Labor optimization. It’s in the headlines, it’s a topic of discussion on social media. It impacts every aspect of your business — namely recruiting for positions ranging from skilled trades to management roles.
Amid an unprecedented labor shortage, we’re faced not only with an aging workforce but the lack of skilled technicians to backfill open positions. According to Pew Research, the labor participation rate of individuals ages 15 to 64 has settled to just 61.5 percent, while retirement has doubled in the past two years.
What is influencing these trends and the numbers? That remains open to debate. However, we can influence the movement by injecting ourselves and our businesses.
Become experts in labor utilization
In recent shop audits, we typically find that the average touch time of a technician is 2 to 3 hours per day – a labor waste of more than 60 percent each day. This is often the case due to the fact that the focus is typically on technician efficiency vs. touch time. We do not consider that an efficient technician most likely achieved those numbers not by completing and delivering repair orders but by building a flag sheet across multiple incomplete vehicles — incomplete because the necessary parts were unavailable at the time of repair. This model does nothing to address the shop’s primary goal — profitability. Shops aren’t paid on flagging hours, shops get paid by completing the job.
To truly address labor utilization, we need to look at both touch time and efficiency. Labor utilization or optimization is impacted by tasks that waste productive labor. The technician is only billing hours when they are touching the vehicle.
Typical time-wasting tasks include:
Missing parts or procedures on the repair order
Incorrect, damaged, or missing parts
Ease of access to needed materials
In-process quality issues
Production reprioritization
Whenever the technician is off task, time and money is lost.
How many hours a day does your technician(s) spend just looking for people, parts, vehicles and materials? This can easily add up to hours per day in lost touch time.
How do we address this?
Accurate and complete damage analysis before vehicle enters production
Parts availability, accuracy, and verification prior to production
Needed materials assessable within workspace
Real-time quality validation and verification process
Visible production management based on schedule
Doing this requires an investment of time and resources, but the return is much greater than the investment. Focusing on optimizing labor utilization has both a direct and indirect impact on your business. Let’s dollarize some of the potential.
If you divide your sales volume by the number of labor hours sold you will come to a sales per labor hour. For the sake of this example let’s say that number is $200 per hour sold.
Imagine if you could move that 3 hour a day touch time to 4 hours per day and keep a 200 percent labor efficiency rate. That means in 4 hours you produce 8 hours of sold labor. Each tech in your shop would sell 2 new labor hours each day at $200 per hour increasing sales by $8,400 a month per tech. In addition, you have improved your cycle time by 25 percent.
Your people benefit. The tech is compensated and the shop boosts revenue without adding additional labor costs. Improved cycle time leads to improved cash flow, and the ability to take on new work. Simultaneously, recruitment and retainment improves — word travels fast, and your shop becomes an attractive place to work (better compensation, better work environment).
Become a skills enabler
We have challenged shops that have highly paid and skilled technicians (A level) spending much of their time on tasks that would be better suited for B and C level technicians. The first thing shops should consider is allocating the right technician to the right task; this can be accomplished by organizing tasks by required skill level and creating apprentices with direct supervision.
Resources exist to help better connect skill level to the task at hand – and this can be accomplished at the recruitment. SkillsTrader is a recruitment and career enablement site designed specifically for the skilled trades. The site captures the technician’s skill level, training and education and cross references it to the defined needs of the posted job role. On this online platform, a shop owner can search for a prospective employee based on a defined role and grade (or skill) level, and the shop can choose to recruit someone who 100 percent matches criteria or utilize a gap analysis feature and hire someone with minimum defined training who could be a fit.
Become a business innovator
Technology is your greatest asset. You have to be willing to embrace it. At Sherwin-Williams, we focus on improvement applications that directly address where collision scenters are wasting labor areas while supporting employee skill development. Our Collision Core suite of cloud-based applications addresses common issues, including:
In-process repair quality to reduce labor waste from redo’s while lowering risks
Smart production that guides scheduling and assignment decisions based on proven skills and efficiencies while allowing visual communication across a range of devices in the shop
Material management that allows for budgeting, billing, tracking, ordering and organization while keeping the needed product accessible in the employee’s workspace
Education delivery through recorded trainings when and where it is needed
Regular push reports that provide easy access to critical data for business decisions
Interested in more information about the various applications within the Collision Core platform, visit us online. For more information about SkillsTrader and to join and actively start recruiting employees, visit the SkillsTrader website here: https://www.skillstrader.com/sherwin-williams.
