Structured vs. Operational Techniques in Dealership Service Operations – Part 1

by: David Dietrich

This is Part 1 of a three-part series.

  1. Introduction

Operating and structural techniques have been developed by our consultant team over the years to reduce the amount of active intervention required by anyone in the business to manage and maintain techniques and processes implemented.

Each of these techniques was developed to enhance the relative position of a service department that has raised sales, production, quality control, and customer relations procedures to a much higher level than a typical service department.  The service managers of highly developed as well as typical service departments have found themselves asking the question, how can I further gain relative improvement from my current position?

Five basic questions are central to examining means of gaining relative improvement:

  • Question 1—Should I raise my labor rate?
  • Question 2—Should I add a technician?
  • Question 3—Can I raise shop production?
  • Question 4—Should I raise my parts prices?
  • Question 5—How should I impact expenses?

These questions are asked by the managers of both advanced production and traditional service departments.  The structure of the service department makes little difference.  The question is, how are the results of these five questions going to alter the financial results?

  1. Types of Change

Changes in any service department will be centered around the answers to the five basic questions presented above.  Those changes will manifest themselves in two types of change:  structured change and operational change.

The purpose of designing the processes in your service department is to generate more net dollars for each common decision made.

Caution should be exercised when using operational techniques.  We often overload managers with high levels of operating techniques that they cannot sustain.  Many managers lack the discipline required to operate those techniques on a day-to-day basis.  The structured design yields the most predictable outcome in more than 90% of cases.

  1. Structured Techniques

Structured Techniques is where the actual structure is altered such that the economic impact of any one of the decisions related to Questions 1. – 5. is altered.  Service departments designed in the traditional evolution—Lateral Support Groups or Simple Support Groups—are examples of structural techniques.  They were designed to have a degree of structural integrity even if management chooses not to manage them.

A structured technique can be illustrated by the charging of the battery in your car.  It requires no daily, monthly, and possibly yearly activity by the person driving the car to keep it charged.  The technique/engineering of the vehicle takes care of this and requires no driver/manager of the car’s process of recharge to be operationally managed.

In a structured design technique, the battery has been built, and the regulation of current managed to keep the process going.  For the most part, the results are predictable for a given period and require no intervention.

The following is an example of monitoring shop supplies using a structured change.  Management gives each technician a flat fee per month for the purchase of their shop supplies (for example, $25 per month).  The technicians are now free to make their own buying decisions.

The technicians can keep whatever portion they do not spend.  Studies show that consumption drops $42 per technician, per month.  Management has made a decision that has altered the outcome from the previous method of tracking shop supplies.  The structured change requires little or no management intervention and provides some of the following benefits:

  1. The expense is no longer inflation-related
  2. The structured technique controls the expense
  3. There is little or no management intervention
  4. There is a more economical use of management’s time
  5. Operational Techniques

Operational techniques are where there has been no change to the structure—results are gained through management’s constant involvement, often utilizing repetitive tasks.  Management must have strong discipline and follow-up characteristics.

For example, if an owner/management replaces the alternator belt when it begins to slip, the battery voltage will be maintained, and the battery will last longer.  Owner/Management must be able to apply a belt when necessary, to keep the system at its ultimate performance level.  If the Owner/Management ceases to monitor the condition and charging rate of the battery the performance suffers.  These are friction points in the process.  They typically cannot be eliminated completely but how can they structurally be reduced (automatic belt tensioners).

Management has decided to control supply expense and is adopting a “can for a can” policy of monitoring shop supplies using an operational change.  Consistent management intervention and discipline are required for this policy to work.  Management must ensure that the following are accomplished:

  1. The supplies must be inventoried, and accounts must be created.
  2. Management must purchase the supplies that require vendor shopping.
  3. Management must monitor technician usage.  Forms must be developed and reviewed.
  4. The supplies must be charged out.  Policies and procedures must be designed.
  5. Invoices must be accounted for.
  6. The shop supply expense will be inflation-related.

As we can see, this is a management-intensive operation, although studies indicate that the average technician’s consumption drops $23 per month, per technician.  The operational technique altered the outcome by lowering the shop supply expense.  Management will be capable of sustaining this change if they devote the necessary time and energy to the process.

From a complete Service Department Assessment to targeted Classroom Service Advisor Training options, I am here to assist you with all of your Fixed Operation improvement custom-tailored to your specific needs. For more information feel free to contact me anytime at (407) 221-8974 or .

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