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How to evaluate your business, what to look for and what improvements can be done
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Section 3
Distributor Service Department Performance Diagnostics
3.1 Management and Supervision
3.3 Gross Profit Low
3.2 Direct Expenses, High
Performance Diagnostics
3.4 Indirect Expenses, High
3.5 Net Contribution, Low
Total Workshop Sales
Diagnostics Chart - 1:
Managerial,Supervisoryissues
Performance Diagnostics
3.1
3.1
Management and Supervision
Business Prospecting
3.1
Performance Diagnostics
Customer Relations
Service Department
Parts Department
Direct and Non-Direct Productive Staff
3.1.1
Business Prospecting
3.1
Performance Diagnostics
3.1.1
Business Prospecting
Reasons
Analyze True Potential?
3.1
Performance Diagnostics
Exploit Fleet Service?Customer Visits?
Customer Records?
Wrong Targets?
3.1.1
Business Prospecting
Actions
Proper Market Study
3.1
Performance Diagnostics
Service Contracts
Customer Visit Plans
Customer Data Base
SMART Targets
3.1.2
Poor Customer Relations
3.1
Performance Diagnostics
3.1.2
Poor Customer Relations
Reasons
Department Image?
3.1
Performance Diagnostics
Poor Work Standards?Customer Complaints?Customer Consent?
No Service Contracts?
3.1.2
Poor Customer Relations
Actions
Improve Overall Image
3.1
Performance Diagnostics
Improve Procedures
Complaints ProcedureReceipt Procedure
Various Contracts
3.1.3
Service Department
3.1
Performance Diagnostics
3.1.3
Service Department
Reasons
Productivity/Efficiency?
3.1
Performance Diagnostics
Improper Workflow?
Supervision?
Monitor Unsold Time?Improper Facilities?
3.1.3
Service Department
Actions
Increase Sales/Training
3.1
Performance Diagnostics
New Procedures
Management
Performance MonitoringReview Facilities
3.1.4
Parts Department
3.1
Performance Diagnostics
3.1.4
Parts Department
Reasons
Service to Workshop?
3.1
Performance Diagnostics
First Pick Availability?Pre-Planning?
Communication?
Retail More Important?
3.1.4
Parts Department
Actions
Change Attitude
3.1
Performance Diagnostics
Forecasting
Better Pre-planning
Communication
Biggest Customer
3.1.5
Direct and Non-Direct Productive
Staff
3.1
Performance Diagnostics
3.1.5
Direct and Non-Direct Productive
Staff
Reasons
Quality and Training?
3.1
Performance Diagnostics
Supervision?
Systematic Planning?Incentives, etc.?
Missed Service Sales?
3.1.5
Direct and Non-Direct Productive
Staff
Actions
Train or Replace
3.1
Performance Diagnostics
Management
Workshop Planning
Motivational SchemesBetter Inspections
Total Workshop
Sales
Direct Expenses
Diagnostics Chart - 2:
Managerial,Supervisoryissues
3.2
Performance Diagnostics
3.2
Direct Expenses, High
Unsold Time
3.2
Performance Diagnostics
Policy Adjustments
Consumables, Tools
3.2.1
Unsold Time
3.2
Performance Diagnostics
3.2.1
Unsold Time
Reasons
Workshop Planning?
3.2
Performance Diagnostics
Parts Supply?
Workshop Facilities?
Supervision?
Time Management?
3.2.1
Unsold Time
Reasons, cont’d
Service Marketing?
3.2
Performance Diagnostics
Pre-Planning?
Parts Forecasting?
Tools Not in Order?
Waiting Approvals?
3.2.1
Unsold Time
Reasons, cont’d
No Jobs?
3.2
Performance Diagnostics
Other Duties?
Training?
Redo as Unsold?
Goodwill as Unsold?
3.2.1
Unsold Time
Actions
Bill of Materials, BOMs
3.2
Performance Diagnostics
Parts Management
Review Facilities
Service ManagementCapture Relevant Data
3.2.1
Unsold Time
Actions, cont’d
Marketing Strategy
3.2
Performance Diagnostics
Systems/Procedures
Parts Forecasting
Tools Management
Approvals Process
3.2.1
Unsold Time
Actions, cont’d
Service Marketing
3.2
Performance Diagnostics
Proper Time Sheets
Training Plans
Improve Sold Quality
Correct Job Bookings
3.2.2
Policy Adjustments
3.2
Performance Diagnostics
3.2.2
Policy Adjustments
Reasons
Quality Assurance?
3.2
Performance Diagnostics
Warranty Recovery?
Customer Goodwill?
Labor on Accessories?Warranty Terms Info?
3.2.2
Policy Adjustments
Actions
Work Procedures
3.2
Performance Diagnostics
Warranty ManagementBook Cost Properly
Improve Quotations
Hand-Over Procedure
3.2.3
Consumables and Tools
3.2
Performance Diagnostics
3.2.3
Consumables and Tools
Reasons
Improper Control?
3.2
Performance Diagnostics
Purchase Agreements?Store Keeper?
Cost on Job Card?
Proper Charge?
3.2.3
Consumables and Tools
Actions
Proper Procedures
3.2
Performance Diagnostics
Purchase AgreementsStore Keeper
Proper Costing
Charge Rate Policy
Total Workshop
Sales
Gross Profit
Direct Expenses
Diagnostics Chart - 3:
Managerial,Supervisoryissues
3.3
Performance Diagnostics
3.3
Gross Profit Low
External Labor Sales
3.3
Performance Diagnostics
Warranty Labor SalesInternal Labor Sales
Sublet and Bought-Out
3.3.1
External Labor Sales
3.3
Performance Diagnostics
3.3.1
External Labor Sales
Reasons
Unbalanced Work Mix?
3.3
Performance Diagnostics
Customer Database?
Prospecting Customers?No Customer GoodwillTime to Sell
3.3.1
External Labor Sales
Actions
More External Sales
3.3
Performance Diagnostics
Create Database?
Prospect Customers
Customer Relations
Training
3.3.2
Warranty Labor Sales
3.3
Performance Diagnostics
3.3.2
Warranty Labor Sales
Reasons
Improper Diagnostics?
3.3
Performance Diagnostics
Warranty/Normal Job?Incomplete Claim?
Service Campaigns?
Low Efficiency?
3.3.2
Warranty Labor Sales
Actions
Training, Procedures
3.3
Performance Diagnostics
Decision Process
Claim Administration
Do All Campaigns
Supervision
3.3.3
Internal Labor Sales
3.3
Performance Diagnostics
3.3.3
Internal Labor Sales
Reasons
Sales Dept?
3.3
Performance Diagnostics
Internal Rates?
All Jobs Charged?
Job Authorization?
Units Over-Prepared?
3.3.3
Internal Labor Sales
Actions
Service a Profit Center
3.3
Performance Diagnostics
Uniform Rates
Specify All Jobs
Approvals Process
Set PDI Standards
3.3.4
Sublet and Bought-Out
3.3
Performance Diagnostics
3.3.4
Sublet and Bought-Out
Reasons
Manage Lube Oil Stock?
3.3
Performance Diagnostics
Negotiate Rates?
Late Invoices?
Job Authorization?
Scrap Management?
3.3.4
Sublet and Bought-Out
Actions
Oil Stock Procedures
3.3
Performance Diagnostics
Supply Agreements
Enforce Supplier SLA
Approvals Process
Scrap Sales Procedures
Total Workshop
Sales
Gross Profit
Direct Expenses
Indirect Expenses
Diagnostics Chart - 4:
Managerial,Supervisoryissues
3.4
Indirect Expenses High
Employee Expenses
3.4
Performance Diagnostics
After Sales Expenses
Admin Expenses
Depreciation Expenses
3.4.1
Employee Expenses
3.4
Performance Diagnostics
3.4.1
Employee Expenses
Reasons
Salary Levels?
3.4
Performance Diagnostics
Ratio Productive Staff?High Sick Leave?
Manage Attendance?
Poor Staff Quality?
3.4.1
Employee Expenses
Actions
HR Policy, Assessment
3.4
Performance Diagnostics
Ratio 3.5:1
Staff Management
Attitude
Training, Assessment
3.4.2
Aftersales Expenses
3.4
Performance Diagnostics
3.4.2
Aftersales Expenses
Reasons
Warranty Recovery?
3.4
Performance Diagnostics
Goodwill Repairs?
High Redo Level?
Warranty Terms?
Manage Ad Campaigns?
3.4.2
Aftersales Expenses
Actions
Warranty Procedures
3.4
Performance Diagnostics
Approvals Process
Repair Quality
Handover Process
Marketing Policy
3.4.3
Administrative Expenses
3.4
Performance Diagnostics
3.4.3
Administrative Expenses
Reasons
Manage Vehicle Fleet?
3.4
Performance Diagnostics
Expensive Rent?
Facilities Maintenance?Control of Utility Cost?Purchasing Policy?
3.4.3
Administrative Expenses
Actions
Proper Procedures
3.4
Performance Diagnostics
Negotiate Rent
Maintenance Policy
Review Utility Usage
Purchasing Policy
3.4.3
Depreciation Expenses
3.4
Performance Diagnostics
3.4.4
Depreciation Expenses
Reasons
Incorrect Policies?
3.4
Performance Diagnostics
Rent/Purchase Policy?Manage Fixed Assets?Manage Capex?
Insufficient Capex Budget?
3.4.4
Depreciation Expenses
Actions
Proper Policies
3.4
Performance Diagnostics
Decide Buy or Rent?
Asset Management
Capex Policy
Proper Capex Budget
Total Workshop
Sales
Gross ProfitNet
Contribution
Direct Expenses
Indirect Expenses
Diagnostics Chart - 5:
Managerial,Supervisoryissues
3.5
Performance Diagnostics
3.5
Net ContributionLow
Direct Expenses
3.5
Performance Diagnostics
Indirect Expenses
Service ManagementResource Optimization
3.5.1
Direct Expenses
3.5
Performance Diagnostics
3.5.1
Direct Expenses
Reasons
Cost Productive Staff?
3.5
Performance Diagnostics
High Unsold Time?
High Redo Level?
Manage Productive Staff?Manage Sublet/Bought-out?
3.5.1
Direct Expenses
Actions
Review HR Policy
3.5
Performance Diagnostics
Workshop ManagementRepair Quality
Supervision
Sublet/Bought-out Management
3.5.2
Indirect Expenses
3.5
Performance Diagnostics
3.5.2
Indirect Expenses
Reasons
Cost Non-Direct Productive Staff?
3.5
Performance Diagnostics
High Facilities Cost?
Manage Sundry Exp.?High Admin Expenses?Manage Depreciation?
3.5.2
Indirect Expenses
Action
Ratio Direct/Non-Direct
3.5
Performance Diagnostics
Maintenance Policy
Expense Policies
Cost Control
Depreciation Policies
3.5.3
Service Management
3.5
Performance Diagnostics
3.5.3
Service Management
Reasons
Manage Main KPIs?
3.5
Performance Diagnostics
Low Sales?
Staff Management?
Policies/Procedures?
Ratio Internal/External?
3.5.3
Service Management
Actions
Know Your KPIs
3.5
Performance Diagnostics
Sales Strategy
Supervision
Policies/Procedures
Increase External Sales
3.5.4
Resource Optimization
3.5
Performance Diagnostics
3.5.4
Resource Optimization
Reasons
Facilities Usage?
3.5
Performance Diagnostics
Low Productivity?
Low Efficiency?
Low Pre-Planning?
Improper Follow-up?
3.5.4
Resource Optimization
Actions
Facilities Optimization
3.5
Performance Diagnostics
Increase Sales
Training
Workshop ManagementCRM Policy
Total Workshop
Sales
Gross ProfitNet
Contribution
Direct Expenses
Indirect Expenses
Improvement Area
Diagnostics Chart - 6:
Managerial,Supervisoryissues
3.6
Improvement Areas
Productivity
3.6
Performance Diagnostics
Efficiency
Resource OptimizationService ManagementCost Control
3.6.1
Productivity
3.6
Performance Diagnostics
3.6.1
Productivity
Actions
Improve Management
3.6
Performance Diagnostics
Differentiated Labor Rate
Improve Skill Levels
Increase Pre-PlanningIncentive to Boost Sale
3.6.2
Efficiency
3.6
Performance Diagnostics
3.6.2
Efficiency
Actions
Skills Assessment
3.6
Performance Diagnostics
Tools and Equipment
Capture Actual Time
Improve Common JobsReview Work Procedure
3.6.3
Resource Optimization
3.6
Performance Diagnostics
3.6.3
Resource Optimization
Actions
Facilities Utilization
3.6
Performance Diagnostics
Productivity/EfficiencyRight Tools/EquipmentService Vehicle UsageAssessments
3.6.4
Service Management
3.6
Performance Diagnostics
3.6.4
Resource Optimization
Actions
Customer Prospecting
3.6
Performance Diagnostics
Customer Relations
Layouts/Workflows
Service Marketing
Manage KPI and Staff
3.6.5
Cost Control
3.6
Performance Diagnostics
3.6.5
Cost Control
Actions
Improve Attendance
3.6
Performance Diagnostics
Approvals ProceduresUpdate Facilities
Supply Agreements
Manage and Follow up
Workshop 3
Impact of Productivity and Efficiency on Bottom Line
3.6
Performance Diagnostics
Section 3 - Summary
Service Department Total Sales:
- Direct Expenses = Gross Profit
- Indirect Expenses
= Net Contribution