Business Management

Measure Everything

Okay, so I can’t claim credit to this as an original concept; but I can put some “spin” on the idea to increase it’s relevancy to what we do every day.

We all know that tried and true adage “Don’t expect what you don’t inspect”. By and large, we (as industry professionals) view performance measurement (be it statistics, calculations, or other “number crunching”) as drudgery when in fact it should be embraced passionately.

Realistically, there is no other way to know where you were, where you are, and where you can go in the short term. Further expanded, there’s no other way to create a long term plan for profitability. Anything else is a fanciful guess.

Anything measured can be improved. I realize this is a very broad statement, and yes, this concept “works both ways”. The inverse of a profitability improvement might be an expense reduction simply because expenses were monitored and reduced. A profitability increase may have resulted because sales volume was monitored and attainable goals were established and tracked.

Technicians must also embrace performance measurement as a means for professional improvement. As the revenue generators within your Service Department, they must be personally vested in knowing their performance in terms of efficiency and productivity. A loss of fifteen labor minutes per day over the course of one year represents SIXTY (60) labor hours – a full week’s pay – lost.

How will they know if they don’t measure?

Service Advisors should have realistic targets which tie to shop capabilities. Measurement of Service Advisor performance should be based on closing ratio: what should have been offered (based on time/mileage/wear), what was offered, and what was selected by the client.

Once again, all of these elements can (and should) be measured.

But this is only one-third of the story.

Back to the Future

Just like the time circuits in the Delorean (from the movie), measurements are only useful if you know where you are and where you were. These two elements, combined with measured knowledge of your shop’s resources, can help you realistically predict where shop performance is headed.

Continuous measurement of performance combined with resource changes also provides you with the opportunity to change the future. Shop volume down? In comparison to what time period? What changed?  What can be done to effect change in a positive manner?

The key word in this concept is do. Measure, compare, do. Measure, compare, do. Over and over again, consistently, as a routine process using the same benchmarks and standards. It is important to remember the “do” element is not “change” for the sake of change alone. Changing something successful for the sake of change is just as bad as clinging to a failed process because “that’s the way we’ve always done it”. Remember: there are no “sacred cows”; if it helps profitability today, fantastic…BUT…it should be monitored to ensure continued benefit, and adjustment if performance falters.

How many measures are there? Theoretically, the sky’s the limit; however, a good starting point lies within your DMS for elements such as hours per RO, effective labor rate, etc. However, these automated measurements are only accurate as data provided (remember the saying: ”garbage in, garbage out”). Solid knowledge of DMS performance measurement is absolutely necessary to ensure reports are accurate. If you intend on using this information, I strongly recommend completing all DMS-supplied training pertaining to reports (whether it be on-line or classroom based). Once you understand how the DMS uses data, you can determine how easily this data may be communicated inaccurately.

In some instances, DMS data may not be quite what you need. In these circumstances, you may have to create your own spreadsheets. Microsoft Excel is the de-facto “world standard” for spreadsheet creation and is well worth your time to learn.
 

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