How to Calculate Efficiency
When you hire a technician, the goal is to make him as efficient as possible. Efficiency is defined as billed hours divided by worked hours.

Let’s make a generalization. There are three types of diesel technicians in this world: struggling, good, and great.

Assuming you’re giving them what they need (the right tools, getting parts to them quickly, expediting customer authorization), a good technician should be billing the same hours they work. A great technician will bill more than they work, and a struggling technician will bill less than they work.

When you hire a technician, the goal is to make him as efficient as possible. Efficiency in a diesel repair shop is defined as billed hours divided by worked hours. The higher the efficiency, the more money you make. And if the efficiency is low enough, you actually lose money keeping a tech around. Great technicians are the most efficient.

For example, say you have a job that, no matter what, will be billed at 6 hours. A great technician may do it in 4 hours (150% efficient), a good tech in 6 hours (100%), and a struggling tech may take 8 hours (75%). Say you pay them all $25 an hour and your labor rate is $90 an hour.

No matter what, you’re going to gross $540 for the job. But it will cost you $100 to have your great tech do it, and $200 for your struggling tech. Plus, your great tech still has half a day left to work on something else. One more job like this and he’s made you $880 profit in eight hours, while the struggling tech made you only $340. Scale this out across a team of techs and you can see that efficiency will make or break a shop.

Great technicians are extremely valuable, and when you find one you should do everything you can to make them a permanent member of your team.

Make Struggling Techs Good, and Good Techs Great

Of course you want as many of your technicians over 100% as possible. Techs with a low enough efficiency may actually cost you money when you factor in overhead. They act like a sea anchor, holding your shop back from achieving its goals.

The good news is that with training and time you can make struggling techs good, and good techs great. Having the data to report will play a big role in that improvement. With any realistic goal, you need to know where things currently stand before you can make a target to aim for. This is where Fullbay’s reporting capabilities become extremely valuable.

Holding Your Great Technicians Back

But what if you have a technician you know is great but keeps running less than 100% efficiency? The problem may not be them, it may be you. There are things you can control as a shop owner to help your techs run more efficiently. The sooner you correct these issues, the sooner these techs will reach their full potential.

Are you providing them the right tools?

The right tool can make a job go from frustrating and time consuming to easy. There are specialty tools that a technician won’t have in his box, and if you don’t have them in the shop it will slow down a job. Consider investing in tools that will pay for themselves through increased tech efficiency.

Jason Maxham explains the inherent benefits of tools at The Art of Troubleshooting:

Tools are born from the frustrations of pioneers who try to do something for the first time. Then they’re honed by those who come after and try to make a living doing what those first-movers have set in motion. Tools evolve over time, incorporating revelations of better ways to accomplish a task.

When you buy a tool, you’re buying more than just an object: you’re buying the sum of what humanity knows about how to best do a job. Be grateful that you didn’t have to endure the pain that lead to the creation of a tool. You get to tap into this fount of hand-held knowledge with just a swipe of your credit card.

Also consider your software tools. Are you requiring techs to hand-write work, when technology exists to enter their diagnosis and parts list right on their phone? Remember that the right software tool can have just as much an impact on a job as the right traditional tool.

Are you spending hours troubleshooting when the right diag software could do the job in a few minutes?

Do you get parts to them quickly?

Pricing and ordering parts can be very time consuming. Even with vendors opening up their catalogs, shops must still must do quite a bit of research to get the right parts for a job. One bad side effect of vendors providing online catalogs is they are essentially shifting the work onto your shoulders. The more they can get you into their system to do the searching, the less they have to do.

In addition to opening up their catalogs, many vendors now accept parts quotes and orders over email. This turns the table back on vendors and encourages them to do the research for you, to earn your business. The more information you can provide them, the easier it will be and the more willing they are to help. By sending quote requests and orders through Fullbay, vendors can see everything about the unit you can see, including any parts pictures you or the tech add in.

Are jobs getting hung up on customer authorization?

There are three levels of customer authorization:

(1) Your relationship with the customer is good enough that they trust you’ll only do what is needed. So when you find something that needs repairing, you just take care of it and send them the invoice.

(2) The customer is comfortable with you doing work up to a certain dollar amount without getting their permission.

(3) For certain reasons (corporate policy, low trust level, cash-strapped customer) the customer requires you to get their permission before doing any work on their equipment.

If you are dealing with levels 2 or 3, you’re going to need to prepare an estimate and get it approved by the customer before work can proceed. The faster you build an estimate, then get it approved by the customer, the more efficient your techs will be.

Make sure that you are not the bottleneck, and that nothing stands in the way of an estimate being assembled quickly. Use all the tools at your disposal. Fullbay makes pricing labor and parts extremely fast.

Once the estimate is ready, don’t delay getting it in front of the customer. Fullbay makes it easy to email the estimate and let the customer play with it in real time. As soon as they authorize, the tech is notified that he can proceed with the repair, and you can set parts to auto order.

Unfortunately, not every step in the authorization process is in your control. But pull those levers you do control and your technicians’ efficiency will directly benefit.

Conclusion

The ideal shop is full of great technicians who are highly efficient. Your challenge as a shop owner is to get your shop as close to that ideal as possible. If you can find and hire great technicians, do it. Help your struggling and good technicians become great. And make sure to remove those efficiency blockers that are in your control.

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