Starting the new year in a good place begins by evaluating current utilization, performance, and profitability. Once you understand your current position, you can move forward amending processes and making adjustments to optimize future success.

With your parts and service departments being a key player in gross profit and customer satisfaction, it is important to reserve time to identify any potential areas for improvement. Let’s discuss three initiatives you can take in fixed ops today to prepare for success in the new year.

Review your reports and analyze KPIs.

Running reports in your parts and service departments is essential to understanding department performance and identifying areas of improvement. However, with the amount of information you get, it can be difficult to determine where your low hanging fruit is. Quick reports that can have a big impact:

• Open Repair Orders. Having ROs mistakenly left open can create inefficiencies in your service department and lead to audit issues and missing revenue. If some are still open, determine why, as you could be missing out on significant profits. Combat this by routinely running an Open ROs report.
• Negative On Hand Inventory. Negative inventory is problematic for record keeping and can result in more being ordered than is needed. Stay on top of this to prevent unneeded shipments coming to your store.
• Obsolescence. Run your obsolescence report to identify the inventory on hand that is not expected to sell, and then move forward with disposal and reorganization.

Evaluate your labour rates.  

Are your labour rates bringing customers to your service department or sending them to the shop down the street? While customers trust your technicians for their deep vehicle knowledge and expertise, high costs will keep them from actually bringing their vehicle in for service.

Finding the sweet spot for your labour rate should take into consideration the needs and expenses of your operation. But you also need to stay in touch with your market – establish prices that compete with local availability and fairly account for your technicians’ skill and experience. Review and update your matrix to keep prices relevant and realistic.

Gauge and adjust parts pricing.

Your parts pricing strategy can have a big impact on fixed ops profitability. If you are just relying on the parts master pricing data, you are likely missing an opportunity. Take time to review current prices and build a parts matrix that keeps you profitable into the next year.

There is no time like the present to revamp and refine your practices. Optimize your reports and prices, and then watch your parts and service department as they are propelled into a high performing, profitable new year.

Related Articles: