hours per ro or effective labor rate

[TheOne]

Wrong again!
Their argument is about measuring the efffectiveness of two managers within the same organization. Nineballs initial comments were valid, and he was asking for us as a group to either validate or invalidate his beliefs.

Hours per RO is if used correctly as I have outlined in multiple earlier posts is a normalized measurement of customer sales.

Effective labor rate measurement is a valid tool used to improve gross profit per tech hour flagged.

[KLINK]

If a shop needs to generate $75,000 in Gross Profit, and their current ELR is $100 dollars @ 75% Gross than they need to generate 1000 Hours. HOW they do it:

500 RO's at 2.0 hrs/ro or...
1000 ROs at 1.0 hr/ro or...
2000 RO's at 0.5 hrs/ro

I know which store I would like to take over with a gp based pay plan! LOL

[jtr8178]

You are making $152.37 per r/o, he is making $144.70 .. Seems like you are doing better.

Our heavy truck shop averages 7.3 hours per r/o with a ELR of $74 per hour. You wouldn't think truck would be much different then auto.....

[topshop1]

Both numbers (and several others) are critical.

As far as the hours per RO goes, both 1.7 and 2.0 are a bit low. In our Key Numbers class we recommend 2.5-3.5 depending on the operation. Maybe the techs need to look the cars over a little better and/or the SA's need to sell a little better.

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Tom Ham
AutomotiveManagementNetwork.com

[patarnotte]

I am a Director for multiple franchises import and domestic. We measure both Hrs per Ro and effective rate along with many other statistics. But what I will never do is compare franchises. How can I compare Nissan 60 month powertrain warranty with no trans overhauls to Ford with(until recently)a 3/36. Import stores will do more maintenance on average than the domestic, and the domestic will do more of the higher dollar repair work and 24,000 miles sooner. Most imports have little to no trans and engine work unlike the domestics. In my opinion your numbers are acceptable. But, your Ford manager has a point as do you. You have some room to move your hrs per ro. I have run Toyota over 2 hrs. The trick would be maintaining your very high effective rate. Your Ford store needs some work. We run over 2.5 hrs per ro every month. Without knowing your door rates we cannot really know about your effective rates. Lets assume they are the same for now. With way more repair work I would say he should be a lot higher than you in both categories. He needs to run a report of his most used op codes and look at his effective rate of those ops first. There is no faster way than to tweek the stuff you do the most. Maybe implement grid pricing for the repair work and he will pass you in no time. But no need to worry he should beat you in both categories. Your ace in the hole should be Ro count. As Ford has less UIO's and Toyota has more, your RO's should increase and his decrease. It is profit we are all looking for, many just get there in different ways. The best advice I can give you is this, forget about what everyone else is doing and focus the energy on improving wht you do. When you think you have evrything perfect, try something new that no one else is doing. You will just keep getting better. Let every one else figure out how you do it and sit back and collect big bonuses.

[nineball]

patarnotte,

Thanks for your reply i appreciate the advice of other areas to look..Thanks again

[LROE8]

Its all about the $dollar$ per ticket.
Not hours or effective. As Pat stated its a combo of both. But we look at total dollars per ticket at our stores.