Service Training
Self-study Programme Service Operations 12
Service KPI´s – Work Performance
Introduction
Dear Reader,
This is the Self-Study Programme Service Operations 12 “Service KPI´s – Work Performance” issued by the Volkswagen
Academy Sales & Service Wolfsburg.
This self-study programme was produced in close cooperation with After Sales Business Management (VSN/1) at
Volkswagen AG. Along with their contribution to the content, we would also like to thank the department for their final
corrections.
The following volume should, above all, provide support for dealership principals, service managers, trainers and
service field forces during their everyday work. Furthermore, it is also a suitable medium for other interested service
2
employees in Volkswagen dealerships wishing to broaden their knowledge of business management.
The Service KPI´s described here form the basis for a uniform and comparable evaluation of the service. This self-study
programme should help to identify potential for improvement at the company as well as to examine the effectiveness
of measures taken by looking at changes to the key figures. Only if the service figures are recorded and analysed
regularly and correctly at the company will they be able to contribute to success. You can learn about the definitions,
meanings and variables influencing these figures in this programme, which are explained in brief.
You can use the questions at the end of this volume to test your knowledge.
We hope you enjoy studying and wish you every success in applying the knowledge gained at your dealership.
Note:
Information box
Exercise box
The information box contains
valuable additional information.
To aid textual comprehension, there is a practical exercise to complete in the
exercise box.
Contents
1
The After Sales division at the Volkswagen dealership . . . . . . .4
2
Types of customers, orders and invoices . . . . . . . . . . . . . . . . . . .6
3
Productive workers, partly productive workers, the number of
productive workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
4
Productive hours for apprentices and trainees. . . . . . . . . . . . . 10
5
Time tracking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6
Paid hours and total hours. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7
Productive hours and their calculation . . . . . . . . . . . . . . . . . . . 17
8
Hours worked and hours sold . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9
Distribution of hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10
Key figures of work performance . . . . . . . . . . . . . . . . . . . . . . . 22
10.1
10.2
10.3
10.4
10.5
10.6
Attendance rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Utilisation rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Efficiency rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Annual overall performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Target values for trainees and apprentices. . . . . . . . . . . . . . . . . . . . . . . .33
11
Evaluating spare capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13
Test Your Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
The groups of people named in the Self-Study Programme Service Operations refer both to men and women. The female pronoun has not
been explicitly used for reasons of readability and simplicity.
The term “Volkswagen” always refers to the brand “Volkswagen Passenger Cars”.
3
1 The After Sales division at the
Volkswagen dealership
Volkswagen dealerships are contractually bound to Volkswagen AG and are
assigned a company number. They are divided into the following divisions:
Fig. 1
The Sales and After Sales divisions at the
Volkswagen dealership
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The After Sales division at the Volkswagen dealership is comprised of the
Service and Parts departments. Together they assume responsibility for staff
working in, and the cost effectiveness of, repairs and customer service. The
Service department maintains and repairs the customers' vehicles.
It performs regular inspections and eliminates damage which occurs during
use or as a result of accidents. It uses Volkswagen Genuine Parts and
Volkswagen Genuine Accessories to do so, which are provided by the Parts
department. These services help maintain the comfort and safety of customer
vehicles. Ultimately revenue is generated, this being labour revenue from the
sale of repair hours and parts revenue from the sale of vehicle components.
A high level of customer satisfaction ensures revenue in the After Sales
division. If After Sales meets customer's expectations of quality, or even
exceeds them, then the customer will continue to use the services provided by
the respective Volkswagen partner in future.
To improve and monitor its own performance, After Sales uses essential key
success figures. These can provide information about adherence to defined
processes, the achievement of cost, turnover and profit targets, and can also
indicate ways to improve competitiveness.
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2 Types of customers, orders and
invoices
Customers can be classified into different groups at the Volkswagen
dealerships. Although the distinctions depend on the market area and the
system-based prerequisites, a few basic definitions apply:
•
A customer is the person who initiates an order in a division of the
Volkswagen dealership.
•
A service customer is the person who initiates an order in the Service
department of the Volkswagen dealership.
•
A Volkswagen customer is the person who initiates an order related to the
Volkswagen Passenger Cars brand in a division of the Volkswagen
dealership.
6
Other ways of defining customers are also used in the Sales business sector
and in the After Sales departments, based on the following differentiation:
•
•
•
Customer in Parts department
Volkswagen customer in Parts department
Volkswagen service customer
After Sales customers are also differentiated according to where they originate
from:
•
Internal customers originate from the Volkswagen dealership's own
business operations. If, for example, the Used Car department has repairs
done to a vehicle which it purchased, then it is an internal customer for the
Service department in terms of the work ordered, and an internal
customer in the Parts department in terms of the vehicle components
needing replacement. The Used Car department orders the services from
the Service and the Parts department.
For internal customers the scope of the work and the required vehicle parts
are recorded via internal orders . In each instance they must be settled
internally, meaning between the department ordering the service and the
department rendering the service. This is a means of settling the cost of
services internally.
•
Normal customers do not originate from the Volkswagen dealership's own
business operations. All work performed for them and the vehicle
components assigned to them must always be invoiced via standard
orders.
Orders in After Sales are essentially divided into service orders and parts
orders.
•
Service orders contain work items or a combination of work items and
parts. Service invoices are issued for them (invoiced).
•
Parts orders only contain ordered parts. Parts invoices are issued for them
(invoiced).
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Invoices or orders which include both, parts and work items, are referred to as
service orders and service invoices. Service orders and service invoices are
divided into four different types according to the work performed:
•
•
•
•
Standard orders
Warranty orders
Goodwill orders
Internal orders
These orders are principally customer orders, meaning they are always issued
by customers. For standard orders and internal orders, the customers receive
the invoice directly, for warranty and goodwill orders, the dealership or the
manufacturer is responsible for settling a share, or all, of the invoice.
No order is made when the Service department renders a service for itself.
8
This covers, on the one hand, the repair of vehicles which were classed as the
commercial responsibility of the Service department (workshop replacement
vehicle, towing vehicles, company car for the service manager) and, on the
other hand, job items such as sorting the tool wall, labelling special tools,
cleaning of the floor and similar tasks. These activities may not be described
as orders, as the jobs have not been ordered. However, time taken to complete
them must be recorded.
(For more information, see Chapter 5 – Workshop hours)
3 Productive workers,
partly productive workers,
the number of productive workers
Employees are referred to as productive employees if they are available for
rendering services on vehicles for at least 10% of their working hours.
Completely productive employees are exclusively available for working on
vehicles.
Partly productive employees are, along with immediate services on vehicles,
also regularly assigned to other tasks. This distinction is decisive for counting
the number of productive employees or productive workers.
The number of productive workers is equal to the sum of the proportions of
partly productive and completely productive employees in service.
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Employees who are available for performing work on vehicles for less than 10%
of their working hours are referred to as administrative employees in the
Service department.
4 Productive hours for
apprentices and
trainees
A lower level of output is expected from productive apprentices, new
productive workers in training, and productive workers who can prove
physical limitations as compared to experienced employees whose
productivity is not limited. The reduced work capacity of the corresponding
employees is factored in using an appropriate allocation factor (see example 1)
and by a set number of reduced potential productive hours (see example 2).
Examples:
In Germany, work in the 1st year of training is never invoiced. For the 2nd year
of training the invoicing factor is 0.31 and for the 3rd and 4th year of training
10
the factor is 0.75.
1. An apprentice or trainee productive worker in his 3rd year of training is
responsible for completing job items within a specified time of 100 time
units. The worker is credited with 100 time units.
These 100 time units are also included on the invoice. However, the
apprentice or trainee is actually given 133 time units for completing the
work for which these 100 time units were credited (100/75 x 100 = 133.33).
2. For open job items, these being job items without an allotted time
(so-called AZ times) the following applies: if an apprentice or trainee in the
3rd or 4th year of training works on open job items on their own , the
productive time is multiplied with the invoicing factor 0.75 (100 x 0.75 = 75).
Of the 100 time units worked, only 75 time units can be invoiced. These
reductions must be given close consideration in warranty cases in
particular.
The target productive hours for apprentices and trainees are defined on the
basis of a realistic, country-specific estimation and apply uniformly across the
country. In Germany, the training period totals 3.5 years. In the 1st and 2nd
year of training, no target productive hours are specified. In the 3rd year of
training, 480 productive hours are expected, and in the last half year of
training, 240 productive hours.
Information box
Your importer can inform you about which reduction factors apply to you and
the level of the reduced number of productive hours.
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5 Time tracking
Information box
Productive employees work through the service orders. The time taken for all
An uninterrupted record of all the
times from starting work to finishing
work, as well as recording absences,
is important.
term used for this, “stamp”, refers to the mechanical time stamp clocks which
activities is recorded. The time is recorded electronically or in writing. The
were once used.
Every working day starts when the employee stamps in the time after which
he's available to work on orders or other activities at the company (in practice,
this is referred to as “time in”) and ends when the employees stamp the time
from which he's no longer available for activities at the company (“time out”).
The time at which work was started and finished is recorded for every order.
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The time at which work finishes is recorded automatically by many electronic
systems when the next starting time is stamped. The time which has been
stamped is the productive time (or to be more precise, the actual productive
time) for the order. Regardless of whether there are customer orders or not,
the work day must always start by recording attendance at the company
(time-in stamp). If no other tasks need to be performed, workers are not
productive. Even if there are no customer orders, any other tasks which are
carried out must be recorded with the corresponding hours for attendance
and non-attendance.
In the following, practical distinctions are illustrated in regard to the
minimum workplace attendance and absence which must be recorded.
The “W” in the terms W1 to W8 is based on the term “workshop hours” or
“workshop time”.
W times for attendance (at the workplace)
W1 “Work for own workshop”
- must be recorded for the times in which maintenance work on company
vehicles belonging to the Service department, larger tidying up tasks,
maintenance work on the business premises or when similar work is
performed.
W2 “Non-productive time”
- must be recorded for the time in which productive employees are at work but
have not been assigned an activity.
W3 “Apprentice time”
- only needs to be recorded by trainees or apprentices for the time in which
they receive technical instruction at their workplace. The productive worker
who is instructing the trainee records this time as W6 (training)
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W4 “Rework”
- must be recorded for the time in which a productive worker is busy
completing rework for which he himself is responsible. If the rework is
completed by someone other than the productive worker responsible for
causing it, then a new order is created and the time needed is recorded the
same way it would be for a normal order. The management of the workshop
must, in this case, ensure that the times for work items needing rework do not
remain recorded twice with the Service department, for example by cancelling
or updating the failed repair attempt.
W times for absence (from the workplace)
W5 “Holidays”
- must be recorded for the time in which a productive worker does not have to
work due to a public holiday or annual holidays.
W6 “Training”
- must be recorded for the time in which a productive worker attends training
which is held within (internal) or outside (external) the dealership. If the
productive worker is supporting a trainee or apprentice, then W6 is also
recorded for this productive worker. The apprentice or trainee records all time
needed for instruction under W3.
W7 “Illness”
- must be recorded for the time in which the productive worker was unable to
be assigned any tasks at the workplace due to disability for work. W7 does not
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have to be recorded when the productive worker causes no longer personnel
costs due to a long-term illness (no continuation of payments in case of
illness). Once the continuation of payments is stopped, then the employee
must be deleted from the time record.
W8 “Substitution and miscellaneous”
- must be recorded for the time in which the productive worker assumes the
work responsibilities of a colleague active in administration for which Service
has commercial responsibility. This includes: advisor substitution of the
service, helping to explain works and invoices, pick-up and drop-off services
for customers and vehicles, works council and union activities. All
circumstances which resulted in a justified absence from the workplace and
are recorded under W8 must be able to be substantiated to the workshop
management.
W8 times should only be approved with the specific permission of the
workshop management.
Other periods of absence can also be recorded within the Service department.
It is important to distinguish between different reasons for an absence from
the workplace.
Information box
Attention: the orders are stamped in immediately following order receipt. This is
before collecting the vehicle and before any technical information about the
order. Stamping out is done after the work is complete but before the final
inspection. Productive workers only ever clean vehicles if this appears as a work
item on the order and the activity has been evaluated with a realistic time.
Otherwise casual workers are responsible. In exceptional cases the productive
worker records a W8 time. The same applies to test drives taken by productive
workers.
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6 Paid hours and
total hours
The terms „paid hours” and „total hours” are used synonymously.
The number of hours paid per productive worker is equivalent to the number
of hours which the employer (Volkswagen dealership) must pay the employee
(employee of a Volkswagen dealership) on the basis of the legal regulations
and/or the employment contract. It is normal to specify the hours paid or the
total hours per productive worker by month or by year, and to specify the total
hours for the workshop in terms of the sum of productive workers per month
or year.
Calculating the paid hours/total hours
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Number of calendar days per year
-
Regular, unpaid days per year (e.g. Saturdays and Sundays)
=
Paid days per year
x
Paid hours per day
=
Paid hours or total hours per year
7 Productive hours and their
calculation
Productive hours are calculated using the productive times recorded
(see Chapter 5 – Workshop hours). The recorded hours (actual productive
hours) of all productive workers in Service are compared with the sum of the
potential productive hours (target productive hours) in order to evaluate the
service and to plan capacities.
Calculating the target productive hours:
Paid days per year
-
Public holidays (W5)
-
Working days off for holiday (W5)
-
Working days off for training (W6)
-
Working days off for illness (W7)
=
Days of attendance per year
x
Hours of attendance per day
=
Hours of attendance per year
-
Percentage of unproductive hours (W1 to W4)*
=
Target productive hours per year
* A maximum of 10% of the hours of attendance may be unproductive hours. (example: German market)
17
Attention: This calculation deliberately excludes the W8 hours, because their
unexpected occurrence leads to a reduction of the actual productive hours
compared to the target productive hours. Where applicable, the differences
between the target and actual productive hours must be examined. Planned
and permanent substitutions lead to a reduced number of productive workers
being included in the calculation.
Note: The target productive hours per month refer to a full productive
employee in this model. When the productive workers are counted, they are
weighted with a numerical factor of 1. A mechanic who always spends half a
day working on service orders and half a day helping in the service reception
must be calculated as half a productive worker and would therefore have a
numerical factor of 0.5. These reduced numerical factors are usual for partly
productive workers, as they are only available for processing customer orders
for the reduced number of working hours, or for productive workers who work
more slowly due to valid personal circumstances. This applies to apprentices
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and trainees, handicapped productive workers, workshop managers or
similar. The importer can specify the numerical factors for apprentices and
trainees, and these may differ considerably from the values named as an
example for Germany.
The numerical factor for a productive worker may never be reduced due to the
difficulty of the tasks assigned. The criterion for a reduction is the result of
having less time for processing customer orders or an objective incapacity to
process the work orders within the specified time, as in the case of workshop
managers, apprentices, handicapped workers or similar groups.
Conclusion: The number of productive workers in the Service department is
the product of the sum of the numerical factors for all employees. If this is
multiplied by the number of calculated target productive hours for a
completely productive employee, this produces the total target productive
hours for the Service department in the specified period, which is called
service capacity.
8 Hours worked and hours sold
Hours worked
Hours worked are counted when a productive employee has finalised a service
order with job items which are evaluated with a time (specified time or AZ
time). The sum of hours worked is treated as a total for each productive worker
or for the Service department, and is usually evaluated on a monthly or yearly
basis. Depending on the month, the W times fluctuate, causing the hours
worked to vary over the course of a year. In Germany, for example, the summer
months are a popular time for taking holidays, and there are many public
holidays in December.
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Hours sold
The hours sold are counted using the sum of time units which have been
invoiced. The price for the individual job items and time units is irrelevant.
Working time which is invoiced without charge is therefore also counted in the
hours sold.
9 Distribution of hours
Ideally, the target productive hours should equal the actual productive hours,
meaning the hours worked should equal the hours sold. The ideal is never
attained, and the deviations must be able to be justified by the hours
recorded. If deviations are too large, the causes must be found and eliminated.
Fig. 2:
Distribution of hours (the percentage
values refer to the following example)
.
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Example (German market):
Number of calendar days per year (365)
-
Regular, unpaid days per year (e.g. Saturdays and Sundays) (104)
=
Paid days per year (261)
x
Paid hours per day (8)
=
Paid hours or total hours per year (2088*)
* 2088 total hours is equal to 100%.
Of these, a maximum of 21%, or approx. 55 days, may be distributed among
the absence times covered under
W5 to W8, for example:
-
Holidays (28 days)
Public holidays (10 days)
Illness (5 days)
Training (10 days)
Substitution or miscellaneous (2 days)
Furthermore, of the 2088 hours, 8%, or approx. 21 days of non-productive time,
can be distributed among the attendance hours covered under W1, W2, W3
and W4.
Conclusion:
Paid hours 100%
21
-
Absence hours 21%
-
Non-productive attendance hours 8%
=
Target productive hours 71%
Should this 71% of the paid hours not be able to be converted into billable
time, then the causes must be investigated immediately. The key time input
figures described in the following will help with this. If the key figures do not
reveal the causes, then the error might be found in the invoicing of the time
worked for the customer.
10 Key figures of work performance
An important prerequisite for determining the key figures for hours worked
correctly is comprehensive documentation of all productive hours,
attendance hours and absence hours. This documentation is to be kept by
every productive worker, including the trainees and apprentices, by using the
daily work card (time stamp card) or by recording it electronically. The start
and end of work at the company must be recorded, as well as every change of
work or order. A change of work also occurs when there is no new customer
order at the workplace but a W time begins.
The hours worked can be described using five key figures:
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•
•
•
•
•
attendance rate
utilisation rate
efficiency rate
productivity
annual overall performance
The following information reveals more about what the key figures are based
on, how they are calculated and what they indicate.
10.1 Attendance rate
The attendance rate indicates the level of workplace attendance by the
productive workers in relation to the total hours. It is a figure which is
calculated on a monthly basis, and is treated as an average over the course of
the year. Workplace attendance does not refer to a mere physical presence at
the company, but instead refers only to the hours which a productive
employee spends at his specific workplace. For this, the employee must be
stamped on the service order or one of the W1 to W4 times.
A daily work card used in practice by one of the productive workers may look
like this:
Fig. 3:
Example of a daily work card from the
German market.
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Calculation:
Exercise box
Use the specific figures at your
dealership to do the calculations.
You can immediately see how close
the attendance rate of your
productive workers is to the specified
target.
Attendance hours
attendance rate =
x 100
Total hours
Influencing factors:
The attendance rate is influenced by the employees' level of motivation, the
working conditions, the general environment at the company, the wages paid
and the company organisation.
If the causes of a low attendance rate are, for example, a lack of punctuality or
a high rate of sickness, then an analysis related to the individual is
recommended.
24
Information box
The attendance rate should be calculated on a monthly basis and should be
compared with the specified annual target. Monthly fluctuations due to public
holidays and holidays must be factored in. The number of working days can vary
from year to year.
10.2 Utilisation rate
The utilisation rate indicates whether the productive workers are pursuing a
productive activity during their attendance at the workplace. It is a figure
which is calculated on a monthly basis and is treated as an average over the
course of the year.
The target value for utilisation rate can not be set at 100%, as W1 to W4 times
will occur, even if work is optimally organised .
Calculation:
Exercise box
Actual productive hours
Utilisation rate =
x 100
Attendance hours
Actual productive hours are only counted when a productive employee
finalises customer orders and records these hours accordingly while doing so.
Influencing factors:
The utilisation rate is influenced by the time recorded, the market, the cyclical
and seasonal environment, scheduling, company organisation, as well as the
attendance W hours (W1 to W4). Even when the company is organised
optimally, employees present at their workplace require around 10% of their
hours for work for own workshop(W1), for their own needs, non-productive
activities (W2) and rework (W4). Instruction of trainees and apprentices at
their workplaces is also added to this, whereby they are the only ones to stamp
the time as W3.
The utilisation rate is always increased by the actual productive hours. Above
all, good workshop planning allows capacity utilisation to be managed.
Use the specific figures at your
dealership to do the calculations.
You can immediately see how close
the utilisation rate of your productive
workers is to the specified target.
Then do a calculation with different
actual productive hours.
This reveals the significance of the
actual productive hours for the
utilisation rate.
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10.3 Efficiency rate
The efficiency rate combines the actual productive hours of a productive
worker with the time he works on work orders. It is a figure which is calculated
on a monthly basis, and is treated as an average over the course of the year.
This also reveals whether the productive worker can adhere to the times
specified for the job items. The specified times for the job items were
identified and verified in time and motion studies by the manufacturer, and
apply worldwide. Time worked can also be accrued by working through AZ
times. These times are defined by the Volkswagen dealership itself.
It should ensure the hours are suited to the individual, can be invoiced and
can be achieved by the productive workers. Also observe the specific
regulations for AZ times in warranty cases!
Calculation:
Hours worked
26
Efficiency rate =
x 100
Actual productive hours
Ideally, productive employees should adhere to the specified times. The
efficiency rate then totals 100%, because the number of hours worked is equal
to the number of actual productive hours.
Influencing factors:
For the efficiency rate, speed and optimum organisation of the work processes
are important. Therefore observe the Service Core Process and, in particular,
the process steps 1 to 4 (arranging appointments, preparing appointments,
vehicle check-in/order creation, repair/performance of service). Compare this
with the Self-Study Programme Organisation, volumes 1 - 4.
Fig. 4:
Self-Study Programme Service
Operations 1 “Service Core Process:
Introduction”
Self-Study Programme Service
Operations 2 “Core Process 1:
Arranging Appointments”
Self-Study Programme Service
Operations 3 “Core Process 2:
Preparing Appointment ”
Self-Study Programme Service
Operations 4 “Core Process 3:
Vehicle Check-In/Creation of Order”
If work is done faster than the specified hours, an efficiency rate of more than
100% may result. However, it is essential that speed is always linked to good
quality work, because repeat repairs and rework do not result in more hours
worked, or actual productive hours. Rework only increases the attendance
hours, while decreasing productivity, as no new hours worked accrue. The
productivity figures must therefore always be considered together with the
efficiency rate.
You can improve the efficiency rate by increasing the level of qualification of
productive workers, by shortening the waiting times for the supply of parts, by
improving the clarity of the work orders, shortening the tooling times and by
improving the quality of the time records. Also motivation and wages paid to
the employee play a role.
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10.4 Productivity
Productivity indicates the proportion of hours worked compared to the hours
of attendance at the workplace, thereby illustrating the effectiveness of the
productive workers at their workplaces. It is a figure which is calculated on a
monthly basis, and is treated as an average over the course of the year.
Productivity is calculated by multiplying the utilisation rate with the efficiency
rate and therefore answers the following questions:
1. Was work done while attending the workplace?
2. Was the work completed within the specified time?
Calculation:
Hours worked
Productivity =
x 100
Attendance hours
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The target value is less than 100% because there are also tasks to complete
during the hours attended at the workplace which do not result in hours
worked, i.e. task which are recorded under the W1 to W4 hours.
Influencing factors:
Productivity depends on the utilisation rate and the efficiency rate, and can
therefore only be influenced by these key figures.
10.4.1 Sales productivity
The productivity described only refers to productive workers. To evaluate the
service advisor, a comparative value which indicates the sales success of hours
worked is required.
Firstly, a time is required which is based on the sales performance by the
service advisors. This time is determined by recalculating the labour revenue
earned within a given period (month or year).
Calculation:
Total labour revenue
Retrograde hours sold =
Calculated labour rate per hour
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Secondly, the calculated labour rate per hour describes the rate charged to
cover the cost of service and also includes the target profit margin. The
formula for the calculated labour rate per hour is calculated using the forecast
figures for the coming business year. These figures must be defined shortly
before the new business year starts.
Calculation:
Calculated
=
labour rate per hour
Total costs in the Service
department + profit
x
Target productive hours
Forecast
inflation in %
Finally to identify the sales productivity of the service advisor, the retrograde
hours sold are considered in relation to the time worked by the productive
workers. The advantage of this key figure is that the sales productivity can be
analysed separately from the productivity of the productive workers. The sales
productivity is a figure which is calculated on a monthly basis, and is treated
as an average over the course of the year.
Calculation:
Retrograde hours sold
Sales productivity =
x 100
Hours worked
The specified target totals 100%.
Influencing factors:
30
The service advisors can influence the sales productivity by selling all hours
worked. This requires consistent invoicing of the orders. Furthermore,
charging the highest possible rates for labour leads to an increase in sales
productivity.
10.4.2 Service productivity
Service productivity takes the entire Service department into consideration
and includes the target achievement by both the productive workers and the
service advisors. It can therefore be regarded as an overriding key figure in the
Service department. It is a figure which is calculated on a monthly basis, and is
treated as an average over the course of the year. The other productivity
figures still remain crucial for achieving the specified targets and for finding
potential for improvement.
Calculation:
Retrograde hours sold
Service productivity =
x 100
Target productive hours
The target specification totals 100%.
Influencing factors:
The service advisors influence the key figure by selling all the hours worked at
the highest possible price. The productive workers influence this key figure by
a high number of hours worked, which equal, or even exceed, the target
productive hours as far as possible.
The factors influencing service productivity are the same ones which
influence productivity (see Chapter 10.4).
31
10.5 Annual overall performance
Information box
The annual overall performance compares the hours paid (total hours) with
the hours worked by productive workers. It covers the key figures of
The annual overall performance is
the first point of reference for the
service manager and represents a
type of “profit calculation”. For a
precise analysis, the service manager
requires the key figures of
attendance rate, utilisation rate and
efficiency rate.
attendance rate, utilisation rate and efficiency rate in one variable.
Calculation:
Annual overall
=
performance
Attendance rate x utilisation rate x efficiency rate
100 x 100
or
Annual overall
=
performance
Hours worked
x
100
Total hours
32
Influencing factors:
The annual overall performance is a key figure aggregated from attendance
rate, utilisation rate and efficiency rate. It is therefore important to analyse the
influencing factors for these individual key figures and to make changes when
required. Compare this with the section on attendance rate, utilisation rate
and efficiency rate. If the annual overall performance is too low, action must
be taken in time.
10.6 Target values for trainees and
apprentices
The target values for trainees and apprentices must always correspond to their
individual capacity for work. Due to the different training systems, the
importers are responsible for defining the target values for this group of
productive workers in their markets.
For example, the following target values apply in Germany:
Key time input figures
Target value in 3rd/4th year of training
Attendance rate
60%
Utilisation rate
55%
Efficiency rate
75%
Productivity
41%
Annual overall performance
25%
In the 1st and 2nd year of training no targets are defined because training is
mainly theoretical and is held outside the Volkswagen dealership.
33
11 Evaluating spare capacity
Multiplying the target productive hours (compare: Chapter 7) with the
number of productive workers results in the target productive hours which
can be achieved in the Service department overall. Multiplying the target
productive hours with the calculated labour rate results in the target labour
revenue.
To evaluate the spare capacity in the dealership, the target labour revenue is
compared with the actual labour revenue. The difference between the two
indicates the sum of money which accrues due to the deviation in the annual
overall performance or the deviation in the actual labour rate from the
calculated labour rate.
34
The actual labour rate (including the rates achieved) is the quotient of the
actual labour revenue (labour revenue achieved) and the hours worked within
a given period.
Calculation:
Labour revenue achieved
Actual labour rate =
Hours worked
A subsequent assumption is made that the actual labour rate is equal to the
calculated labour rate.
In the following German example, the spare capacity for a dealership is
calculated:
Number of mechanics
15
Hours paid/total hours
159
Months
12
Target
Actual
Attendance rate
79.0%
77.5%
Utilisation rate
90.0%
87.2%
Efficiency rate
100.0%
93.5%
Labour rate per hour
€61.06
€61.06
Target capacity for one year:
15 x 159 x 12 x 0.79 x 0.90 x 1.00 = 20,348.82 hours
If the hours which can be worked are actually worked, then these hours should
also be sold. In this case, the following target labour revenue can be expected.
Target labour revenue for one year: 20,349 x €61.06 = €1,242,498.95
If the actual situation is regarded, this results in the following scenario:
Actual capacity for one year:
15 x 159 x 12 x 0.775 x 0.872 x 0.935 = 18,084.2 hours
Actual labour revenue for one year: 18,084.2 x €61.06 = €1,103,679.04
This results in a capacity which is not being fully utilised due to failure to meet
specified values for the key figures of work performance:
20,348.82 hours – 18,084.2 hours = 2,264.62 hours
This unutilised capacity leads to a loss of labour revenue which is evaluated
using the labour rate per hour:
2,264.62 hours x €61.06/hour = €138,819.91 (labour revenue lost)
Exercise box
Calculate the example using the
figures at your dealership. This will
give you good arguments to
motivate yourself and the
responsible employees in the Service
department to pay attention to the
key figures of work performance.
35
Due to the low attendance, utilisation and efficiency rate the labour revenue is
reduced by €138,819.91.
In such case it is essential to identify the reasons for not achieving target
values and to introduce appropriate measures.
Good workshop planning ensures ideal utilisation of the workshop and shows
the spare capacity.
In the last example, the spare capacity for a dealership was calculated. Due to
optimised workshop planning each productive worker is able to increase his
hours worked by e. g. 20 minutes each day. If this time is also sold, then based
on 185 working days per year the following additional labour revenue can be
generated:
36
185 days x 0.33hours x 15 productive workers x €61.06/hour = €56,480.50
These additional time would also have allowed a similar level of turnover to be
achieved with Volkswagen Genuine Parts, lubricants, oils and accessories.
12 Summary
With the help of key figures it is possible to evaluate the economic situation of
a dealership. The periods over which records are made differ for the individual
key figures. Considered as they stand, the key figures primarily only provide
information about certain areas of business administration processes in the
dealership. They more or less represent a „snapshot” of the periods under
examination. These values do, predictably, fluctuate over the course of the
year. For example, the hours of absence accumulate together due to the
seasonal concentration of holiday hours. However, the annual overall
performance and the attendance rate over the entire year are always key.
The key figures only really gain significance through an understanding of the
processes and sequences they reflect, their analysis and the conclusions
derived from them for the future work to be done by the service employees.
The key figures examined here show the path to achieving the targets of a
dealership, these being generating turnover and profit at the same time as
high customer satisfaction. Their analysis has a significance for capacity
utilisation and therefore reducing the waiting times and non-productive
hours. To ensure a high degree of capacity utilisation, adherence to the Service
Core Process must be checked regularly and improved using the key figures
described here.
It is important to clarify to every service employee the effect his work has on
the key figures in line with the employee's role, and to get employees actively
involved in making improvements.
The qualification programme offered by the Volkswagen Academy Sales &
Service in Wolfsburg provides support for both management as well as the
service employees in Volkswagen dealerships, for example with its training
course “Coaching service employees successfully”.
37
13 Test Your Knowledge
Introductory question
1. What are key service figures important for?
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
38
______________________________________________________________
Questions on chapter 2
Types of customers, orders and invoices
2. Which types of orders allow revenue to be generated?
______________________________________________________________
______________________________________________________________
3. Name the service orders.
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
4. Which hours are included in the attendance W times?
Questions on chapter 5
Time tracking
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
5. Which hours are included in the absence W times?
______________________________________________________________
39
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
6. How can paid hours be calculated?
Questions on chapter 6
Paid hours and total hours
______________________________________________________________
______________________________________________________________
7. What does the attendance rate express?
______________________________________________________________
______________________________________________________________
______________________________________________________________
Questions on chapter 10
Key figures of work performance
Questions on chapter 10
Key figures of work performance
8. In which intervals should the utilisation rate be identified?
______________________________________________________________
______________________________________________________________
9. Which relationship does the efficiency rate show?
______________________________________________________________
______________________________________________________________
______________________________________________________________
40
10. How is productivity calculated?
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
11. How is the annual overall performance calculated?
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
12. How is the spare capacity of a dealership identified?
Questions on chapter 11
Evaluating spare capacity
______________________________________________________________
______________________________________________________________
______________________________________________________________
41
Solutions
42
1.
a)
b)
c)
For a consistent and comparable evaluation of Service
To identify potential for improvement in the company
To verify the effectiveness of changes
2.
Service orders and parts orders
3.
a)
b)
c)
d)
Internal orders
Standard orders
Warranty orders
Goodwill orders
4.
a)
b)
c)
d)
Work for own workshop (W1)
Non-productive time (W2)
Apprentice time (W3)
Rework (W4)
5.
a)
b)
c)
d)
e)
Holidays (W5)
Training (W6)
Illness (W7)
Substitution and miscellaneous (W8)
Others can be freely assigned
6.
(Number of calender days per day minus regular unpaid days per year) multiplied by paid hours
per day
7.
It indicates the level of workplace attendance by the productive workers in relation to the
total hours.
8.
Monthly
9.
The relationship between hours worked and actual productive hours
10. By multiplying the utilisation rate and efficiency rate or by the relationship between
hours worked and hours of attendance at the workplace
11. By multiplying the attendance rate, utilisation rate and efficiency rate or by the relationship
between hours worked and total hours
12. By comparing the target labour revenue with the actual labour revenue
43
12
© Volkswagen AG, Wolfsburg
All rights reserved.
Article no. VW0.2890.12.20
Version 03.2013
Volkswagen AG
After Sales Qualification
Service Training VSQ-3
Brieffach 1995
38436 Wolfsburg
❀ This paper was manufactured using pulp bleached without the use of chlorine.