3 Min ReadApril 9, 2021

Productivity is King!

Productivity is King!

Being in business is easy. You buy something, sell it to someone else at a higher price than you bought it for, reinvest some of the difference in the business and pocket the rest. Sounds simple enough, doesn’t it?

As we all know, the automotive business adds nuances that make that simple business model far more complex. However, in principle, that’s how it works.

In the Fixed Operations departments you buy two things – labor hours and parts – and they become the assets that you sell to others. But you also invest in facilities, utilities and administration and protecting and maximizing the utilization of those vital investments.

The industry pays a great deal of attention to protecting Parts inventory. We count every single part once a year and sometimes we count them throughout the year. We carry out detailed investigations when we come up short to determine where the missing parts have gone, and we will not close the inventory process until every lead has been investigated.

A well-run dealership will take weeks to prepare for a full inventory before an army of volunteers comes in to count and recount the parts. Then days are spent poring over reports to look for discrepancies before the count is finalized.

How is the Service department different? To conduct business, you need to make a considerable investment in facilities, administrative support, utilities and marketing. While it’s true that flat rate Technicians are only paid when they’re working, the investment is already there to provide them with an environment where they CAN work. That investment must be maximized and the best way to do that is through high productivity. For hourly paid Technicians, the case is doubly compelling since the business |is investing in hours regardless of whether they’re sold or not. And, unlike parts, these hours are volatile. If a part doesn’t sell today, you can sell it tomorrow. If an hour of labor isn’t used, then it’s gone forever.

So why is productivity that is less than 100% accepted? In many cases productivity of 80% and less is tolerated. Would you feel the same way if 20% of your Parts inventory disappeared overnight?

How do you ensure high productivity? First, you must measure it accurately. Technicians should report their use of the facilities that are provided so you can determine their productivity regardless of whether they’re flat rate or hourly paid.

It’s the management team’s responsibility to enable high productivity. To do this, management should:

  • Ensure that enough work is available
  • Remove time-wasting obstacles such as trips to the Parts counter or the front desk
  • Ensure that there’s a high sales rate for additional repairs
  • Monitor technician time daily and make corrections in a timely manner
  • Use productivity information as a tool to drive it higher

Productivity is indeed king. And remember — selling additional hours also results in additional parts sales. That’s a win-win for your dealership.

If you are looking for additional support, a 20 group format can help establish long term productivity habits. 

Share This

Martin Bleasdale
By Martin Bleasdale
Director, Consulting

Martin Bleasdale is Director, Consulting for CDK Global. With over 40 years of experience in the auto industry, he has managed both Automotive and Heavy Truck operations in the UK, the Middle East, and the U.S. During his ten years with CDK he has installed and consulted on CDK software and processes.

Recent Insights

Some Purchase Steps Slip as Car Inventory Booms

Some Purchase Steps Slip as Car Inventory Booms

Car shoppers hit dealerships in droves this December and nearly nine out of 10 (88%) said the purchase experience was...
2 Min ReadJan 6David Thomas
Communicating Long Car Parts Delays With Service Customers.

Communicating Long Car Parts Delays With Service Customers

Your Service department is likely accustomed to auto parts delays that stretch far longer than in days past. While many...
4 Min ReadJan 3CDK Global
How Car Dealers Can Communicate Their Community Involvement

How Car Dealers Can Communicate Their Community Involvement

Your car showroom is a beacon for your community and not just because of its well-lit displays. In smaller cities...
4 Min ReadDec 23CDK Global
Car Shoppers Battle EV Myths

Car Shoppers Battle EV Myths

Once you go electric, you stay electric. At least that’s what electric vehicle drivers indicated in a CDK study earlier...
2 Min ReadDec 19CDK Global
C D K Global Research Year in Review.

CDK Global Research Year in Review

Each year CDK produces an array of class-leading research to help dealers better understand their customers, their employees and the...
4 Min ReadDec 16CDK Global
The R O I of modern Retail.

The ROI of Modern Retail

It’s old news that consumers today browse and research potential vehicle purchases online before coming into a car dealership. Ninety-five...
2 Min ReadDec 9Jen Miller
Community College Recruitment Strategies for Your Dealership.

Community College Recruitment Strategies for Your Dealership

Recruiting people to staff entry-level positions at your dealership can be a challenge. Rather than posting a “help wanted” ad...
3 Min ReadDec 6CDK Global
Dealers Deliver on Customer Experience in November

Dealers Deliver on Customer Experience in November

Inventories hit some of their highest levels in years last month and the ability to find the car they wanted...
3 Min ReadDec 2David Thomas
Energize E V Sales This Winter.

Energize EV Sales This Winter

Winter is a unique time to sell cars, especially in cold climates. This year promises to be an even more...
5 Min ReadNov 22CDK Global
The Need for Speed. How A I Is Transforming Auto Dealerships.

The Need for Speed: How AI Is Transforming Auto Dealerships

In today’s fast-paced world, time is one of the most precious commodities, and nowhere is that more evident than in...
3 Min ReadNov 20Jessie Hammonds