During our Vision 20/20 Virtual Conference, one of our presenters David Saline from consulting company DRIVE talked about documenting processes in your business in order to advance growth of the organization. During his session on Shop Finances: Making the “New Normal” Work for Your Shop & Increase Profits, one of our members asked a question about processes:
I know from personal experience this can be exhausting and also limits the growth your company can experience because your team is always reliant on you.
Let’s start at the beginning. I like models, and someone once told me the best idea is not an original one, but rather one you borrow that is already proven. We can examine other service businesses to understand what procedures they have instituted to allow for growth. Keep in mind that any process you decide to use will not be perfect, but we are not interested in perfection. We are interested in progress. Perfection is the killer of progress, and in business, my philosophy was the 80/20 rule. If my organization could work at 80% or above in everything we did, we would be successful. Let’s clarify this; because you can’t be successful by only repairing 80% of the leaks in a radiator. The 80% rule is about efficiency, caring, pricing correctly, achieving your goals, and having a positive attitude.
All dealerships, whether automobile, truck or equipment have service writers. The owners of these businesses are not at the service desks pricing the jobs. How do the service writers or service managers price the repair jobs? Usually there is a fee to check out a vehicle or piece of equipment. Then depending on what the checkout reveals, they call the customer with a quote to repair and also tell the customer if they find anything else out when they get into the job they will call you.
Part of quoting a repair job in a radiator shop is understanding the customer’s expectations of time and whether he wants a long term or short term solution. This is like a flow chart, so the conversation between the service manager or service writer needs to be so that they understand the customer’s needs while communicating the fact any radiator failure not attributed to physical damage is a sign of product failure, and a repaired unit will not last as long as a new replacement. Too often as owners we think our customers want the least expensive alternative. This is not the case most of the time, and well trained service managers or writers will sell according to the way they are trained and not based on their emotions like an owner. When I removed myself from pricing, we found the service manager would consistently sell jobs at a higher rate than I would because I had too many emotions and information running through my head.
It is always prudent to ask for all of the information about the radiator when taking the job. Depending on your mix of work, industrial, equipment, heavy truck and or light duty vehicle, it is best to have a system for checking prices and availability of the cooling system components. This strategy allows you to better understand the competition and what your customer may be considering. The only way you are going to sell a new radiator core is if there is an advantage to the customer over buying a new radiator, either price or availability. Having all the information about the application allows you to better serve your customer.
When I owned my company, we didn’t service or sell light-duty cooling system components unless it was for one of our fleet or industrial accounts. All of our work was heavy truck, equipment and industrial so the light duty product group wasn’t included.
Here are the following steps we followed when accepting a job in our shop:
- STEP 1: Obtain all of the application information.
- STEP 2: Understand customer’s expectations.
- STEP 3: Know the customer’s buying alternatives.
- STEP 4: Explain to the customer that any radiator failure not caused by physical damage is a sign of product failure.
- STEP 5: Check out Unit; first with visual inspection, pressure wash, flush and test.
- STEP 6: Quote repair or replacement cost.
- STEP 7: Document call
One more piece of the puzzle is assigning a standardized hourly rate to your labor codes so there is a dollar amount for each labor code. Establishing an hourly labor rate is one of the most important things you can do if you have not done so already. Step 6 is the step our NARSA member was specifically interested in. Let us examine the proven model of a dealership. What makes it possible for a dealership to have service writers? The tremendous advantage they have is a labor guide. All dealerships, whether car or truck, use a labor guide that is loaded into their dealership computer program. After a vehicle has been inspected, which there is a diagnostic fee for, the labor codes coinciding to the necessary repairs are chosen and placed on an estimate along with the parts which have been marked up according to the percentage the dealership has chosen. Any service writer can produce an estimate to make the necessary repairs to a vehicle. The labor guides are very sophisticated as they pertain to each vehicle by year with hundreds of repair procedures. We are lucky in that there are only so many procedures that can be performed on a radiator, charge air cooler, oil cooler, fuel tank, etc. The computer system we used to manage our business was originally designed for truck dealerships, so it already was set up for labor codes to be loaded into the program.
We analyzed each radiator we repaired to see if there were common characteristics amongst radiators, which there are. Our labor codes addressed the size and type of radiator. The larger the radiator, the more money it cost to service. Every possible procedure had a labor code. You might ask how did the service writer know which code to choose? This is simple. The service technician had a work order sheet that had all of the procedures listed on it. The technician checked the size and the labor operations that were needed to repair the radiator, and the service writer could effectively create an estimate to repair based on the technician’s work order.
Our labor codes had a key and cheat sheet. For example: a 10-labor code would be for a small copper and brass radiator measuring no more than 19 inches across the tank and no more than 32 inches tall. This would cover most automotive radiators. An 11-labor code would cover copper and brass forklift radiators. 12-labor codes were for medium duty trucks. 13-labor codes were for class 8 trucks. The labor codes for 10- were as follows:
- 10-1000 Pressure wash, power flush and pressure test
- 10-1001 Ultrasonically clean inlet header
- 10-1002 Ultrasonically clean outlet header
- 10-1003 Remove, clean, tin and resolder inlet tank to header
- 10-1004 Remove, clean, tin and resolder outlet tank to header
- 10-1005 Rod Clean radiator tubes
- 10-1006 Repair tube to header leaks inlet header
- 10-1007 Repair tube to header leaks outlet header
- 10-1008 Repair damaged tube or tubes in radiator core
- 10-1009 Remove split tube in radiator core by disconnecting tube at each end of header
- 10-1010 Silver solder cracked tank
- 10-1011 Remove, clean and resolder inlet hose connection
- 10-1012 Remove, clean and resolder outlet hose connection
- 10-1013 Remove, clean, tin and resolder oil cooler in tank
- 10-1014 Remove side anchorages, sand blast, prime, tin and resolder to radiator tanks
Every possible procedure was given a labor code along with a time to complete the operation. You can time your technicians, one technician might be faster than another so you average their time.
For a small radiator, we charged a minimum of 10 minutes for 10-1000. The first labor code was charged for every job because this was the diagnostic fee. This system can be used if you are writing work orders and invoices by hand or have a computer system. The more procedures you list on a work order or invoice the more you can charge, because the customer will understand all of the procedures you performed on their unit.
The codes are produced for each size and type of radiator. The example I shared with you is for a copper and brass, solder together unit. We had codes for plastic tank radiators, bolt together radiators, aluminum oil coolers, charge air coolers, fuel and hydraulic tanks. We had a total of around 16 or 18 categories of labor codes. We performed service in the shop for the removal and re-installation of radiators on trucks so we had labor codes specific to servicing truck cooling systems.
Once the codes and times are fine-tuned, then you will have a standard process for your service manager or writer to generate quotes and invoices. Remember progress over perfection. It is imperative to set a process in motion to grow your organization.
This editorial was originally published in the September/October issue of The Cooling Journal.