BY NOW, YOU'RE smack-dab in the middle of the busy season. Now is when the service department should be knocking down the highest revenue of the year.
If you aren’t, you may be asking yourself, “WTF is happening?”
Truth is, most shops don’t lose money by the dollar; they lose it by the hour, and a lot of it is caused by runaway W-Time.
|While it’s necessary for techs to maintain and grow their collection of time-saving tools, if tool truck visits are left unsupervised they can add up to thousands of dollars of yearly revenue loss.|
W-Time stands for Withdrawn Time, which is the time technicians use during their daily regimen that service doesn’t charge back to the customers. There is a long list of W-Time designations, such as techs waiting on parts, pushing vehicles, unloading motorcycles, attending meetings, and time out for training. W-Time consists of typically legitimate hours that techs use to conduct business throughout the day.
But legitimate doesn’t always mean it’s OK.
One W-Time category I want to talk about is tool truck visits. While it’s necessary for techs to maintain and grow their collection of time-saving tools, if left unsupervised the visits can add up to thousands of dollars of yearly revenue loss. For example, in most major cities there are at least two if not three tool trucks that stop at dealerships once a week. If your techs spend an average of 12 to 18 minutes in each truck during every visit, the time adds up to significant loss of labor hours and parts dollars.
To demonstrate, let’s figure the W-Time and lost revenue for a crew of three techs. First, we multiply the number of techs by the average hours per week that each tech visits the tool truck — let’s say 0.5 hours for each tech to visit the two to three trucks that stop by on a weekly basis. That equals 1.5 hours per week for the crew.
Multiply 1.5 hours by the number of working weeks per year (let’s use 49 weeks per year to factor in vacations and holidays): that equals 73.5 hours. We then multiply 73.5 hours times the shop labor rate; I’ll use $75 per hour because it’s not too high and not too low. That equals $5,512.50 in labor dollars that could not be billed to customers because the techs were in the trucks drooling all over the shiny new tools.
But we’re not done yet. We also need to calculate the parts revenue that’s being missed. I’ll use $80 parts dollars to one labor hour. Note that this number has a wide range; most Harley dealers are well above the $100 parts-to-labor-hour ratio, and I would guess independent shops to be much lower. If we multiply our 73.5 labor hours times the $80 in parts dollars, we get $5,880 in uncollected parts sales revenue. (Continued)