Productivity and Profitability

by Art Little

This article appeared in the January 2013 issue of Transmission Digest.

Well it's a new year again. By now, you have probably 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? If you just had one or two more vehicles ready to go at the end of the week,  you know , your numbers would look a lot different. One or two at the end at every week  can make the difference between standing in line at the bank or standing in line at the soup kitchen for lot of shops now days.

There are ways to find out why you are not getting those one or two jobs you need in the bank each week. First, watch your leads. Are you recording & working each lead? 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 removes and installs 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 is critical if you want to get the one or two extra jobs a week. Is the manager making good decisions? Is he working on jobs that will not pick up this week when money jobs are sitting on the bench? Are parts getting ordered as soon as the sale is made so production is not slowed down waiting on parts? Every production mistake delays cash collected .

Watching the shop open and close is a good way to key into some time management challenges your shop might be having.  It is an easy assignment. Just sit and observe employees during these times .Look for how the work assignments are issued  and how the work assignments are taken.  You might  be able to see where the one or two are being lost.

 Let's look at two different imaginary shops, for clarification, and try to pick up on some of the real world issues you might be having at your shop.

Shop A

The shop owner is absentee and does not have a production system set up 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 to manage his shop.

The builder is the first to arrive at 7:40 AM.. He has to wait 20 minutes for the manager to unlock the front door at 8:01 AM. The manager lets him in and the builder goes straight to the building room and calls his wife. He talks on the phone to his wife, friends and the parts house until 9AM. He eats breakfast and talks to the installers at the shop until about 9:45. He looks at some tech notes and finally starts building the transmission he was working on the day before and about 10:15. At 10:25AM the manager pulls him off to go drive a vehicle for a customer complaint waiting out in the lobby.

He gets back to the bench about 11:00AM and goes back to the transmission he was working on. At 12:00 PM he goes to lunch. He is not even close to having one unit built for the day. When he arrives back at 1:00PM the manager asks him what he is working on. He tells him and the manager informs  him that the customer called at 8 AM this morning and is not going to pick it up for 2 weeks. The manager tells him to go ahead and finish it since he is in the middle of it.

At 3:00PM the transmission that is not going to deliver this week is finished. The builder looks for the manager to find out what his next work assignment is and the manager is on a road test . So, he calls his wife again and waits on the manager to come back.  At 3:20 pm the manager returns and issues his next work assignment . He performs an RDI and works up a parts list . It is 4:15PM now. It is too late in the daty to start a new work assignment. He washes his hands and starts helping the other techs pre close so he can leave at 5:00 PM sharp. Production report...1 unit built all day.

Installer A arrives at 8:15AM and goes in the lobby to start the coffee. He opens up the shop for the manager.  When the coffee is ready he takes his coffee to the building room. It is about 8:30am now. About 30 minutes later installer B arrives late. Now it is 9:00. He goes into the building room and is sent to pick up  breakfast.

The manager is run over by customers when he got there late and is handling the crowd.Installer B asks him if 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. It is close to 10am now.  Installer A takes a road test on a warranty job. Installer B has to wait on 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 AM. In an hour and 40 minutes it is lunchtime. Production report......Installer B goes to lunch with a half a pull on his production output for the day. Installer A has no removes or installs 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. He is having trouble keeping up with his own job. He is unorganised and always behind. He can not possibly keep up with them. He does not record all his leads. He does not call customers back if they do not show up for their appointments. He forgets to order parts. He can not get customers to pick up their vehicles when they are ready. Basicly, he comes in and reacts to what is happening to him every day. Instead of managing the shop, the shop is managing him. The tail is wagging the dog here.

The shop closes every day At 5:00. At 4:30  the shop starts to pre close. Cars are taken off the lift, others are brought in. Everybody is already standing around waiting for the shop to close when it is 5:00 sharp.They have used shop time to pre close so they can leave the exact minute the posted business hours say the shop is closed . The manager and all the employees leave together regardless of promises made to customers, and it all starts over again tomorrow.

Shop B

This shop owner understands that it is beneficial to a transmission shop owner to set up his own production workflow system. A system that he understands and can teach. Why? Because people come and go. He knows if he allows  the manager to use his own production workflow system he is asking for trouble. Why?  Every time a manager leaves, it throws his shop into chaos because nobody knows what's going on but the manager, and the manager is gone. Next thing you know, here comes another replacement manager trying to figure it all out. Then, after thousands of dollars are lost,  the replacement manager sets up another workflow system of his own that no one understands but him. The shop owner has lost control. It is a vicious cycle and a money losing proposition to say the least . This shop owner has eliminated this problem by establishing his own production workflow system for the shop and training everyone on their responsibilities. He requires production reports on each of his employees to make them accountable and uses the production reports to help measure the productivity of his crew.

The manager in shop B is organized and makes sure that everyone in the shop is trained on what their responsibilities are .  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 7:00 AM, 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 go move cars out of the shop and get ready for the meeting at 7:45.

 At 7:45AM the production meeting starts and by 8:00AM it is over. When the meeting is over, everyone knows what their work assignments are for the day. Target cars to be delivered by the team that day are on the production schedule. Other repairs are put on hold.  Parts that are needed are discussed and ordered. Problems and delays are discussed and fixes decided upon.

The manager is tuned in to time management. He knows the purpose for the daily meeting is to set  the daily production goal together and plan the shop time needed, to reach that goal . If they reach their daily goals then, weekly production goals are achieved.  

By 8:00 AM, everybody knows the game plan and goes to work. Goals are set at that meeting together as a team and the team works toward achieving those goals by the end of the day. They all feel like they are part of a professional team and they are motivated to achieve their individual and team goals.

At 8AM the builder starts on his first work assignment and installer A and B start on their first work assignments .The manager watches the game plan all day long. If something happens to take him off his schedule, he immediately makes a change in the production schedule so his team knows. Communication between team members is important at this shop.

Immediately after each work assignment, the manager issues  their next assignment. The manager leaves the employees alone to complete the work he has scheduled for them. He does not pull them off of jobs every time a customer comes in with a complaint.  

The employee productivity is measured by using production reports. Everyone is accountable to the team at this shop.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 5PM . The shop employees find a quitting point on what they are working on and do not start closing until 5PM or after. They keep on working on billable hours until 5:00PM. They will stay late when required if there is a promise made to the customer. The manager puts together another production game plan for tomorrow before he leaves so he will be ahead of the game and prepared for his 7:45AM  production meeting when tomorrow comes. And the next day, it all starts over.

 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 organised? 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 is lost when a shop has poor leadership, is not organised, not trained and not accountable. With so many specialty shop failing over the last few years, I often wonder how many could have been saved if the owner had an effective production system in place and, the manager and the production employees worked together as a team , to maximise the shops production potential.

You have to make a new years resolution now, in January , to become more productive in 2013. It is not something you can do alone. It takes a team effort. Here is the plan.

1.  Owners, provide the production workflow organizational  structure and training the shop needs .
2. Managers, provide the leadership and time management skills the shop needs.
3. Production employees, become more time conscious and accountable.

In closing, here are some numbers to think about to get you motivated to increase your shops production capacity.One more  transmission job averaging $2,000.00 delivered every week works out to $104,000 gross revenue per year. Two more per week is $208,000. If you can figure out how to get  one or two more jobs delivered each week, you can add those numbers to your P&L in 2013. That is pretty good motivation ! I wish you and yours a happy and prosperous New Year !  

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