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Hours Attended (Service Department)

Total Number of Productive Hours Available

Guideline: See Hours Bought

Description:

This term represents the total number of hours that the Technicians are available to work, or in other words, the total number of hours that the Technicians are clocked-in at the dealership.

The number of Hours Attended is the statistic that is used in the calculation of Utilisation and Overall Efficiency.

It is important to note that this does not give you the total number of Hours Worked; it provides you with the total number of hours that are available to work.

As well as collating the total number of Hours Attended, it is also recommended that you calculate the hours attended for each individual Technician so that their individual Utilisation can be ascertained.

Example:

Discussion:

Factors that will influence the number of Hours Attended is time spent on training courses, time off on holiday, and sickness.

Related Terminology:

(Also see Hours Bought)

Hours Bought (Bodyshop)

Total Number of Hours Paid to Productive Personnel

Guideline: See Hours Attended

Description:

This term represents the total number of hours that you pay your Productives, or in other words it represents the total Productives salary for the specified period.

It includes time spent at the dealership, time spent on training courses, sickness and holiday pay.

For statistical purposes, and the calculation of key performance indicators, Hours Bought is never considered in any equation. For the most part, it is usually seen in business plans and annual budgets so that an accurate forecast of cost can be attained.

For instance, there are fifty-two weeks in the year of which four weeks could be allocated to holiday, two weeks allocated to training, and one week could be allocated for sickness.

Example:

A) Training = 80 hours (2 weeks)
B) Holiday = 160 hours (4 weeks)
C) Sickness = 40 hours (1 week)
D) Attended Hours = 1800 (45 weeks)
E) Total Hours Bought = 2080 (52 weeks)

Discussion:

Simply by multiplying the hourly rate that you pay to your Productives you are able to calculate a reasonably accurate forecast in each sector listed.

Related Terminology:

Hours Bought (Service Department)

Total Number of Hours Paid to Technicians

Guideline: See Hours Attended

Description:

This term represents the total number of hours that you pay your Technicians, or in other words it represents the total Technicians salary for the specified period.

It includes time spent at the dealership, time spent on training courses, sickness and holiday pay.

For statistical purposes, and the calculation of key performance indicators, Hours Bought is never considered in any equation. For the most part, it is usually seen in business plans and annual budgets so that an accurate forecast of cost can be attained.

For instance, there are fifty-two weeks in the year of which four weeks could be allocated to holiday, two weeks allocated to training, and one week could be allocated for sickness.

Example:

A) Training = 80 hours (2 weeks)
B) Holiday = 160 hours (4 weeks)
C) Sickness = 40 hours (1 week)
D) Attended Hours = 1800 (45 weeks)
E) Total Hours Bought = 2080 (52 weeks)

Discussion:

Simply by multiplying the hourly rate that you pay to your Technicians you are able to calculate a reasonably accurate forecast in each sector listed.

Related Terminology:

Hours per Parc

Annualised Hours Sold ÷ Number of Vehicles in Parc

Guideline: Own Strategy

Description:

This KPI is very useful for assessing your current performance in Hours Sold against your fellow dealers or your total market potential.

Keep in mind that this statistic is utilising every vehicle in the parc and if you are assessing a 10-year parc some of those vehicles may no longer be in your area or even in existence.

You may also wish to consider who else is registering vehicles within your territory it could be that you have a sizable fleet that is distorting your vehicle parc. You also have to ask yourself the question about the age profile of the vehicles that your dealership attracts.

Example:

A) Annual hours sold = 22,752
B) Number of vehicles in parc = 7,584
C) Hours sold per parc vehicle = 3 (A ÷ B)

Discussion:

Many financial reports show the statistic averaged over the whole vehicle parc, however your franchise manufacturer should be able to provide you with your parc data on a year-by-year basis, and in some cases on a model-by-model basis too. This will provide you with a more realistic and accurate figure with which to measure your territory penetration.

Related Terminology:

Hours per Retail Job Card

Retail Hours sold ÷ Number of Retail Job Cards

Guideline: > 2 hrs

Description:

This KPI simply counts the number of retail hours that have been sold and the number of job cards that have been raised in the retail sector and one is simply divided by the other to give an average of hours sold per retail job card.

When you wish to compare your performance with another dealer it is often difficult to gain an accurate measurement by using Labour Sales or the number of Hours Sold, as no two dealers are the same; this is where manufacturers composites and inter-firm comparisons are very useful.

Example:

A) Number of Retail Hours sold = 1,437
B) Number of Retail Job Cards = 334
C) Hours per Retail Job Card = 4.3 (A ÷ B)

Discussion:

When you compare your results to the national average you should keep in mind that this statistic is influenced by the type of work that is being undertaken, the Technicians ability to find additional work and the Service Receptionist's ability to sell that additional requirement on to the customer.

Related Terminology:

Hours per Vehicle Parc

Annualised Hours Sold ÷ Number of Vehicles in Parc

Guideline: Own Strategy

Description:

This KPI is very useful for assessing your current performance in Hours Sold against your fellow dealers or your total market penetration.

Keep in mind that this statistic is utilising every vehicle in the parc and if you are assessing a 10-year parc some of those vehicles may no longer be in your area or even in existence.

You may also wish to consider who else is registering vehicles within your territory it could be that you have a sizable fleet that is distorting your vehicle parc. You also have to ask yourself the question about the age profile of the vehicles that your dealership attracts.

Example:

A) Annual hours sold = 22,752
B) Number of vehicles in parc = 7,584
C) Hours sold per parc vehicle = 3 (A ÷ B)

Discussion:

Many financial reports also show you an average repair figure per vehicle in your parc, which uses an incident rate of around 20% and splits the hours between insurance and non-insurance work. This will provide you with a more realistic and accurate figure with which to obtain your territory potential.

Related Terminology:

Hours Sold (Bodyshop)

Total Number of Hours Invoiced

Guideline: See Labour Sales Mix

Description:

This figure represents the total number of hours that have been invoiced. Of course, the monetary value of this statistic is represented by the Labour Sales value.

It is more important to keep track of the number of Hours Sold than it is to keep track of their monetary value. This is because the monetary value of the Hours Sold can be influenced by your charge out rate and Recovery Rate and this does not therefore provide you with an accurate reflection of the direction of your business.

Example:

Discussion:

By far the easiest way to track the performance of the Hours Sold is to compile them into a simple graph on a weekly or monthly basis.

The graph will of course be more meaningful if you are able to segregate the hours sold between Retail, Internal and Warranty so that you can accurately plot the trend in each performance sector.

Related Terminology:

Hours Sold (Service Department)

Total Number of Hours Invoiced

Guideline: See Labour Sales Mix

Description:

This figure represents the total number of hours that have been invoiced. Of course, the monetary value of this statistic is represented by the Labour Sales value.

It is more important to keep track of the number of Hours Sold than it is to keep track of their monetary value. This is because the monetary value of the Hours Sold can be influenced by your charge out rate and Recovery Rate and this does not therefore provide you with an accurate reflection of the direction of your business.

Example:

Discussion:

By far the easiest way to track the performance of the Hours Sold is to compile them into a simple graph on a weekly or monthly basis.

The graph will of course be more meaningful if you are able to segregate the hours sold between Retail, Internal and Warranty so that you can accurately plot the trend in each performance sector.

Related Terminology:

Hours Sold per Repair

Insurance Hours Sold ÷ Number of Insurance Repairs

Baseline: 18 Hours

Description:

This KPI generally deals with work carried out for insurance companies, as they tend to be the larger accident repair jobs.

The equation simply divides the number of Hours Sold by the number of repairs to provide you with an average number of hours sold per repair.

Example:

A) Insurance Hours Sold = 968
B) Number of Insurance Repairs = 51
C) Hours Sold per Repair = 19 (A ÷ B)

Discussion:

The resulting KPI gives you an indication of the type of work that you are receiving from your insurance companies and is also a measurement of the skills of your Estimator.

If you reported figures are below the suggested baseline of 18 hours it could be that you are receiving more of the smaller type of repairs or it could be that the Estimator is falling short of requirements.

Related Terminology:

Hours Worked (Bodyshop)

Hours Attended x Idle Time

Guideline: See Utilisation

Description:

This statistic represents the number of hours that the Productives have been working productively.

Working productively means, panel beating, spraying or trimming or in other words, working on time that can be charged out to the customer.

Although a Productive may be clocked in and available to work for 40 hours per week, the time that they spent working productively is shown as the Hours Worked.

There is only one way to accurately capture the number of Hours Worked productively and that is for each Productive to clock on and off each individual job.

Example:

A) Hours Attended = 40
B) Idle Time = 2
C) Hours Worked = 38 (A - B)

Discussion:

Whatever your thoughts in this area of analysis there is one question that must be asked. If you do not accurately record this key performance area, when you do have a problem that you want to resolve, where do you begin to look for the answers? There is an old quote that says: "If you can't measure it, you can't manage it."

Related Terminology:

Hours Worked (Service Department)

Hours Attended x Idle Time

Guideline: See Utilisation

Description:

This statistic represents the number of hours that the Technicians have been working productively.

Working productively means, spanner-in-hand head-under-bonnet working on time that can be charged out to the customer. Although a Technician may be clocked in and available to work for 40 hours per week, the time that they spent working productively is shown as the Hours Worked.

There is only one way to accurately capture the number of Hours Worked productively and that is for each Technician to clock on and off each individual job.

Example:

A) Hours Attended = 40
B) Idle Time = 2
C) Hours Worked = 38 (A - B)

Discussion:

Whatever your thought in this area of analysis there is one question that must be asked. If you do not accurately record this key performance area, when you do have a problem that you want to resolve, where do you begin to look for the answers? There is an old quote that says: "If you can't measure it, you can't manage it."

Related Terminology:

Idle Time (Bodyshop)

Hours Attended x Hours Worked

Guideline: See Utilisation

Description:

Idle Time does not mean that the Productives are standing around idle; it simply represents the time spent at the dealership that cannot be charged out to the customer.

Typically this could be time spent locating keys or vehicles, waiting for parts and other such issues.

The mathematical formula is simply Hours Attended minus Hours Worked and this is always shown as a monetary value, which can usually be found within the Variable Expenses of the Bodyshop.

Example:

A) Hours Attended = 320
B) Hours Worked = 304
C) Hours Idle = 16 (A - B)
D) Prime labour Cost = R10
E) Idle Time = R160 (C X D)

Discussion:

In addition to this, some financial reports might show the monetary value of Idle Time as a percentage of the Departmental Gross Profit.

Related Terminology:

Idle Time (Service Department)

Hours Attended x Hours Worked

Guideline: See Utilisation

Description:

Idle Time does not mean that the Technicians are standing around idle doing nothing; it simply represents the time spent at the dealership that cannot be charged out to the customer.

Typically this could be time spent locating keys or vehicles, waiting for parts and other such issues.

The mathematical formula is simply Hours Attended minus Hours Worked and this is always shown as a monetary value, which can usually be found within the Variable Expenses of the Service Department.

Example:

A) Hours Attended = 320
B) Hours Worked = 304
C) Hours Idle = 16 (A - B)
D) Prime labour Cost = R8,40
E) Idle Time = R136 (C X D)

Discussion:

In addition to this, some financial reports might show the monetary value of Idle Time as a percentage of the Departmental Gross Profit.

Related Terminology:

(Also see Hours Attended and Hours Worked)

Interest %

Total Interest ÷ Total Turnover (x100)

Benchmark: < 1%

Description:

This KPI assesses the level of interest that you are paying and expresses it as a percentage against your company turnover.

The amount of interest that a company is paying on its borrowings is always of primary concern, especially when interest rates are increasing. However, nearly all businesses borrow money at some time so the question must be how much interest is your company paying and is it too much?

It is generally accepted that the level of interest that you are paying should be less than 1% of your company turnover.

Example:

A) Annual Interest payments = R101,665
B) Company Turnover = R14,523,661
C) Interest % = 0.7% (A ÷ B X 100)

Discussion:

If this KPI is higher in your business then you may wish to arrange a meeting with your Bank manager or your other providers of money to renegotiate your terms.

Related Terminology:

(Also see interest cover)

Interest Cover

Total Interest ÷ Cash Profit (x100)

Benchmark: < 33%

Description:

This KPI establishes your total interest payments against the value of your Cash Profits.

When you approach your bank manager to borrow money, their concern is whether or not you can afford to pay the interest on your loan, as they usually have your buildings as security against the principal loan value. This is how they assess your business in this area.

Example:

A) Annual Interest Payments = R90,697
B) Cash Profits = R412,263
C) Interest Cover = 22% (A ÷ B X 100)

Discussion:

In many cases, your Bank Manager will calculate this figure and if it is less than the guideline of 33% they may ask you if you are borrowing enough money.

Ironically, they do not assess your business's ability to repay the whole of the loan repayment and therefore it is critical that you also calculate the Loan Repayment % for yourself.

Related Terminology:

(See also Interest %)

Investment

Net Worth + Interest-Bearing Borrowings

Guideline: See Circulation of Funds Employed

Description:

This term refers to all of the money that is invested in the company (or nearly all of it).

The total investment is all of the funds that are employed within the company to enable it to operate on a day-to-day basis.

Its constituent parts are Net Worth (the owners funds) and all interest-bearing borrowings. Items such as Creditors, Accruals and the like are excl;uded from this figure, as they do not attract interest payments.

The value of investment informs you of how much money is invested into the company to enable it to function on a daily basis and although by itself it is not a KPI it is used in the calculation of many other KPI's.

Example:

Discussion:

Investment is always shown as a monetary value and is usually shown on the summary page of your financial information. If the value of your Funds Employed is not shown on your summary page you can calculate it for yourself from the balance sheet.

Please keep in mind that the value of the Investment is not the same value as the Total Liabilities.

Related Terminology:

Funds employed is sometimes called Funds Employed or Capital Employed.

Labour Cost of Sales (Bodyshop)

Value of Hours Attended X Idle Time

Baseline: 90% of Attended Hours

Description:

This statistic captures the amount of money that is paid to Productives for every hour that is worked productively.

The amount of money that you pay your Productives per hour is divided into three sections: Hours Attended, Hours Worked Productively and Idle Time.

Hours attended simply represents the number of hours that the Productives have been clocked in and available to work, these hours are simply divided between Hours Worked Productively and Idle Time.

Example:

A) Value of Hours Attended = R6,290
B) Idle Time = R320
C) Labour Cost of Sales = R5,970 (A - B)

Discussion:

This example demonstrates that the cost of labour for the hours that have been sold can only be the hours spent working productively, and therefore Idle Time (or Diverted Time) is shown as a Variable Expense.

Related Terminology:

Labour Cost of Sales (Service Department)

Value of Hours Attended x Idle Time

Baseline: 90% of Attended Hours

Description:

This statistic captures the amount of money that is paid to Technicians for every hour that is worked productively.

The amount of money that you pay your Technician per hour is divided into three sections: Hours Attended, Hours Worked Productively and Idle Time.

Hours attended simply represents the number of hours that the Technicians have been clocked in and available to work, these hours are simply divided between Hours Worked Productively and Idle Time.

Example:

A) Value of Hours Attended = R6,290
B) Idle Time = R320
C) Labour Cost of Sales = R5,970 (A - B)

Discussion:

This example demonstrates that the cost of labour for the hours that have been sold can only be the hours spent working productively, and therefore Idle Time is shown as a Variable Expense.

Related Terminology:

Labour Efficiency % (Bodyshop)

Hours Worked ÷ Hours Attended (x100)

Benchmark: 85% to 95%

Description:

This statistic tells you how much of the Technicians Attended time is actually spent working productively.

In more simplistic terms, each Productive usually clocks in and is available for eight hours each day, but how much of that time is spent spray-gun-in-hand or panel beating or in other words, working on hours that can be charged out to the customer? Labour Efficiency gives you the answer to this question.

Example:

A) Hours Worked = 957
B) Hours Attended = 1,040
C) Labour Efficiency = 92% (A ÷ B X 100)

Discussion:

This example shows that the Productives have attended 1,040 hours at the dealership of which 92% of that time has been spent working productively. The remaining 8% will be shown in your expenses as Idle Time.

Related Terminology:

Labour Efficiency % (Service Department)

Hours Worked ÷ Hours Attended (x100)

Benchmark: 85% to 95%

Description:

This statistic tells you how much of the Technicians Attended time is actually spent working productively.

In more simplistic terms, each Technician usually clocks in and is available for eight hours each day, but how much of that time is spent spanner-in-hand, head-under-bonnet, working on hours that can be charged out to the customer? Labour Efficiency gives you the answer to this question.

Example:

A) Hours Worked = 957
B) Hours Attended = 1,040
C) Labour Efficiency = 92% (A ÷ B X 100)

Discussion:

This example shows that the Technicians have attended 1,040 hours at the dealership of which 92% of that time has been spent working productively. The remaining 8% will be shown in your expenses as Idle Time.

Related Terminology:

This KPI is also known as Utilisation, Labour Utilisation and Selling Efficiency.