Shop Supplies

[Art_Mopar]

Looking for some feedback as to how the cost of "haz waste and shop supply" costs are recouped. I realize it is illegal to turn a profit by charging a flat fee or percentage (at least in PA),so what is the solution? I have a $6.95 cap based on the type of repair being performed but found out accounting was putting the charge to 349A (equipment/depreciation) as opposed to 344A (shop supplies/tools/uniforms)and now have a mess on my hands. Should I increase my labor rate and eliminate the "waste line"?

[robc]

I generally like the "increase labor rate" idea, since it is the simplest to implement with least amount of questions. If you are on warranty system where the manufacturer matches your retail rate, youll also be getting the factory to chip in as well.

A couple of thoughts though (1) dont let anyone forget that money is in the gross, before techs and advisors start asking for raises; and (2) do the math every month to make sure your rate addition is still on target total supply charges divided by CP hours booked per month.


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** Rob, Editor Dealersedge/WD&S **
Help is only a message post away!
robc@dealersedge.com

[flyboy]

I have to disagree on this one Rob.

I don't like kidding myself, burying the cost of supplies in a labor figure. Talk about skewing figures! How would you know your true ELR, GP% etc.

I would first make certain I am capturing all of themoney I could in those supplies, selling them as parts. It's a bit more work for the parts dept, but then they get the profit from all those supplies anyway, so make them earn it. Give serious consideration as to what you could sell on the ro, cans of anything, nuts and bolts and most chemicals. There are some very good systems of averaging the smaller stuff, bolts and so forth, and color coding so as to simplify the sales. Nearly everything we use in shop supplies can be sold. Not everything, but most.

As for the things that cannot, those that fall under "haz waste services" should be charged out as such. Most states will allow you to collect for outside services that collect such things as used oil, coolant etc. If you add a fee for those services, attaching said fee to the op-code, then you can balance out what you are not able to charge for, with these types of services. Try to break even.

I guess my point in the end is this, putting forth some effort into recouping some or most of the supplies money is much better than just dumping it into the labor gross.

[johnny o]

Hi Art ...

We have 4 separate "KITS" ... the actual parts in each kit are displayed in a plastic bag.

KIT 1 .... brake kit ...= "SS100"

1 brake cleans
1 varsol cleaner


sells 4.99


each time we do a brake kit one of these is added. If a brake cleans is taken by the tech we charge to the techs line on the shop repair order. That way inventory control is looked after. We could do it as a kit , but the service manager / owner wishes to see what is being used by each tech at month end.

Depending on the job being billed we charge a specific kit. If the customer wishes to see the kit we can physically show them.

We always run a small profit on shop supplies (not by a lot by always by enough)


For tires we give the customer the option ... they may dispose or we do so for 2.00 a tire.


Is this the only way ...nope ... does it work ..yes.

[Doug]

"I don't like kidding myself, burying the cost of supplies in a labor figure. Talk about skewing figures! How would you know your true ELR, GP% etc."


Easy ! Increase your labor rate $1.00 per hour to cover supplies. At month end tell your business manager how many hours were billed and have him/her make an journal entry adjustment to your labor sale account..... 2500 hours = $2500 to offset your shop supplies account. Your labor GP% will be accurately reflected on the monthly statement.

Cheers
Doug

[robc]

I should have probably posted this link originally, but here is a copy of the article I wrote last Sept using Don Tipton's advice.
http://www.dtcconsult.net/Resources.htm

------------------
** Rob, Editor Dealersedge/WD&S **
Help is only a message post away!
robc@dealersedge.com

[Doug]

Very good.

It brings up another topic: tech pay versus retail labor rate, which I shall comment on under a new subject line

Doug