How to Schedule Warranty Work
The amount of warranty work a service center gets can fluctuate greatly, especially as the work continues to diminish as OEMs continue to improve how vehicles are built. Nonetheless, it still remains a significant scheduling challenge for many service departments, says Richard Owen, a former fixed operations consultant and now the southeast regional fixed operations director at Group 1 Automotive, the third-largest automotive dealer group in the U.S.
Within his role, Owen oversees the production of numerous service departments and hundreds of technicians. And among his many tasks, Owen has to ensure that his facilities properly manage warranty work without taking away from other, more profitable jobs. Owen describes his process for scheduling warranty work.
At this point, less than 20 percent of our work is warranty related. However, it’s still work that fluctuates heavily. We lump warranty and customer pay for the purposes of scheduling the work. All of our calls go to a national call center, and the associates there can tell what dealership is being called and see the available appointment times.
It’s most important to manage the flow and technician’s time. It’s all about time management. We create a bucket of hours. If I have 10 techs and I know they’re going to be available for eight hours per day spinning wrenches, then I can generate about 80 hours of work per day. It really doesn’t matter if it’s warranty work, customer pay work or internal work. That’s the reason we started lumping customer pay and warranty work together, because we’re trying to grow the customer pay segment of the business.
Let’s use the warranty work example of transmission repair. A transmission job can be an all-day job and we know that since it’s a high-skill job, only certain technicians can perform it. So, we limit the number of transmission work appointments to three per day. If three technicians can perform that, of the 80 hours of work generated in a day, there are 24 hours that I can use for transmission work.
The challenge is that, from a technical standpoint, you’re limited in most brands as to which techs can perform that work because they have to be certified and approved by the manufacturer or else the OEM won’t pay for the warranty work that was done. The biggest challenge that we have is making sure that we get the work to the right people in the stores so we can get the work done in a timely basis and get paid for the work that we do.
Because most warranty work is not low skill these days, typically it’s your A and B techs that do warranty work. However, some manufacturers have instituted “shop competence” programs, of which I recommend taking advantage. What that term means is that if you’ve got uncertified Ford techs, for example, if your CSI is above regional average for six months in a row, it gives you “shop competency” and any of those techs can do the work that doesn’t require a high-skill level (as defined by the OEM).
Now, it’s also important to keep in mind the pay rate difference. We use the manufacturer's labor time standards but there are often discrepancies with an ALLDATA manual, for example. So if you’re a technician, which would you rather work on? Especially if it’s a highly skilled technician that gets bogged down in warranty work, we compensate him accordingly by paying the higher hourly rate because he’s doing so much of that work and it reduces his opportunity to make as much money.
That’s also why you want to have an equal spread of technicians. If you have 70 percent master techs, you’ll price yourself out of the market. But the opposite is true: If you have mainly C and D technicians, you’ll start misdiagnosing vehicles, leading to comebacks, and your A techs will leave because they’re bogged down with warranty work. Again, that’s where properly compensating your A techs comes into play.
Finally when it comes to dealing with fluctuations, the biggest source is something like the Takata airbag recall. It creates a warranty stampede. Beyond that, it stays consistent. In those situations, though, you have to staff up accordingly.
Here’s what you do: Don’t schedule customers right away. More than likely, customers will be notified before the parts are available. As the parts start coming in, contact the customers and schedule the work. Because of that backlog, we can control the f low. When it comes to staffing up, take a look at the provided list of the affected vehicles in your market area and see how that extra work fits in your current capacity. Also, identify space where you could potentially add a couple flat stalls. The good news is you’re notified considerably in advance and you know the incoming number of vehicles, so you should be able to plan accordingly.