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Profitable Distributor Service Management Make Your Service Department the Driver of Your Dealership

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This section covers various KPIs for service, definitions, why they are important and how they impact your business

TRANSCRIPT

Page 1: Sect 2 KPI's

Profitable Distributor

Service Management

Make Your Service Department the Driver of Your Dealership

Page 2: Sect 2 KPI's

Section 2

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

Key Performance Indicators

Page 3: Sect 2 KPI's

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

Page 4: Sect 2 KPI's

Section 2.1 Why KPI?

2.1

Key Performance Indicators

Page 5: Sect 2 KPI's

Uniform Snapshot of Department Performance

2.1

Key Performance Indicators

Page 6: Sect 2 KPI's

Enables Performance Health Checks

2.1

Key Performance Indicators

Page 7: Sect 2 KPI's

Forces the Department to

Capture All Relevant Data

2.1

Key Performance Indicators

Page 8: Sect 2 KPI's

Will Enable Correct Measurement of

Progress Made

2.1

Key Performance Indicators

Page 9: Sect 2 KPI's

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

Page 10: Sect 2 KPI's

Section 2.2 Time to Sell

2.2

Key Performance Indicators

Page 11: Sect 2 KPI's

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

Page 12: Sect 2 KPI's

Parkinson’s Law #1:

“Work Expands to Fill the Time

For Its Completion”

Cyril Northcote Parkinson, 1909-1993

2.2

Key Performance Indicators

Page 13: Sect 2 KPI's

Parkinson’s Law #2:

“Expenditures Rise to Meet

Income”Cyril Northcote Parkinson, 1909-1993

2.2

Key Performance Indicators

Page 14: Sect 2 KPI's

Section 2.3

Distributor Service Department Key Performance Indicators, KPI

2.3

Key Performance Indicators

Page 15: Sect 2 KPI's

2.3.1

Technicians Availability Against

Calendar Time, %

2.3

Key Performance Indicators

Page 16: Sect 2 KPI's

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

Page 17: Sect 2 KPI's

2.3.1

Technician’s Availability Against

Calendar Time, %

Impacts

Total Hours to Sell

Turnover

Profit

2.3

Key Performance Indicators

Page 18: Sect 2 KPI's

2.3.1

Technician’s Availability Against

Calendar Time, %

Reasons

Management?

Time Management?

Follow Up Attendance?Dissatisfaction?

“Ownership”?

2.3

Key Performance Indicators

Page 19: Sect 2 KPI's

2.3.1

Technician’s Availability Against

Calendar Time, %

Actions

2.3

Key Performance Indicators

Awareness

Attitude

Care

Educate

Ownership

Page 20: Sect 2 KPI's

2.3.2

Technicians Productivity, %

2.3

Key Performance Indicators

Page 21: Sect 2 KPI's

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

Page 22: Sect 2 KPI's

2.3.2

Technician’s Productivity, %

Impacts

Turnover

Margins

Net Profit

2.3

Key Performance Indicators

Page 23: Sect 2 KPI's

2.3.2

Technician’s Productivity, %

Reasons

Low Sales?

Management?

Awareness, Hrs to sell?Pre-planning?

Workshop layout

2.3

Key Performance Indicators

Page 24: Sect 2 KPI's

2.3.2

Technician’s Productivity, %

Reasons, Cont’d

Workshop MaintenanceParts Availability?

Skill levels?

Incentive systems?

Management System?

2.3

Key Performance Indicators

Page 25: Sect 2 KPI's

2.3.2

Technician’s Productivity, %

Actions

Increase Sales

Awareness

Attitude

Pre-plan

Management

2.3

Key Performance Indicators

Page 26: Sect 2 KPI's

2.3.3

Technicians Efficiency, %

2.3

Key Performance Indicators

Page 27: Sect 2 KPI's

2.3.3

Technician’s Efficiency, %

Definition

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

Target >100%

2.3

Key Performance Indicators

Page 28: Sect 2 KPI's

2.3.3

Technician’s Efficiency, %

Impacts

Turnover

Margins

Net Profit

Bay Utilization

Turnaround Time

2.3

Key Performance Indicators

Page 29: Sect 2 KPI's

2.3.3

Technician’s Efficiency, %

Reasons

Skill Match?

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

More Than Required?

2.3

Key Performance Indicators

Page 30: Sect 2 KPI's

2.3.3

Technician’s Efficiency, %

Reasons, Cont’d

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

Job Planning?

2.3

Key Performance Indicators

Page 31: Sect 2 KPI's

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

Page 32: Sect 2 KPI's

2.3.3

Technician’s Efficiency, %

Actions

Improve Supervision

Better Planning

Correct Job cards

Education

Awareness/Attitude

2.3

Key Performance Indicators

Page 33: Sect 2 KPI's

2.2.4

Recovery Rate on Technician’s

Available Time, Money/hr

2.3

Key Performance Indicators

Page 34: Sect 2 KPI's

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

Page 35: Sect 2 KPI's

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

Page 36: Sect 2 KPI's

2.3.4

Recovery Rate on Technician’s

Available Time, Money/hr

Reasons

Attendance?

Productivity?

Efficiency?

Internal/External?

Management?

2.3

Key Performance Indicators

Page 37: Sect 2 KPI's

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

Page 38: Sect 2 KPI's

Workshop 2

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

2.3

Key Performance Indicators

Page 39: Sect 2 KPI's

2.3.5

Technician’s Unsold Time, %

2.3

Key Performance Indicators

Page 40: Sect 2 KPI's

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

Page 41: Sect 2 KPI's

2.3.5

Technician’s Unsold Time, %

Impacts

Turnover

Net Profit

Required Charge Rate

Margins

Break-even level

2.3

Key Performance Indicators

Page 42: Sect 2 KPI's

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

Page 43: Sect 2 KPI's

2.3.5

Technician’s Unsold Time, %

Actions

Increase Sales

Awareness

Attitude

Pre-plan

Management

2.3

Key Performance Indicators

Page 44: Sect 2 KPI's

2.3.6

Work-bay Utilization in % of Potential

2.3

Key Performance Indicators

Page 45: Sect 2 KPI's

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

Page 46: Sect 2 KPI's

2.3.6

Work-bay Utilization in % of Potential

Impacts

Turnover

Net Profit

Sales Potential

Margins

Expansion Plans

2.3

Key Performance Indicators

Page 47: Sect 2 KPI's

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

Page 48: Sect 2 KPI's

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

Page 49: Sect 2 KPI's

2.3.6

Work-bay Utilization in % of Potential

Actions

Workflows

Parts Planning

Training

Clean up Workshop

Management

2.3

Key Performance Indicators

Page 50: Sect 2 KPI's

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

Page 51: Sect 2 KPI's

2.3.7

Gross Profit on Own Labor, %

2.3

Key Performance Indicators

Page 52: Sect 2 KPI's

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

Page 53: Sect 2 KPI's

2.3.7

Gross Profit on Own Labor, %

Impacts

Net Profit

Required Charge RatesExpansion Plans

Break-even level

Investments

2.3

Key Performance Indicators

Page 54: Sect 2 KPI's

2.3.7

Gross Profit on Own Labor, %

Reasons

Productivity?

Unrealistic Salary?

Labor Rate?

Efficiency?

Internal/External?

2.3

Key Performance Indicators

Page 55: Sect 2 KPI's

2.3.7

Gross Profit on Own Labor, %

Actions

Service Marketing

Training

Differentiate ChargesSupervision

Procedures

2.3

Key Performance Indicators

Page 56: Sect 2 KPI's

2.3.8

Workshop Direct Expenditures

2.3

Key Performance Indicators

Page 57: Sect 2 KPI's

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

Page 58: Sect 2 KPI's

2.3.8

Workshop Direct Expenditures

Impacts

Margins

Required Charge RatesNet Profit

Break-even level

Indirect Expenses

2.3

Key Performance Indicators

Page 59: Sect 2 KPI's

2.3.8

Workshop Direct Expenditures

Reasons

Salary Level?

Budget?

Management?

Overtime, Sick Leave?

Follow up KPI?

2.3

Key Performance Indicators

Page 60: Sect 2 KPI's

2.3.8

Workshop Direct Expenditures

Actions

Differentiate ChargesAttendance

Realistic Budget

Supervision

Management

2.3

Key Performance Indicators

Page 61: Sect 2 KPI's

2.3.9

Workshop Indirect Expenditures

2.3

Key Performance Indicators

Page 62: Sect 2 KPI's

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

Page 63: Sect 2 KPI's

2.3.9

Workshop Indirect Expenditures

Impacts

Net Profit

Investments

Break-even Level

Required Charge Rates

Company Future

2.3

Key Performance Indicators

Page 64: Sect 2 KPI's

2.3.9

Workshop Indirect Expenditures

Reasons

Management?

Budget?

Supply Agreements?

No Control?

In Expansion Mode?

2.3

Key Performance Indicators

Page 65: Sect 2 KPI's

2.3.9

Workshop Direct Expenditures

Actions

Procedures

Controls

Realistic Budget

Supply Agreements

Delegation

2.3

Key Performance Indicators

Page 66: Sect 2 KPI's

2.3.10

Service Department Net Contribution, %

2.3

Key Performance Indicators

Page 67: Sect 2 KPI's

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

Page 68: Sect 2 KPI's

2.3.10

Gross Profit on Own Labor, %

Impacts

Company Performance

Investments

Company Future

Expansion Plans

Future Bonus, etc.

2.3

Key Performance Indicators

Page 69: Sect 2 KPI's

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

Page 70: Sect 2 KPI's

2.3.10

Gross Profit on Own Labor, %

Actions

Price Management

Salary Levels

Supervision

Management

Service Marketing

2.3

Key Performance Indicators

Page 71: Sect 2 KPI's

2.3.11

Spare Parts Sales Through Own Workshop, %

2.3

Key Performance Indicators

Page 72: Sect 2 KPI's

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

Page 73: Sect 2 KPI's

2.3.11

Spare Parts Sales Through Own Workshop, %

Impacts

Company Performance

Margins

Net Profit

Turnover

Company Reputation

2.3

Key Performance Indicators

Page 74: Sect 2 KPI's

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

Page 75: Sect 2 KPI's

2.3.11

Spare Parts Sales Through Own Workshop, %

Actions

Discount ManagementContracts and CombosStructured MarketingManagement

Customer Satisfaction

2.3

Key Performance Indicators

Page 76: Sect 2 KPI's

2.3.12

External Workshop Sales Versus Internal,

%

2.3

Key Performance Indicators

Page 77: Sect 2 KPI's

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

Page 78: Sect 2 KPI's

2.3.12

External Workshop Sales Versus Internal,

%

Impacts

Turnover

Net Profit

Service Penetration

Margins

Company Performance

2.3

Key Performance Indicators

Page 79: Sect 2 KPI's

2.3.12

External Workshop Sales Versus Internal,

%

Reasons

Service Marketing?

Contracts, Combos?

Manage KPIs?

Workshop Discount?

Profit Generator?

2.3

Key Performance Indicators

Page 80: Sect 2 KPI's

2.3.12

External Workshop Sales Versus Internal,

%

Actions

Management

Structured MarketingAdd Value

Contracts and CombosCustomer Satisfaction

2.3

Key Performance Indicators

Page 81: Sect 2 KPI's

2.3.13

Redo Work in Percent of Total Workshop

Sales

2.3

Key Performance Indicators

Page 82: Sect 2 KPI's

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

Page 83: Sect 2 KPI's

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

Page 84: Sect 2 KPI's

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

Page 85: Sect 2 KPI's

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

Page 86: Sect 2 KPI's

2.3.14

Time, Vehicle In to Invoice Out

2.3

Key Performance Indicators

Page 87: Sect 2 KPI's

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

Page 88: Sect 2 KPI's

2.3.14

Time, Vehicle In to Invoice Out

Impacts

Cash Flow

Net Profit

Productivity/Efficiency

Margins

Company Reputation

2.3

Key Performance Indicators

Page 89: Sect 2 KPI's

2.3.14

Time, Vehicle In to Invoice Out

Reasons

Pre-Planning?

Procedures?

Customer Approvals?

Parts Availability?

Supervision?

2.3

Key Performance Indicators

Page 90: Sect 2 KPI's

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

Page 91: Sect 2 KPI's

Section 2.4 5 x Super KPIs

2.4

Key Performance Indicators

Page 92: Sect 2 KPI's

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

Page 93: Sect 2 KPI's

Recovery Rate/ Calendar Hr

Covers:

Charge Rate(s)/Hr

Attendance

Productivity

Efficiency

Internal vs. External

2.4

Key Performance Indicators

Page 94: Sect 2 KPI's

Parts Sales Through Workshop vs. Total

Parts Sales

Gives an Indication of Total Growth Potential For the Workshop

2.4

Key Performance Indicators

Page 95: Sect 2 KPI's

Work-bay Utilization Versus Potential

Gives an Indication of Growth Potential Within Existing Premises

2.4

Key Performance Indicators

Page 96: Sect 2 KPI's

Redo Work Versus Total Workshop Sales

Gives an Indication of Total Repair Quality of the Workshop

2.4

Key Performance Indicators

Page 97: Sect 2 KPI's

Time, Vehicle In to Invoice Out

Covers:

Approval Process

Management

Productivity/EfficiencyParts Availability

Admin Procedures

2.4

Key Performance Indicators

Page 98: Sect 2 KPI's

Section 2, Summary

Measure Performance

Key Performance Indicators

Uniform Snap Shot

Correct Decisions

Measures Trends

Capture Relevant Data