Ok, you will probably need to re-read this one a couple times. I am going to go through the math to help you figure out your shop’s current Customer Demand and how many cars or better yet, Billable Hours to bring in per day. With the data available to us nowadays, this should be simple math for you.
So, go to your management system and look at your last 12 months of closed repair orders. Leave out total losses and any jobs with less than 3 billed hours but leave in self pays. By leaving out any jobs less than 3 hours, this takes out Ex: Refinishing a door handles/mirrors for car dealers, minor upsells and just cleans it up.
Now we are going to use an example shop that does say $3,300,000 in gross sales. Let’s say this example shop after looking into their management system produced 25,400 billed hours for all types of labour (body, frame, Ref, Mech & Etc.) in 2021. Not only did this shop see total billed hours in their management system, but there were also 846 completed RO’s in 2021 after filtering out jobs with less than 3 hours. Now we take the 25,400 hours / 846 completed RO’s = 30 average billed hours/estimate hours per RO. We have 365 days in a year, with leaving out 104 days for weekends and 7 days for holidays we have 254 working days left. We take the 25,400 billed hours per year / 254 working days = 100 billed hours per day.
So, for this example shop we figured out the following data. (No.1) Billed hours per year (less jobs with less than 3 hours) = 25,400. (No.2) Cars repaired per year 846. (No.3) Average billed hours per RO was 30. (No.4) Billed hours per day = 100 or available capacity per day = 100 hours. (No.5) Now then, how many cars were fixed on average per day? 100 billed hours per day / 30 average billed hours per RO = 3.3 cars per day or 16.5 cars repaired on Avg. in a five-day week.
On paper, this is showing that this example shop should only input 3.3 cars per day and needs to output 3.3 cars per day. Your saying, “Yah right, in a perfect world!” I totally get this, trust me, so hang in there. We must work towards leveling our daily inputs and outputs as much as possible. We have been experimenting with this for several years in my shop. (No.6) Using the metrics from this example shop at 100 hours per day available capacity, they can only schedule in for drivable vehicles about 2/3 or 66 billed hours of their available capacity per day. This is due to supplements, unscheduled non-drive drop-offs and tow-ins.
As your front-end estimators get better a triaging the incoming work, they will be able to better guess at what the final billed hours for each job will be prior to Blueprint. This takes some training of course, trial/error and patience. In this example shop with restricting drivable scheduling capacity to 2/3rds or 66 hours per day, they may have a drivable vehicle that was triaged at 60+ hours on the schedule. If that’s the case, they can only bring in that one car for that day.
Now it is time to do the math for your shop. Please do this when it’s quiet and on a whiteboard, so you can study it. It would even be a good Saturday morning project. We will continue this discussion in the next chapter. I will show you the visual aids we use to help with scheduling and explain the WHY of this being so important.
Now, go do the math to find out what your shops No.’s 1-6 metrics are from above. FYI: If you have had significant growth in the last six months, then only use your last six months data to compute your No.’s 1-6 metrics. EX: July-Dec, 2021 or Aug-2021-Jan 2022.
Sorry, one more thing to leave you with. For those who were formers techs like me and are now owners, we no longer own a body shop; we OWN A BUSINESS!! We must have an unwavering goal, to have a full understanding of EVERY FACET of our business. This includes reading our P&L, knowing our owners break even, current customer demand, how to train our estimators to write profitable estimates, taxes, cost per hour and most importantly the ability to see waste. Over the past 15 years, I have invested over $250k and 3-4,000 hours of overtime into learning from the right people. Otherwise, high profits, high employee pay and the ability to help others isn’t for those lacking courage.