, but they can contribute significantly to production capacity. Using this technique in a 10-technician shop can increase available time by 5, 10 or 15 hours per day or up to 75 hours per week.
Another option for increasing available hours is to open for one or two nights a week or open on Saturdays for either a half or full day with some or all of the technicians. If you are already open Saturdays and give the technicians a day off during the week, if they work Saturday, consider changing that to increase clock hours available.
While these options may conflict with the Introduction statement made regarding increased work hours, we often find that technicians in many dealerships are not currently working a full day. For example, in a dealership that I recently visited, the service department was open 7:30 am – 5:00 pm. The technicians were scheduled to work 7:30 am – 4:30 pm. Because there was seldom work available at 7:30, the technicians drank coffee until 8:00. Before long, the technicians were working 8:00 – 4:30 by their own choice. Now, they began drinking coffee from 8:00 – 8:30, advisor frustration was running high because customers were waiting too long. In the technician’s opinions, the dealership did not have enough work. Actually, this dealership had a scheduling problem as they were quite busy. The dealership lacked control in having customers come in at prescribed times. In this case, merely improving scheduling and modifying the work day created a substantial productivity improvement.
If you are in an area where technicians are in short supply, you may be surprised at how cooperative your technicians might be, once they understand the challenges and they know that you are committed to preventing the daily coffee hour.
Coming Next Week – Part 2 – Testing Your Market for Extended Hours Demand & Implementation of Extended Hours