How do you measure the financial success of your Fixed Operations? Do you focus on sales, gross, or net? Maybe it’s a combination of all three, but in most cases, the owner is consistently telling you, “You need to turn a profit in your department.” Does this sound familiar?
As the manager, you find yourself jumping from one data point to another each month, wondering which one will actually have the most impact on the results in your department. Growing in your role, additional training that revolves around daily operating reports and month-end financial statements provides additional results for your review. All of this information can be overwhelming at times and can focus your attention on the actual results rather than diving deeper into how you can affect the outcome of those results. In this case, let’s consider the production of a quality flat-rate hour for this discussion.
Production is key for any business, but with regards to dealer Fixed Operations, it is the most critical unit of measure that can have the most dramatic effect on our financial performance. If the technician does not generate a quality flat-rate hour, does anything else positive occur as a result? Clearly, the answer is no.
Diving a little deeper, the word quality is even more important to our unit of measure as it defines our flat-rate hour. We all have our own definition of quality, but in this case, we will define quality as: “The complete elimination of all human pain and suffering.” At the center of most employee concerns, we find them telling us, “I cannot make enough money here.” At the center of most customer concerns, we find them telling us, “What’s going on with my car, why is it not done yet?” Our lack of focus on quality flat-rate hour production creates the very pain that leads to these concerns every day.
Labor sales are the result of producing quality flat-rate hours, but without production, there would be no parts sales either. Labor has no shelf life. What we miss out on today that we cannot make up tomorrow! We spend countless man-hours performing physical inventories of our parts departments to ensure they are accurate, but we tend to ignore the loss of production only to blame something else for our poor financial performance.
So, why do we accept productivity when it is less than 100% of the time we have invested? If a part were missing, we would turn the dealership upside down to find it. We must recognize the production of the quality flat-rate hour as the most critical component to our financial success. We should be managing our production with the same energy and enthusiasm that likely provided you with the management opportunity you have been given.
Daily tracking of production complemented with morning huddles that include our technicians will drive the necessary behavior to manage our production. This should be fun and create an atmosphere of excitement placing value on the technician and their accomplishments every day. Establishing the quality flat-rate hour as the unified focus for all team members provides the foundation in which the manager can affect the outcome of their financial performance.
