FEATURE STORY By Jim Yount
Increasing Shop Profitability (Part II): MATHEMATICS AND MONEY
Shop Profitability" with numbers relating to money, taken from my company's consulting files representing actual case history. As we progress, you'll discover the mathematical formulas are relatively easy to understand. To follow this article in detail, I recommend making a copy of the Service Department Efficiency Analysis Ratio (SDEAR) chart below and use it as a reference tool. Allow me a few words to describe the SDEAR chart. We will
M
PERFORMANCE HISTORY Service Department Efficiency Analysis: Ratio and Personal Performance History: Ratio
YEAR TOTAL
DEPART. EMPLOY.
_
AVERAGE _
HIGHEST _
YEAR _
MONTH January February March April
May June July
August
September October
November December
TOTAL: 20
5 _
TOTAL
PAYROLL HOURS
7,176 _
TECH. HOURS
No Allowance _
526 _
14,704
SERVICE DOLLARS _ _ _ _
_ _ _ _ _ _ _ _
_
SERVICE PARTS
DOLLARS _ _ _ _
_ _ _ _ _ _ _ _
_
Customer equip. only
OTC
PARTS SALES _ _ _ _
_ _ _ _ _ _ _ _
_
TECH. HOURS
COMPANY AVAILABLE
7,176 _
ACTUAL HOURS BILLED
1,099 _
read the chart from left to right, beginning with YEAR at the top of the first of 10 columns. The second column's heading is abbreviated for TOTAL DEPARTMENT EMPLOYEES. The second line in the first column is "My Company," which is the place to enter your service department's numbers. The next item in column one is LOWEST, meaning the numbers represent the lowest EFFICIENCY RATIO we have
Name ______________________________________ HOURLY
LABOR
LABOR RATE
$50.00 _
INCOME DOLLARS
$54.950 _
NON-
REVENUE HOURS
6,077 _
PERCENT
My Company ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ LOWEST
15.31% _
3.5 _ 8
TECH.
5,637 _
5,111 _
14,704 TOTAL
DEPART- SALES _ _ _ _
_ _ _ _ _ _ _ _
_
2,704 _
12,767
Name of Service
Technician _ _ _ _
_ _ _ _ _ _ _ _
_
$55.00 _
$45.00 $55.00
TECH. HOURS
PAYROLL _ _ _ _
_ _ _ _ _ _ _ _
_ OUTDOOR POWER EQUIPMENT www.outdoorpowerequipment.com
$148,720 _
$574,515 $702,185
TECH. HOURS BILLED _ _ _ _
_ _ _ _ _ _ _ _
_
2,407 _
1,937 LABOR
INCOME DOLLARS _ _ _ _
_ _ _ _ _ _ _ _
_
52.90% _
86.82% TECH.
EFFICIENCY RATIO _ _ _ _
_ _ _ _ _ _ _ _
_ Second article in a series
ore than three decades ago, one of my mentors made the following statement: "Jim, the only way you keep score in business is to count the money." We'll begin part two of this series on "Increasing
EFFICIENCY RATIO
Image ©istockphoto.com/Yakobchuk
