Sect 2 KPI's

Profitable Distributor

Service Management

Make Your Service Department the Driver of Your Dealership

Section 2

Distributor Service Department Key Performance Indicators (KPIs) Definitions and Reasons For Deviations

Key Performance Indicators

2.1 Why KPI?

2.3 KPI, Definitions, Impact, Reasons for Deviations and Actions

2.2 Time to Sell


2.4 5 x Super KPIs

Section 2.1 Why KPI?

2.1


Uniform Snapshot of Department Performance

2.1


Enables Performance Health Checks

2.1


Forces the Department to

Capture All Relevant Data

2.1


Will Enable Correct Measurement of

Progress Made

2.1


Food For Thought:

“The beginning of wisdom is to call things by their right names”Chinese Proverb

Know Your KPIs!

2.1


Section 2.2 Time to Sell

2.2


2.2


Total Calendar

Time

Total Available

Time

Productive Time

Sick leave, vacation, unauthorized absence

Unsold time:Idle timeOther unsold time

Improvement Area

Parkinson’s Law #1:

“Work Expands to Fill the Time

For Its Completion”

Cyril Northcote Parkinson, 1909-1993

2.2


Parkinson’s Law #2:

“Expenditures Rise to Meet

Income”Cyril Northcote Parkinson, 1909-1993

2.2


Section 2.3

Distributor Service Department Key Performance Indicators, KPI

2.3


2.3.1

Technicians Availability Against

Calendar Time, %

2.3


2.3.1

Technician’s Availability Against

Calendar Time, %

Definition

Technician’s attendance hours/Theoretical calendar time = Technicians Availability, %

Target >87%

2.3


2.3.1


Calendar Time, %

Impacts

Total Hours to Sell

Turnover

Profit

2.3


2.3.1


Calendar Time, %

Reasons

Management?

Time Management?

Follow Up Attendance?Dissatisfaction?

“Ownership”?

2.3


2.3.1


Calendar Time, %

Actions

2.3


Awareness

Attitude

Care

Educate

Ownership

2.3.2

Technicians Productivity, %

2.3


2.3.2

Technician’s Productivity, %

Definition

Technician’s Sold Time/Technician’s Attendance Time = Technicians Productivity, %

Target >85-90%

2.3


2.3.2


Impacts

Turnover

Margins

Net Profit

2.3


2.3.2


Reasons

Low Sales?

Management?

Awareness, Hrs to sell?Pre-planning?

Workshop layout

2.3


2.3.2


Reasons, Cont’d

Workshop MaintenanceParts Availability?

Skill levels?

Incentive systems?

Management System?

2.3


2.3.2


Actions

Increase Sales

Awareness

Attitude

Pre-plan

Management

2.3


2.3.3

Technicians Efficiency, %

2.3


2.3.3

Technician’s Efficiency, %

Definition

Technician’s Allotted Time/ Technician’s Used Time = Technicians Efficiency, %

Target >100%

2.3


2.3.3


Impacts

Turnover

Margins

Net Profit

Bay Utilization

Turnaround Time

2.3


2.3.3


Reasons

Skill Match?

Complex, Frequency?Non-Productive Time?Wrong Method?

More Than Required?

2.3


2.3.3


Reasons, Cont’d

Separate Operations?Availability, Manuals?Improper Procedures?Supervision?

Job Planning?

2.3


2.3.3


Reasons, Cont’d

Workshop Layout?

Tool Maintenance?

Climate/Environment?2 Technicians not 1?

Lack of Training?

2.3


2.3.3


Actions

Improve Supervision

Better Planning

Correct Job cards

Education

Awareness/Attitude

2.3


2.2.4

Recovery Rate on Technician’s

Available Time, Money/hr

2.3


2.3.4



Definition

Total Labor Sales/Total Available Time = Recovery Rate, Money/hr

Target: 3-4 x cost direct productives

2.3


2.3.4



Impacts

Turnover

Net Profit

Required Charge Rate

Margins

Break-even level

2.3


2.3.4



Reasons

Attendance?

Productivity?

Efficiency?

Internal/External?

Management?

2.3


2.3.4



Actions

Improve Attendance

Improve Productivity

Improve Efficiency

Increase External SalesManage and Coach

2.3


Workshop 2

Attendance, Productivity and Efficiency, How They Impact Turnover and Gross Margin

2.3


2.3.5

Technician’s Unsold Time, %

2.3


2.3.5


Definition

Technician’s Non-productive time/Total Attendance Time = Technician’s Unsold Time, %

Target <10-15%

2.3


2.3.5


Impacts

Turnover

Net Profit

Required Charge Rate

Margins

Break-even level

2.3


2.3.5


Reasons

Low Sales

Awareness, Hrs to Sell?Pre-planning?

Management?

Workshop Lay-out

2.3


2.3.5


Actions

Increase Sales

Awareness

Attitude

Pre-plan

Management

2.3


2.3.6

Work-bay Utilization in % of Potential

2.3


2.3.6


Definition

Sold hours per work bay divided by total available hours to sell per work bay = work bay utilization, %.

Target >90%

2.3


2.3.6


Impacts

Turnover

Net Profit

Sales Potential

Margins

Expansion Plans

2.3


2.3.6


Reasons

Pre-planning?

Productivity/Efficiency?Admin Process?

Units Waiting For Parts?

Supervision?

2.3


2.3.6


Reasons, cont’d

Service Marketing?

Cleanliness?

24/7 Operation?

Workshop Layout?

Low Skill Levels?

2.3


2.3.6


Actions

Workflows

Parts Planning

Training

Clean up Workshop

Management

2.3


2.3.6


Actions, cont’d

Marketing Plan

Supervision

Customer InteractionWorkshop Layout

Extend Operating Hrs

2.3


2.3.7

Gross Profit on Own Labor, %

2.3


2.3.7


Definition

Total Labor Sales less Direct Expenses for own productive staff = Labor Gross Profit

Target 65-80%

2.3


2.3.7


Impacts

Net Profit

Required Charge RatesExpansion Plans

Break-even level

Investments

2.3


2.3.7


Reasons

Productivity?

Unrealistic Salary?

Labor Rate?

Efficiency?

Internal/External?

2.3


2.3.7


Actions

Service Marketing

Training

Differentiate ChargesSupervision

Procedures

2.3


2.3.8

Workshop Direct Expenditures

2.3


2.3.8


Definition

Includes personnel expenditures for Technicians (salary, HRA, visa cost, vacation package, health insurance, etc.)

Target 20-35%

2.3


2.3.8


Impacts

Margins

Required Charge RatesNet Profit

Break-even level

Indirect Expenses

2.3


2.3.8


Reasons

Salary Level?

Budget?

Management?

Overtime, Sick Leave?

Follow up KPI?

2.3


2.3.8


Actions

Differentiate ChargesAttendance

Realistic Budget

Supervision

Management

2.3


2.3.9

Workshop Indirect Expenditures

2.3


2.3.9


Definition

Costs which can not be directly allocated towards a specific job such as rent, entertainment, head office expenses, etc.

Target <35%

2.3


2.3.9


Impacts

Net Profit

Investments

Break-even Level

Required Charge Rates

Company Future

2.3


2.3.9


Reasons

Management?

Budget?

Supply Agreements?

No Control?

In Expansion Mode?

2.3


2.3.9


Actions

Procedures

Controls

Realistic Budget

Supply Agreements

Delegation

2.3


2.3.10

Service Department Net Contribution, %

2.3


2.3.10

Service Department Net Contribution, %

Definition

Total Sales – Direct Expenses – Indirect Expenses = Net Profit

Net Profit/Total Sales = Net Profit %

Target 25-30%

2.3


2.3.10


Impacts

Company Performance

Investments

Company Future

Expansion Plans

Future Bonus, etc.

2.3


2.3.10


Reasons

Sales, Charge Rates?

Productivity/Efficiency?Internal/External?

Direct Expenses?

Profit Generator?

2.3


2.3.10


Actions

Price Management

Salary Levels

Supervision

Management

Service Marketing

2.3


2.3.11

Spare Parts Sales Through Own Workshop, %

2.3


2.3.11


Definition

Sales of Spare Parts Through Own Workshop/ Total Sales of Spare Parts = Sales in %

Target 30-70%

2.3


2.3.11


Impacts

Company Performance

Margins

Net Profit

Turnover

Company Reputation

2.3


2.3.11


Reasons

Favor Counter Sales?

Contracts, Combos?

Service Marketing?

Workshop Discount?

Profit Generator?

2.3


2.3.11


Actions

Discount ManagementContracts and CombosStructured MarketingManagement

Customer Satisfaction

2.3


2.3.12

External Workshop Sales Versus Internal,

%

2.3


2.3.12


%

Definition

Sales of External Jobs/ Total Workshop Sales = External Sales in %

Target 80%

2.3


2.3.12


%

Impacts

Turnover

Net Profit

Service Penetration

Margins

Company Performance

2.3


2.3.12


%

Reasons

Service Marketing?

Contracts, Combos?

Manage KPIs?

Workshop Discount?

Profit Generator?

2.3


2.3.12


%

Actions

Management

Structured MarketingAdd Value

Contracts and CombosCustomer Satisfaction

2.3


2.3.13

Redo Work in Percent of Total Workshop

Sales

2.3


2.3.13


Sales

Definition

Redo Sales, parts and labor/ Total Workshop Sales, parts and labor = Redo in %

Target <1%

2.3


2.3.13


Sales

Impacts

Productivity

Net Profit

Customer Satisfaction

Margins

Company Reputation

2.3


2.3.13


Sales

Reasons

Training?

Definition of Work?

Supervision?

Diagnostics?

Wrong Technician?

2.3


2.3.13


Sales

Actions

Staff Development

Proper Procedures

Management

Proper Tools

RTFM

2.3


2.3.14

Time, Vehicle In to Invoice Out

2.3


2.3.14


Definition

Time elapsed from vehicle arrives to workshop until invoice is issued and sent.

Target: 1 workday after technical completion

2.3


2.3.14


Impacts

Cash Flow

Net Profit

Productivity/Efficiency

Margins

Company Reputation

2.3


2.3.14


Reasons

Pre-Planning?

Procedures?

Customer Approvals?

Parts Availability?

Supervision?

2.3


2.3.14


Actions

Better Pre-Planning

Parts Forecasting

Detailed Procedures

Approvals Process

Management

2.3


Section 2.4 5 x Super KPIs

2.4


Recovery Rate/ Calendar Hr

2.4


Parts Sales Through Workshop

Work-bay Utilization, %

Redo Work Versus Total Sales, %


Recovery Rate/ Calendar Hr

Covers:

Charge Rate(s)/Hr

Attendance

Productivity

Efficiency

Internal vs. External

2.4


Parts Sales Through Workshop vs. Total

Parts Sales

Gives an Indication of Total Growth Potential For the Workshop

2.4


Work-bay Utilization Versus Potential

Gives an Indication of Growth Potential Within Existing Premises

2.4


Redo Work Versus Total Workshop Sales

Gives an Indication of Total Repair Quality of the Workshop

2.4



Covers:

Approval Process

Management

Productivity/EfficiencyParts Availability

Admin Procedures

2.4


Section 2, Summary

Measure Performance


Uniform Snap Shot

Correct Decisions

Measures Trends

Capture Relevant Data

Sect 2 KPI's

Automotive

Transcript of Sect 2 KPI's