Of course I am speaking of the all important, yet fleeting Flat Rate Hours here. These are the family jewels of service and without their fabrication; both service and parts would wilt like the Celtics in the fourth quarter of a game seven championship game.
The heart of service forecasting is calculating how many flat rate hours will be produced in an hour, day, month, quarter, and even year by mighty techs. And, to add to that impact, parts sales are a consequence of the production of these profit-making critters, so the more they propagate, the more parts sales are conceived. Do you feel the love yet?
An accurate “Zero-based Forecast” begins with determining how many flat rate hours can/will be produced by a technician group based on planned (or not) absence, working days, clock hours, and output (“proficiency” — no, not productivity). After those figures are carefully determined, the formula is: tech staffing x clock hours x working days x output minus absent days. Note that the cost (loss of bill-paying gross profit) for planned absence days is (attendance hours x output % x overall effective labor rate) or AH x O% x OELR for you heady mathematician smarty pants types.
Not to worry, cause I have a suitable easy-to-use-formula-ready-locked out Excel Flat Rate Hour Forecasting Worksheet for your use — so simple to utilize, it can be man-handled after four adult beverages, and on your personal deck! I will explain flat rate technicals for those who may wonder about this type of thing, or what the auto engineers were thinking when they created the brainless “intelligent key.”
Because the production of flat rate hours drives so many critical areas, such as employee, department, and dealership income, how they are managed (or not) every day is a critical factor for all. The ultimate volume of flat rate hours might determine survival or bankruptcy for some of this group.
The meat of this issue is how well flat rate hours are planned, dispatched, created, and ultimately billed each day. My concern here with our clients is whether FRHs are “pushed” through with a planned process, or whether they are dragged kicking and screaming by a “pull through” process.
Let me explain — I have supplied a diagram of the perfect flat rate hour loading program — one individual planning a pre-load for one technician. This simplified process would border on perfection since, let’s say, an assistant service manager would be planning for the production related on one producer — simplicity at its best. Moving forward, it’s easy to see how this process gets complicated by multiple technician loading when the very foundation of the most effective model (1 to 1) is dumped, in favor of pre-loading based on potential volume only — essentially disregarding skill levels, technical specialties, attendance, workmix, output, and carryovers.
I visited a dealership and there were four assistant service managers (writers) who were pre-loading the shop by potential volume only. They incarcerated the work as marginal and inefficient order-takers do, then held it for ransom based on how well various techs were behaving on any given day. They then dispersed these money-generating flat rate hours when said techs showed up begging for more work — the “How do I feel about you today?” process. Whoa.
How about this? We reversed that flow quickly when I calculated how much money each ASM personally would enjoy by taking the opposite approach to shop “pre-loading.” Rather than allow it to happen, I advocated a “let’s make it happen” approach, where the ASM staff pre-loaded each tech individually, treating the entire shop as if it was a one tech x staffing. The simple result was to “pre-assign” every appointment job to a tech, creating a workplan for each as if there was only one tech available for those assigned customers. Wow, simple is better.
Well, good stuff resulted. Techs suddenly got interested in viewing the next day workplan for themselves, flat rate hour production became the center of attention, it became important for techs to show up (and on time) to generate the flat rate pre-assigned to them, time commitments to customers were actually fulfilled, the service drive management team began running the shop, and best of all, the customers took over as the boss. Abruptly, the work was being “pushed” through the shop rather than being “pulled” by the techs — and best of all, everyone (yes, even the techs too) were more satisfied — manna from Heaven.
If you need a proper forecasting tool for Flat Rate Hour Forecasting, just send me a note to firstname.lastname@example.org, and put on the subject line “Forecasting FRH’ I need more money.” Or close. Thanks to the literally hundreds of readers who respond to my columns — you make my day, everyday. Be safe and happy.