Download - 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
Key Performance Indicators
2.4 5 x Super KPIs
Section 2.1 Why KPI?
2.1
Key Performance Indicators
Uniform Snapshot of Department Performance
2.1
Key Performance Indicators
Enables Performance Health Checks
2.1
Key Performance Indicators
Forces the Department to
Capture All Relevant Data
2.1
Key Performance Indicators
Will Enable Correct Measurement of
Progress Made
2.1
Key Performance Indicators
Food For Thought:
“The beginning of wisdom is to call things by their right names”Chinese Proverb
Know Your KPIs!
2.1
Key Performance Indicators
Section 2.2 Time to Sell
2.2
Key Performance Indicators
2.2
Key Performance Indicators
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
Key Performance Indicators
Parkinson’s Law #2:
“Expenditures Rise to Meet
Income”Cyril Northcote Parkinson, 1909-1993
2.2
Key Performance Indicators
Section 2.3
Distributor Service Department Key Performance Indicators, KPI
2.3
Key Performance Indicators
2.3.1
Technicians Availability Against
Calendar Time, %
2.3
Key Performance Indicators
2.3.1
Technician’s Availability Against
Calendar Time, %
Definition
Technician’s attendance hours/Theoretical calendar time = Technicians Availability, %
Target >87%
2.3
Key Performance Indicators
2.3.1
Technician’s Availability Against
Calendar Time, %
Impacts
Total Hours to Sell
Turnover
Profit
2.3
Key Performance Indicators
2.3.1
Technician’s Availability Against
Calendar Time, %
Reasons
Management?
Time Management?
Follow Up Attendance?Dissatisfaction?
“Ownership”?
2.3
Key Performance Indicators
2.3.1
Technician’s Availability Against
Calendar Time, %
Actions
2.3
Key Performance Indicators
Awareness
Attitude
Care
Educate
Ownership
2.3.2
Technicians Productivity, %
2.3
Key Performance Indicators
2.3.2
Technician’s Productivity, %
Definition
Technician’s Sold Time/Technician’s Attendance Time = Technicians Productivity, %
Target >85-90%
2.3
Key Performance Indicators
2.3.2
Technician’s Productivity, %
Impacts
Turnover
Margins
Net Profit
2.3
Key Performance Indicators
2.3.2
Technician’s Productivity, %
Reasons
Low Sales?
Management?
Awareness, Hrs to sell?Pre-planning?
Workshop layout
2.3
Key Performance Indicators
2.3.2
Technician’s Productivity, %
Reasons, Cont’d
Workshop MaintenanceParts Availability?
Skill levels?
Incentive systems?
Management System?
2.3
Key Performance Indicators
2.3.2
Technician’s Productivity, %
Actions
Increase Sales
Awareness
Attitude
Pre-plan
Management
2.3
Key Performance Indicators
2.3.3
Technicians Efficiency, %
2.3
Key Performance Indicators
2.3.3
Technician’s Efficiency, %
Definition
Technician’s Allotted Time/ Technician’s Used Time = Technicians Efficiency, %
Target >100%
2.3
Key Performance Indicators
2.3.3
Technician’s Efficiency, %
Impacts
Turnover
Margins
Net Profit
Bay Utilization
Turnaround Time
2.3
Key Performance Indicators
2.3.3
Technician’s Efficiency, %
Reasons
Skill Match?
Complex, Frequency?Non-Productive Time?Wrong Method?
More Than Required?
2.3
Key Performance Indicators
2.3.3
Technician’s Efficiency, %
Reasons, Cont’d
Separate Operations?Availability, Manuals?Improper Procedures?Supervision?
Job Planning?
2.3
Key Performance Indicators
2.3.3
Technician’s Efficiency, %
Reasons, Cont’d
Workshop Layout?
Tool Maintenance?
Climate/Environment?2 Technicians not 1?
Lack of Training?
2.3
Key Performance Indicators
2.3.3
Technician’s Efficiency, %
Actions
Improve Supervision
Better Planning
Correct Job cards
Education
Awareness/Attitude
2.3
Key Performance Indicators
2.2.4
Recovery Rate on Technician’s
Available Time, Money/hr
2.3
Key Performance Indicators
2.3.4
Recovery Rate on Technician’s
Available Time, Money/hr
Definition
Total Labor Sales/Total Available Time = Recovery Rate, Money/hr
Target: 3-4 x cost direct productives
2.3
Key Performance Indicators
2.3.4
Recovery Rate on Technician’s
Available Time, Money/hr
Impacts
Turnover
Net Profit
Required Charge Rate
Margins
Break-even level
2.3
Key Performance Indicators
2.3.4
Recovery Rate on Technician’s
Available Time, Money/hr
Reasons
Attendance?
Productivity?
Efficiency?
Internal/External?
Management?
2.3
Key Performance Indicators
2.3.4
Recovery Rate on Technician’s
Available Time, Money/hr
Actions
Improve Attendance
Improve Productivity
Improve Efficiency
Increase External SalesManage and Coach
2.3
Key Performance Indicators
Workshop 2
Attendance, Productivity and Efficiency, How They Impact Turnover and Gross Margin
2.3
Key Performance Indicators
2.3.5
Technician’s Unsold Time, %
2.3
Key Performance Indicators
2.3.5
Technician’s Unsold Time, %
Definition
Technician’s Non-productive time/Total Attendance Time = Technician’s Unsold Time, %
Target <10-15%
2.3
Key Performance Indicators
2.3.5
Technician’s Unsold Time, %
Impacts
Turnover
Net Profit
Required Charge Rate
Margins
Break-even level
2.3
Key Performance Indicators
2.3.5
Technician’s Unsold Time, %
Reasons
Low Sales
Awareness, Hrs to Sell?Pre-planning?
Management?
Workshop Lay-out
2.3
Key Performance Indicators
2.3.5
Technician’s Unsold Time, %
Actions
Increase Sales
Awareness
Attitude
Pre-plan
Management
2.3
Key Performance Indicators
2.3.6
Work-bay Utilization in % of Potential
2.3
Key Performance Indicators
2.3.6
Work-bay Utilization in % of Potential
Definition
Sold hours per work bay divided by total available hours to sell per work bay = work bay utilization, %.
Target >90%
2.3
Key Performance Indicators
2.3.6
Work-bay Utilization in % of Potential
Impacts
Turnover
Net Profit
Sales Potential
Margins
Expansion Plans
2.3
Key Performance Indicators
2.3.6
Work-bay Utilization in % of Potential
Reasons
Pre-planning?
Productivity/Efficiency?Admin Process?
Units Waiting For Parts?
Supervision?
2.3
Key Performance Indicators
2.3.6
Work-bay Utilization in % of Potential
Reasons, cont’d
Service Marketing?
Cleanliness?
24/7 Operation?
Workshop Layout?
Low Skill Levels?
2.3
Key Performance Indicators
2.3.6
Work-bay Utilization in % of Potential
Actions
Workflows
Parts Planning
Training
Clean up Workshop
Management
2.3
Key Performance Indicators
2.3.6
Work-bay Utilization in % of Potential
Actions, cont’d
Marketing Plan
Supervision
Customer InteractionWorkshop Layout
Extend Operating Hrs
2.3
Key Performance Indicators
2.3.7
Gross Profit on Own Labor, %
2.3
Key Performance Indicators
2.3.7
Gross Profit on Own Labor, %
Definition
Total Labor Sales less Direct Expenses for own productive staff = Labor Gross Profit
Target 65-80%
2.3
Key Performance Indicators
2.3.7
Gross Profit on Own Labor, %
Impacts
Net Profit
Required Charge RatesExpansion Plans
Break-even level
Investments
2.3
Key Performance Indicators
2.3.7
Gross Profit on Own Labor, %
Reasons
Productivity?
Unrealistic Salary?
Labor Rate?
Efficiency?
Internal/External?
2.3
Key Performance Indicators
2.3.7
Gross Profit on Own Labor, %
Actions
Service Marketing
Training
Differentiate ChargesSupervision
Procedures
2.3
Key Performance Indicators
2.3.8
Workshop Direct Expenditures
2.3
Key Performance Indicators
2.3.8
Workshop Direct Expenditures
Definition
Includes personnel expenditures for Technicians (salary, HRA, visa cost, vacation package, health insurance, etc.)
Target 20-35%
2.3
Key Performance Indicators
2.3.8
Workshop Direct Expenditures
Impacts
Margins
Required Charge RatesNet Profit
Break-even level
Indirect Expenses
2.3
Key Performance Indicators
2.3.8
Workshop Direct Expenditures
Reasons
Salary Level?
Budget?
Management?
Overtime, Sick Leave?
Follow up KPI?
2.3
Key Performance Indicators
2.3.8
Workshop Direct Expenditures
Actions
Differentiate ChargesAttendance
Realistic Budget
Supervision
Management
2.3
Key Performance Indicators
2.3.9
Workshop Indirect Expenditures
2.3
Key Performance Indicators
2.3.9
Workshop Indirect Expenditures
Definition
Costs which can not be directly allocated towards a specific job such as rent, entertainment, head office expenses, etc.
Target <35%
2.3
Key Performance Indicators
2.3.9
Workshop Indirect Expenditures
Impacts
Net Profit
Investments
Break-even Level
Required Charge Rates
Company Future
2.3
Key Performance Indicators
2.3.9
Workshop Indirect Expenditures
Reasons
Management?
Budget?
Supply Agreements?
No Control?
In Expansion Mode?
2.3
Key Performance Indicators
2.3.9
Workshop Direct Expenditures
Actions
Procedures
Controls
Realistic Budget
Supply Agreements
Delegation
2.3
Key Performance Indicators
2.3.10
Service Department Net Contribution, %
2.3
Key Performance Indicators
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
Key Performance Indicators
2.3.10
Gross Profit on Own Labor, %
Impacts
Company Performance
Investments
Company Future
Expansion Plans
Future Bonus, etc.
2.3
Key Performance Indicators
2.3.10
Gross Profit on Own Labor, %
Reasons
Sales, Charge Rates?
Productivity/Efficiency?Internal/External?
Direct Expenses?
Profit Generator?
2.3
Key Performance Indicators
2.3.10
Gross Profit on Own Labor, %
Actions
Price Management
Salary Levels
Supervision
Management
Service Marketing
2.3
Key Performance Indicators
2.3.11
Spare Parts Sales Through Own Workshop, %
2.3
Key Performance Indicators
2.3.11
Spare Parts Sales Through Own Workshop, %
Definition
Sales of Spare Parts Through Own Workshop/ Total Sales of Spare Parts = Sales in %
Target 30-70%
2.3
Key Performance Indicators
2.3.11
Spare Parts Sales Through Own Workshop, %
Impacts
Company Performance
Margins
Net Profit
Turnover
Company Reputation
2.3
Key Performance Indicators
2.3.11
Spare Parts Sales Through Own Workshop, %
Reasons
Favor Counter Sales?
Contracts, Combos?
Service Marketing?
Workshop Discount?
Profit Generator?
2.3
Key Performance Indicators
2.3.11
Spare Parts Sales Through Own Workshop, %
Actions
Discount ManagementContracts and CombosStructured MarketingManagement
Customer Satisfaction
2.3
Key Performance Indicators
2.3.12
External Workshop Sales Versus Internal,
%
2.3
Key Performance Indicators
2.3.12
External Workshop Sales Versus Internal,
%
Definition
Sales of External Jobs/ Total Workshop Sales = External Sales in %
Target 80%
2.3
Key Performance Indicators
2.3.12
External Workshop Sales Versus Internal,
%
Impacts
Turnover
Net Profit
Service Penetration
Margins
Company Performance
2.3
Key Performance Indicators
2.3.12
External Workshop Sales Versus Internal,
%
Reasons
Service Marketing?
Contracts, Combos?
Manage KPIs?
Workshop Discount?
Profit Generator?
2.3
Key Performance Indicators
2.3.12
External Workshop Sales Versus Internal,
%
Actions
Management
Structured MarketingAdd Value
Contracts and CombosCustomer Satisfaction
2.3
Key Performance Indicators
2.3.13
Redo Work in Percent of Total Workshop
Sales
2.3
Key Performance Indicators
2.3.13
Redo Work in Percent of Total Workshop
Sales
Definition
Redo Sales, parts and labor/ Total Workshop Sales, parts and labor = Redo in %
Target <1%
2.3
Key Performance Indicators
2.3.13
Redo Work in Percent of Total Workshop
Sales
Impacts
Productivity
Net Profit
Customer Satisfaction
Margins
Company Reputation
2.3
Key Performance Indicators
2.3.13
Redo Work in Percent of Total Workshop
Sales
Reasons
Training?
Definition of Work?
Supervision?
Diagnostics?
Wrong Technician?
2.3
Key Performance Indicators
2.3.13
Redo Work in Percent of Total Workshop
Sales
Actions
Staff Development
Proper Procedures
Management
Proper Tools
RTFM
2.3
Key Performance Indicators
2.3.14
Time, Vehicle In to Invoice Out
2.3
Key Performance Indicators
2.3.14
Time, Vehicle In to Invoice Out
Definition
Time elapsed from vehicle arrives to workshop until invoice is issued and sent.
Target: 1 workday after technical completion
2.3
Key Performance Indicators
2.3.14
Time, Vehicle In to Invoice Out
Impacts
Cash Flow
Net Profit
Productivity/Efficiency
Margins
Company Reputation
2.3
Key Performance Indicators
2.3.14
Time, Vehicle In to Invoice Out
Reasons
Pre-Planning?
Procedures?
Customer Approvals?
Parts Availability?
Supervision?
2.3
Key Performance Indicators
2.3.14
Time, Vehicle In to Invoice Out
Actions
Better Pre-Planning
Parts Forecasting
Detailed Procedures
Approvals Process
Management
2.3
Key Performance Indicators
Section 2.4 5 x Super KPIs
2.4
Key Performance Indicators
Recovery Rate/ Calendar Hr
2.4
Key Performance Indicators
Parts Sales Through Workshop
Work-bay Utilization, %
Redo Work Versus Total Sales, %
Time, Vehicle In to Invoice Out
Recovery Rate/ Calendar Hr
Covers:
Charge Rate(s)/Hr
Attendance
Productivity
Efficiency
Internal vs. External
2.4
Key Performance Indicators
Parts Sales Through Workshop vs. Total
Parts Sales
Gives an Indication of Total Growth Potential For the Workshop
2.4
Key Performance Indicators
Work-bay Utilization Versus Potential
Gives an Indication of Growth Potential Within Existing Premises
2.4
Key Performance Indicators
Redo Work Versus Total Workshop Sales
Gives an Indication of Total Repair Quality of the Workshop
2.4
Key Performance Indicators
Time, Vehicle In to Invoice Out
Covers:
Approval Process
Management
Productivity/EfficiencyParts Availability
Admin Procedures
2.4
Key Performance Indicators
Section 2, Summary
Measure Performance
Key Performance Indicators
Uniform Snap Shot
Correct Decisions
Measures Trends
Capture Relevant Data