Know When to Grow
Growth is a focus in any fixed operations department, but as a department sees continued expansion, maxing out is inevitable. As the vice president of fixed operations with the Carousel Motor Group, a 10-location luxury dealership in the Minneapolis area, Wayne Pisinski is intimately familiar with growing those departments and determining capacity.
Pisinski details the calculations he uses to determine capacity and, when capacity is reached, the steps he takes to expand.
Determine your capacity.
To understand if your collision and service departments are maxed out, the first step needs to be understanding your capacity, which starts by looking at your production numbers. Different technicians with different expertise and background have the ability to generate a range of hours per day, Pisinski says, and it’s your job as the manager to figure out what their capacity is and track what they’re producing on a weekly basis.
Break each technician down by how many hours per week they’re turning, as well as their hours per repair order and the amount of hours that each stall produces. If your demand is over your maximum production, it’s time to add someone.
In the parts department, Pisinski says that the parts manager will almost immediately feel when a department is maxed out. Set benchmarks for parts personnel regarding sales and gross sales per person, as well as keep a close eye on inventory and increasing turns.
Estimate your hours of demand.
While it all breaks down to the amount of hours you can produce, you will also need to estimate your hours of demand by tracking how many visits per year you’re getting on an average vehicle.
“If you know you’re going to average two visits per car and each visit is going to be 3.5 hours, you know how many cars are in your area of responsibility or you have retained,” Pisinski says. “You can do the math on a bigger scale, looking at how many hours you have per year and making sure you have enough production to meet that demand.”
In the parts department, consider from where you’re selling parts. More and more parts departments are opening up online venues, be it with eBay or Amazon, Pisinski says, so it may be necessary to add someone dedicated to those sales.
Add room for error.
Despite knowing what your maximum technician efficiency is, you need to take into account that any department is not going to be running at maximum efficiency at all times, Pisinski says. People will be sick or on vacation and that needs to be considered.
“Even though my max production might be 300 hours per day, I know the reality is every day I’m going to be missing at least two people, so now my max production is 280,” he says.
If your demand is consistently over 280 hours per day, that’s when you know your department is maxed out and you will need to make a move to accommodate this demand.
Consider running a night crew.
Expanding your actual facility may not always be a possibility, so it’s important to consider other ideas, even if they’re outside the box, to grow your department. If you have a 10-stall shop but have demand for 18 stalls, Pisinski says one option might be a running a night crew. This allows you to double your production time and your staff. To determine if this is a viable option, look at how many hours you have available and the amount of hours per stall you’re currently getting.
Load level work—if possible.
If you own multiple stores and duplicates of those stores, load leveling work when one facility is overloaded could be a possibility. However, there are logistical obstacles, Pisinski says. First, every manufacturer has various training requirements and this could cause the manufacturer not to pay for warranty work if it wasn’t performed by a properly trained technician. In addition, dealership customers expect that a technician trained on their make will repair the vehicle.
Consider off-site storage.
As your sales increase, your inventory in the parts department will increase, too, creating space constraints, Pisinski says. To resolve this, consider offsite parts storage. Before you do so, however, Pisinski says there are a few considerations: First, ensure that the parts manager is doing an excellent job managing inventory and that everything being carried on the property has an appropriate turn level. If you’re confident in that, if based on your sales and the inventory turned, you need additional square footage, look for storage space that’s in close proximity to the dealership and that has an ease of getting in and out of the contract for the space.
Grow your own employees.
Naturally, if your department is maxed out, you will need more employees. Pisinski says the best way to combat this is to grown your own employees. Bring graduates from trade schools in at a lower level and grow them as you grow.
“You invest in them for training. They prove they’re worthy of the investment, you give them more opportunity over a couple of years,” he says.
This is your last option and should only be done once you’ve exhausted all other opportunities, Pisinski says. If you look at your demand and know that it’s going to be high for the long term, one of the considerations will have to be expansion. Part of that, he says, is having faith in the projections that the manufacturer is giving you, while also bringing some accountability and common sense to those at times pie-in-the-sky figures.
“You look at how your store has been doing in the marketplace in the past years, where you see that brand is going in the future. If you have a brand that’s adding three or four vehicles—and in our market, if it’s SUV or crossover vehicles—those are going to increase your demand significantly,” he says. “How are the other vehicles they sell doing? If it’s a brand that you feel is significantly going to continue growing, you’re going to have to be able to respond to that demand.”