Shop management can get sidetracked when they only focus in on individual productivity measurement within their business. This is not to say that it is not important; however, individual measurement, known as proficiency measurement, is excellent for counselling an individual staff member to improve themselves. But what about the TEAM productivity as a whole and the effect on the business?
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Measuring the entire shop as a team can help direct management to the necessary attention to certain processes that are failing. When processes fail, net income disappears. It also tells us much more. This measurement is called “site efficiency.”
Let’s look at the steps required for this measurement. Insert your own numbers as you go through each step. Note that the longer the period of measurement to start (i.e. one full year), the more accurate the measurement will be. Once you have this “base” measurement established, then you can proceed with a weekly and monthly measurement within the business to compare your progress.
The basic information you require to complete the measurement is the following:
- The number of days per year the shop is actually open (Example: 243 days per year)
- The number of days per week the average technician works (Example: 5 days per week)
- The total average hours per week a technician works (Example: 44 hours per week)
- The business labor (door) rate (Example: $125)
- The total labor sales for the year (Example: $561,731.25)
- The equivalent number of technicians on staff (Example: 3 licensed technicians/journeymen) Note – a licensed technician (A Tech or Master Tech) is 1 full technician and an apprentice technician (B or C Tech) is equivalent to ½ technician for this measurement. If you had 2 licensed technicians and 1 apprentices, the shop has the equivalent to 2.5 technicians for this measurement.
Step 1: Take the total hours per week an individual technician works and divide it by the number of days a week worked. This equals the total average technician hours per day.
Example: 44 hours divided by 5 = 8.8
Step 2: Take the average technician hours per day times the number of days per year. This equals the number of technician hours worked (paid) per year.
Example: 8.8 X 243 = 2,138.4
Step 3: Take the number of technician hours worked per year times the number of technicians. This equals the number of hours available per year to produce labor.
Example: 2138.4 X 3 = 6,415.2
Step 4: Total technician hours per year available to produce labour divided by 12. This equals the available hours per month for all technicians.
Example: 6415.2 divide by 12 = 534.6