Consultant’s Corner Every dealership sells four different types of inventories: Parts, New Vehicles, Used Vehicles, and Labor Hours. That’s right – Labor Hours are one of your inventories, and a manager’s ability to understand them as a diminishing value resource will drive their effectiveness as a manager. Once it is understood that Labor Hours are a perishable inventory, they are better equipped to manage a Service Department for maximum profitability. Without a grasp on Labor Hours, it is almost impossible to be strategic, negatively affecting a manager’s ability to make great decisions. Service is an increasingly important part of a profit formula so let’s take a deeper look into Labor Hours as an inventory. Think of your technician’s time as a block of ice over a floor drain. For every unit of time sold, you are chipping away at that block of ice, leaving any unsold time to melt away. If you are not effectively managing your technicians’ time, your most precious commodity is going right down the drain. Several factors go into managing your technician’s time inventory: • Service scheduling • Advisor sales ability • Work mix and dispatching • Parts availability • Lack of accountability and goals DAN HAHN DIRECTOR OF FIXED OPERATIONS Brown & Brown Dealer Services For more information, please contact Francis Fagan with Brown & Brown Dealer Services at 312-608-4979 or francis.fagan@bbrown.com. Francis is the Regional Training Director for Illinois and Indiana. At Brown & Brown Dealer Services, we emphasize training. Visit our website for our training calendar and to meet our nationally renowned trainers — www.bbdealerservices.com. While those are just a few, let’s look closer at the last point. When it comes to goals, there is often a disconnect between leadership and technicians. Dealers can avoid this by establishing individual production goals for each one of their technicians. This starts by having a conversation with each technician about what their personal goals are. The goal must be reasonable and should be based on their past production numbers. For example, let’s say your technician made $67,500 last year and has set a goal of $75,000 this year. You can simply divide their annual goal by their pay rate to determine the hours they need to produce that year. Divide that by the number of weeks, then divide that by the number of days. This will give you their daily production goal. $75,000 (goal) ÷ $30.00 (pay rate) = 2500 (annual labor hour goal) 2500 ÷ 52 weeks = 48 hours (weekly goal) 48 Hours ÷ 5 working days = 9.6 hours (daily goal) Once the goal is established, it’s vital that you check in with each technician daily and review their individual results versus their goal. Helping them identify and remove the barriers to their success. The daily check-in is as much about building a relationship as it is about managing their performance. Having a goal to manage them makes the accountability part of your job that much easier. 8 Automobile Dealer News illinoisdealers.com
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