Understanding Productivity and Efficiency
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Service financial and performance tracking can be confusing for service managers and technicians. Some systems use different terminology, such as revenue recovery, charge-out efficiency, or service recovery that can also cause additional confusion.

In this edition of Top Metrics to Watch, I will try to explain Productivity and Efficiency in a way that may help your employees understand how they can make a difference in shop performance in these two areas.

A generic formula of Productivity is 1) revenue hours divided by 2) available hours.
1. Revenue hours
Revenue hours are hours posted to revenue work orders. Generally, this would be customer labor sales, warranty labor sales, and internal labor sales, e.g., equipment setup, predelivery, or trade reconditioning. In most shops, these are charged at the retail shop rate. Nonrevenue hours would be technician time posted to nonpaying jobs, such as general shop and yard maintenance, servicing company vehicles, or helping another department. In most dealerships, nonrevenue work is charged at cost or nonrevenue shop rate. Some systems consider nonrevenue work as “lost time.” It is primarily the job of service managers to maximize revenue work and minimize nonrevenue work.
2. Available hours
In most cases, a technician is paid for all hours during the work year, including vacation, holidays, paid time off, etc. However, because of paid time off, they are only available for a reduced number of hours. EXAMPLE: 40 hours per week x 52 weeks per year equals 2,080 technician paid hours. Minus 180 hours of vacation, sick days, statutory holidays, or other paid time off, and that total drops to 1,900 available hours.


Western Equipment Dealer Magazine Winter 2019 Issue
By Kelly Mathison

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