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Balance in the Service Department
by: Charlie Waters
For every action, there's a reaction; what goes up, must come down; point and counterpoint; opposites attract. In accounting: For every credit, there must be a debit (pluses must equal minuses). We’ve heard all of these but what does that have to do with service? It’s called balance. These same rules go with productivity: You have supply and you have demand.
You are experiencing excessive carryovers or appointment backlogs - you have high demand and inadequate production hours available or a "Production Supply" problem. You must find a way to increase supply to meet the needs. Unfortunately, this is so often accomplished by degradation of service to our customers. Advisors, or order takers in this case, stop selling because they're already getting their heads handed to them several times a day by customers who missed promise times. This "lack of effort" creates huge morale problems for the technicians, advisor and managers, not to mention, the customers.
Now, let's take a look at the opposite scenario. If your technician production exceeds your available hours, you don't have enough hours to sell or a "Production Demand" problem. That is, your lack of accomplishment of production supply is caused by either a lack of traffic or lack of sales effort, or a combination of the two. Once again, you have huge morale problems. That is, until you fix it. How do you fix it? Get rid of techs and lower your demand? That's certain to make your dealer principle happy!
The reason it's important to understand this concept is because so often a manager (or consultant), after a training exercise, will say: "I'm going to implement Production Objectives for a 10% production gain, then implement a sales process (menus/ASR) to increase the RO value by .3 on a 1.8 hours per RO current average. That's a 17% increase, along with the 10% objective increase that's a total of 27%! Right? - Wrong!
You potentially increased your Production Supply by 10% and your Production Demand by 17%. So if you are already operating at capacity or with a backlog, this scenario will make the problem worse. Even the best trained advisors will eventually succumb to the pressure of not being able to get the work done. This is when the selling stops!
THE WALMART WAY
Balance! With the incredible need for customer retention, never in the history of our industry has it been more important to have balance between supply and demand. Until you have a grasp on this concept, you will likely always struggle with balance. You must understand all of the elements that cause "Production Supply" as well as all of the elements that cause "Production Demand". If Walmart, (like them or not - the largest retailer in the history of the world) sells 100 widgets a week in one particular store, each week, and the widgets are restocked once per week - will they stock 50 widgets? Will they stock 200 widgets? Probably neither! Best guess is 110 widgets +/-. Why? They are dialed in on supply and demand. The goal is for their supply to only slightly exceed their demand. That is why they are the giant. You challenge: "OK, it's easy when you're talking inventory of widgets, but we're talking labor, that's different." NO, IT IS NOT!!! The challenge is, absolutely, the same. You can and should use this same argument when a tech complains that he doesn’t understand why we don’t stock shock absorbers for a (insert vehicle) when we’ve never sold any.
In the service business, we typically play "catch-up or ignore". That is, when business is good, we wait for it to get bad and vice-versa. Why not have business good all of the time and have production balanced? Understanding these concepts and learning the do's and don'ts of addressing the supply and demand is the key.
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