A. Little Help
- Subject: Improving shop productivity and profitability
- Essential Reading: Shop Owner, Center Manager
- Author: Art Little
Well, it’s a new year. By now you probably have reviewed your P&L for last year. Does it seem like every week the clock runs out on you just before you start making a real profit? You know, if you had just one or two more vehicles ready to go at the end of the week, your numbers would look a lot different. One or two at the end at every week can make the difference between standing in the line at the bank or standing in line at the soup kitchen for a lot of shops nowadays.
There are ways to find out why you are not getting that one or two jobs we need in the bank each week. First, watch your leads. Are you recording and working each one? If you are not getting enough leads or working them properly, that may be the problem.
Look at production reports on your employees. How many removals and installations did your installers get this week? Last week? Last month? What is their average? How many builds did your builder get? How much time is spent on warranty? Diagnostics?
Time management and planning are critical to getting the one or two extra jobs a week. Is the manager making good decisions? Is he working on jobs that will not be picked up this week when money jobs are sitting on the bench? Are parts being ordered as soon as the sale is made so that waiting on parts is not slowing production? Every production mistake delays cash collection.
Watching the shop open and close is a good way to key into some possible time-management challenges. Just observe employees during these times. Look for how the work assignments are issued and how they are taken. You might be able to see where the one or two jobs are being lost.
Let’s look at two imaginary shops for clarification and try to pick up on some of the real-world issues your shop might have.
Shop A
The owner is absentee and does not have a production system for his shop. He has no idea how the production system works because he lets each manager he hires use their own production-management system.
The builder is the first to arrive, at 7:40 a.m. After waiting 20 minutes for the manager to unlock the front door, he goes straight to the building room and calls his wife. He talks on the phone with his wife, friends and the parts house until 9 a.m. He eats breakfast and talks with the installers at the shop until about 9:45. He looks at some tech notes, and about 10:15 he finally starts building the transmission he was working on the day before. About 10:25 the manager pulls him off to go drive a vehicle to check out the complaint of a customer waiting in the lobby.
He gets back to the bench about 11 a.m. and goes back to the transmission he was working on. At noon he goes to lunch and is not even close to having one unit built for the day. When he arrives back at 1 p.m. the manager asks him what he is working on. The builder tells him, and the manager says the customer called at 8 this morning and is not going to pick it up for two weeks. The manager tells him to go ahead and finish it since he is in the middle of it.
At 3 p.m. the transmission that is not going to deliver this week is finished. The builder looks for the manager to get his next work assignment and the manager is on a road test, so he calls his wife again and waits for the manager to come back. At 3:20 the manager returns and issues his next work assignment. The builder performs an RDI (remove, dismantle and inspect) and works up a parts list. It is 4:15 now, too late to start a new work assignment. He washes his hands and starts helping the other technicians pre-close so he can leave at 5 sharp. Production report: 1 unit built all day.
On that same day, installer A arrives at 8:15 and goes to the lobby to start the coffee. He opens the shop for the manager. When the coffee is ready he takes his coffee to the building room. It is about 8:30 a.m. now. About 30 minutes later installer B arrives late. He enters the building room and is sent to pick up breakfast.
The manager, overrun by customers after arriving late, is handling the crowd. Installer B asks him whether he wants anything for breakfast. The manager puts his customer on hold and places his breakfast order.
About 9:30 installer B is back with breakfast. The crew eats and then starts to work, close to 10 a.m. Installer A takes a road test on a warranty job. The builder gets on the phone with the parts house. Installer A takes a road test on a warranty job. Installer B has to wait for the manager to get off the phone to tell him what to do. The manager gets off the phone and issues the first work assignment to installer B about 10:20, an hour and 40 minutes before lunchtime. Production report: Installer B goes to lunch with a half a pull on his production output for the day. Installer A has no removals or installations because he has been on test drives and reading tech notes when he has worked.
The rest of the afternoon both installers might make two or three moves to end the day. It doesn’t matter because no one has to fill out production reports. They are not held accountable by the manager, who has trouble keeping up with his own job. He is unorganized and always behind. He cannot keep up with them. He does not record all his leads, does not call customers back if they do not show up for their appointments, forgets to order parts and cannot get customers to pick up their vehicles when they are ready. Basically, he reacts to what is happening to him. He is not managing the shop; the shop is managing him. The tail is wagging the dog.
The shop closes every day at 5, and by 4:30 it starts to pre-close; cars are taken off lifts and others are brought in, and everybody is standing around waiting for the shop to close at 5 sharp after using shop time to pre-close. The manager and all the employees leave together regardless of promises made to customers, and it all starts over tomorrow.
Shop B
This owner understands the benefits of setting up his own production work-flow system that he understands and can teach. Why? Because people come and go. He knows if he allows the manager to use his own system he is asking for trouble. Every time a manager leaves, it throws the shop into chaos because nobody knows what’s going on but the manager, and he is gone, Then, here comes another replacement manager trying to figure it all out. After the shop loses thousands of dollars, the replacement manager sets up his own work-flow system that only he understands, and the owner has lost control. It is a vicious cycle and a money-losing proposition, to say the least, and this shop owner has eliminated the problem by establishing his own work-flow system and training everyone on their responsibilities. He requires production reports on each employee to make them accountable and uses the reports to help measure the crew’s productivity.
The manager in shop B is organized and makes sure everyone in the shop knows their responsibilities. He sets the production schedule before he leaves work the night before and then has a production meeting before work begins the next day, every day. It is like his game plan for the next day.
The manager arrives at 7 a.m., makes coffee and opens the shop. He makes a phone call or two and gets ready for his morning production meeting. At 7:30 the builder and both installers show up. They move cars out of the shop and get ready for the meeting at 7:45.
The purpose of the meeting is to set the daily production goals and plan the shop time so the team can reach those goals in the most-efficient way. Working as a team, they set goals and work together to achieve them by the end of the day. They all feel as if they are part of a professional team and want to achieve their individual and team goals.
The meeting starts on time, and when it is over at 8 everyone knows their work assignments for the day. Target cars to be delivered to customers that day are put on the production schedule. Other repairs are put on hold. The parts required are discussed and ordered. Problems and delays are discussed and fixes decided upon.
By 8, everybody is working. The builder and installers A and B work on their first assignments. The manager watches the game plan all day. If something happens to take him off his schedule, he immediately changes the production schedule so his team knows. Communication between team members is important at this shop. Immediately after each assignment is finished, the manager issues their next assignment. He lets the employees alone to complete the work he has scheduled for them. He does not pull them off jobs every time a customer comes in with a complaint.
The shop measures employee productivity by using production reports. Everyone is accountable to the team. Each week they look at their production reports and try to figure out how they can get better individually and as a team. They care about productivity and take pride in being productive.
The shop closes at 5 p.m. Employees keep working on billable hours until then. They will stay late when required if a promise has been made to the customer. The manager puts together tomorrow’s production plan before he leaves so he will be prepared for the next day’s 7:45 production meeting.
These two imaginary shops are on opposite ends of the scale. You can use the examples to look at your own shop and start asking some hard questions:
- Is the production system working?
- Are your employees motivated?
- Are they organized?
- Do they care about the shop? The customer? You?
- Is there a production order? Communication? Organization?
- Are there job descriptions? Production reports? Motivation? Leadership?
So much time and money are lost when a shop has poor leadership and is not organized, trained or accountable. With so many specialty shops failing in recent years, I often wonder how many could have been saved if the owner had had an effective production system in place and the manager and the production employees had worked together as a team to maximize the shop’s potential.
Make a New Year’s resolution now to become more productive in 2013. This requires a team effort. Here is the plan: Owners, provide the work-flow organizational structure and training the shop needs. Managers, provide the necessary leadership and time-management skills. Production employees, become more time conscious and accountable.
Here are some numbers to think about and get you motivated to increase your shop’s production capacity. One more completed transmission job averaging $2,000 every week works out to $104,000 gross revenue each year. Two more each week is $208,000. If you can figure out how to complete one or two more jobs each week, you can add those numbers to your P&L this year. That is pretty good motivation!
Happy New Year!
Art Little is the founder and CEO of TransTeam. He has been a professional manager, trainer, multiple-shop general manager, owner and a business consultant for transmission-shop owners nationwide. TransTeam used Internet technology in 1997 to create the National Employment Headquarters for the transmission industry. The TransTeam website has more than 3,000 members. All industry professionals are invited to visit the website to recruit nationwide or find a job. Art’s articles written for Transmission Digest are on the TransTeam website. Visit www.transteam.com.
