Chris Aiello Service and part departments need to track their KPIs to achieve growth
As we are well into the first quarter of 2024, the subject of labor shortages continues to be a trend across our industry. Dealers that I talk to stress that the growth of their service and parts departments’ revenue continues to be impacted by the shortage of skilled forklift technicians. The topic of attracting, hiring, and retaining technicians continues to be a hot topic, however, in this month’s column, I will focus on another topic as it relates to service technicians, technician productivity, and efficiency.
The key to your dealership’s service department’s success goes beyond the number of technicians you have and how busy they are. The question to ask is how productive and efficient they are in their work. Long hours on the clock may not be the key metric; rather, it’s their productivity that impacts your dealership’s profitability. Today, many dealerships have adopted business system software that will track and compute these metrics as they pertain to technician productivity for you, yet sometimes this this Key Performance Indicator (KPI) is neglected.
Service Department Efficiency
Before measuring technician productivity and setting up KPIs, your service department operations and processes must first be efficient. Running an efficient service department within your dealership requires a combination of effective management, skilled personnel, and streamlined processes. The efficiency of your service department is critical in meeting your customer demands and driving the success and revenue of the department.
A crucial factor is the proficiency of the service technicians on your staff, who should be well-trained and certified to handle the diverse range of equipment they are being asked to diagnose and service. Investing in ongoing and continuing training programs will ensure your technicians are up to speed on the latest technological advancements in equipment and diagnostic tools.
Additionally, having a well-organized and stocked spare parts department or service van parts inventory is an important factor for efficiency. You want to ensure that the necessary spare parts are readily available to your service technician when your customer’s equipment goes down. Be sure your parts department staff have the necessary resources to look up, procure, inventory, and deliver the right parts as needed to positively impact technician efficiency and customer satisfaction.
Establish clear communication channels with your customers so your service department and technicians understand their needs and expectations. Providing regular updates on the status of repairs and offering estimated completion times helps build trust and satisfaction with your customers. Additionally, if everyone at your dealership (service dispatcher, service writer, technician, customer service sales rep, etc.) is on the same page with the customer, it will show the customer that your dealership is running a customer-centric service department.
Having efficient workflow processes and effective management of work-in-process is another critical element to the efficiency of your service department. There are many business systems and field service mobile solutions today that allow for the efficient documentation of service records and collaborations between your service, sales, and parts departments that further enhance the overall performance and customer satisfaction of your dealership. If you are still asking your technicians to use paperwork orders to document their service work orders and billable hours and turn them in manually to the office, it may be time to look to invest in a modern field service mobile solution. This will also streamline your processes of converting a completed service work order to a customer invoice more efficiently. An additional benefit, as you look to attract, hire, and retain technicians, is that state-of-the-art technology is more attractive to workers for their everyday job tasks.
Technician Productivity
Now that you’ve streamlined processes and demonstrated your service department can run efficiently, it’s also crucial to stress the importance of productivity. Simply computed, technician productivity can be calculated by dividing their working hours by the available hours and their efficiency by how long they take to complete a service job versus the standard time estimated to complete that job.
For many dealers, a normal paid working day consists of eight hours for your service technicians, which you compensate them for even if they are unable to bill out all that time to retail customer service jobs. While not all their time will always be 100% billable to your customers, your processes should maintain accountability for every paid hour to be billed out to a customer invoice, internal invoice, or general ledger (GL). These three types of hours to be billed are commonly referred to as retail hours, internal hours, and expense hours.
Retail hours are hours you can bill your customer for a service job. Internal hours billed include repairs to your rental fleet, pre-delivery inspection of new equipment sales, and equipment serviced under full maintenance lease agreements. Expense hours include training hours, team meetings, and other non-billable tasks. The key here is to invest in technology and systems that can effectively account for every retail, internal, and expense hour of your technician.
The forklift service industry landscape is evolving, and strategic adaptation is key to the future profitability of your dealership. Embracing change, staying up to date with technological advancements, and consistently innovating your service offerings can position your dealership as a leader in your market, while also attracting and retaining customers with opportunities for revenue growth.
About the Author:
Chris Aiello is the Business Development Manager at TVH Parts Co. He has been in the equipment business for 17-plus years as a service manager, quality assurance manager, and business development manager. Chris now manages a national outside sales team selling replacement parts and accessories in various equipment markets such as material handling, equipment rental, and construction/earthmoving dealerships.
