No matter what the real reason Repair Orders are open for a longer than a desired period of time, the first words uttered are usually..."We Are Waiting For Parts!". Even if a different reason is true, it's usually the easiest one that everyone expects and accepts.
Sometimes, when we as human beings hear the same thing over and over again, it becomes an accepted response, or answer in this case. Even without a real explanation, no one really challenges the answer and this the guilt, and blame falls where it usually does.
There is a logical reason for this overwhelming first response, or answer and that is because more often than not, we are "waiting for parts". But we have to go way back to the beginning to find what really leads us to this point of eventually "waiting for parts" at the outset.
Think about it...a vehicle is brought in with concerns that require a diagnosis from a "certified" technician. The diagnosis is made, and it is determined that a repair is required that involves parts. It's at this point that "Work-In-Process" is born, and the clock starts ticking as to when the repair will be completed.
Once the diagnosis has been completed and if parts are required, it's off to the Parts Department to start the process of completing the repair(s). This is why the most common answer to why we have so many open repair orders as everything stops right here if we don't have the part(s).
That being said, we all know that it is crucial to have the right parts at the right time with a Parts Inventory that can provide the technician that part on a first-time basis of 75% - 85% of the time.
Even if we don't stock the part due to back-order situations, or limited demand, we have to have a Parts Department that is diligent in chasing down the needed part. No matter how hard it may be to get due to limited availability, back order or supply chain issue, our job is to limit Service Cycle Times and RO's being open waiting for parts.
In the Parts Department, we have to have a "sense of urgency" and a "state of mind" that time, in this case a perishable inventory in Service that we can never get back. In other words, if the part is back ordered, not in stock for whatever reason, our job is just now beginning.
With all that said, "Smart Parts" Managers already know this and especially in today's world. More and more Parts Managers and their staff are spending more time than they ever have getting the parts our customers need than they ever have before.
I know from personal experience that more and more dealers are spending more than they ever have on Parts Manager Training. More and more dealers are seeing the need for training their Parts Manager and staff on having more of the right parts on the shelf.
The overall goal now is to reduce Overall Service & Collision Center Cycle Times, reduce the amount of open repair orders and most importantly, increase their Fixed Operations Parts & Service Sales & Gross as well as their Overall Service Absorption and the Parts Department plays a huge role.
So!...with all the above being said!...
"Why Do We Really Have So Many Open RO's?"
It's time to reveal our Top 10 Reasons why we have so many Open RO's...and surprisingly enough...it's not just the Parts Department's fault!
As I mentioned earlier, it is no surprise that the Number One reason and answer to the above question is "hands down" that we are waiting for parts. It's also obvious that parts are required in most repairs, so it's also the most logical answer if we don't have the parts to complete the repair(s).
In this issue of ACG "Smart Parts", we will explore all the reasons why we have so many open repair orders, also known as "Work-In-Process", or as I refer to as "Work-In-Waiting", for whatever the reason or excuse.
We will list our Top 10 Reasons why we have so many open repair orders beyond the accepted limits. Accepted limits meaning, "longer than initially expected" after the repair order was first written. We all know that once a repair order is initially written up, it's already considered as "Work-In-Process" until it's been closed.
Our Top 10 is also not in any particular order, even though we will start with parts, as after all, it's the main headliner in this month's issue. But many may be surprised as we bring out many other reasons why we have so many open repair orders, even if we aren't willing to admit it.
Here We Go!
1.) Needed Parts Not in Stock
As mentioned earlier, one of the most common reasons for RO's to be open for a longer period of time is that the part is not a Normal Stocking Part. Today's average Parts Department's "First Time Fill Rate" is less than 40%, meaning that they fail to provide that needed part on the first visit.
This starts the "Work-In-Waiting" Process depending on how long it takes to find, order and receive the parts needed to complete the repair. At this point the "finger pointing" is obvious as to why these RO's remain open.
Solution:
In order to increase the Parts Department's "First Time Fill Rate" it requires the utilization of the Dealer Management System, or "DMS", which to me means Demand More from your System. More and more Parts Managers are relying less on their own DMS and more on the Manufacturer for Stock Replenishments.
Most Manufacturers' Vendor Managed Inventories, (VMI) only provide approximately 50%-55% of the manufacturers total inventory "breadth". The only way to get to that Magic Number of 75%-85% First Time Fill Rate is to use the dealers' DMS with ABC Source Ranking by Piece Sales with the proper math.
2.) Parts on Back Order/Not Readily Available
Another reason we have so many Open RO's is no surprise as Back Ordered Parts and Parts that are not readily available for other reasons can definitely add to the "Work-In-Waiting" problem.
Parts Supply Chain Issues, VIN-Specific Parts and some Recall Parts are also on that list of parts that can hold things up in the Shop. All that said, and even though we have more of these parts delays today than we did years ago, we still have to find ways to overcome these parts issues.
When a part is not available, our job has not ended as it's really just beginning. Unfortunately, in many dealerships today, when a part is back ordered, or not readily available, Parts Managers do not go to the extent of pursuing these parts strong enough.
Solution:
We have to have a "sense of urgency" and stop the back order before it happens!...
If you think about it and based on what we know, most Parts Departments' "First Time Fill Rates" are less than 40% where that industry guideline is 75%-85%. If our "First Time Fill Rate" is within industry guidelines, it is more likely that we would have that part on the shelf.
If a part goes on back order on our Stock Order, it's much easier to chase those parts down before it is actually needed for the customer. Once the customers' vehicle is down in the shop and we just now find out the part is on back order, it's already too late.
Just looking at the math, if we achieve a "First Time Fill Rate" of 75%-85% and based on dealer averages in this category, our chances of having to deal with back ordered parts, or other parts that may not be readily available, are cut in half at minimum.
3.) Wrong Parts Ordered
This one has "finger pointing" written all over it with the blame going mostly to the Parts Department, but we all know that the technician is also involved as well. That being said, we have to look at the root causes as to why this happens, especially more often to than "back in the day".
The answer is really quite simple as even though Electronic Catalogues and looking up parts by the VIN number has helped immensely, vehicles today are much more complicated and have many more parts and components than they did years ago.
Also, parts "life spans" of parts has decreased, while overall model usage has increased, requiring more part numbers to look up with more chance of mistakes being made. More parts, less usage is definitely a recipe for more Open RO's.
Solution:
With all the above being said, today's vehicles require the right Technician diagnosing the vehicle in the first place and a Parts Counter Person that has the right experience, which all starts with proper training in both areas.
4.) Improper Diagnosis
It's kind of obvious that our Number Four would follow our Number Three, but I did want to separate them. "Improper Diagnosis" has many more ramifications than just ordering the wrong part and the "finger pointing".
Technician misdiagnosis not only slows the process down and adds to "Work-In-Waiting", but it can also lead to more obsolescence. (see last two ACG "Smart Parts" issues) Ordering the wrong parts up front, and/or additional parts, (just in case we need them!) due to lack of Technician Skill Level happens far too often. But!...who gets the blame as technically, we are "still waiting for parts"!
Solution:
In order to lessen the "Work-In-Waiting" in this category, training is the word that comes to the forefront. We cannot have Technicians "guessing" what they may need in order to repair a vehicle as it's not only adding to the problem, but it could also lead to safety issues.
Parts Counter Staff also need to be properly trained and "motivated" to getting it right the first time and also not "guessing" which part is actually required to repair the vehicle.
5.) Poor Scheduling
In my opinion, Scheduling Service or Collision Repairs is an artform as it requires lots of forward thinking into the unknown in many cases. After all, how do we know how long it will take to repair a vehicle when we haven't even diagnosed the problem yet?
What we do know though is after the vehicle has been diagnosed, we now have an idea of how much time will be needed to complete the repair(s). The trick is how we "fit in" these repairs with other vehicles are still coming in for their initial diagnosis as well as all the vehicles scheduled in for maintenance.
This is where the ball is usually dropped as some Advisors and Technicians "prioritize" their workload based on their own preference, or paychecks and not necessarily based on Overall Shop "Cycle Times" and Overall Shop Productivity.
Overbooking is not uncommon due to not having enough time initially available in the Shop in order to achieve desired productivity levels. In other words, if we have 10 Technicians that work an 8-hour day, we only have 80 clock hours available, no matter what the workload is.
This is where the "juggling" begins, and more repairs are added into the "Work-In-Waiting" equation. Plus, if you add in that we have to wait because we are chasing parts, then the "trickle down" affect is now also in play, pushing vehicles in and out, losing precious time that we can bever get back.
Solution:
Whatever Scheduling System is being utilized, and most are using an Electronic Scheduling System, initial Set Ups in these systems are crucial. If we use the above example of a 10 Technician Shop, we have to first determine how many hours those 10 Technicians can produce in a day.
We may have 10 Technicians, but due to most of the Technicians perhaps having lower Skill Levels, thus, we may only be able to produce 60 hours in a day at 75% Productivity as opposed to 80 hours in a day at 100%.
All Scheduling Systems should be set up and based on our "hours to sell" capabilities with a combination of hours available for diagnosis and hours available for repairs. The dealers that are doing it better always have the proper amount of Technicians with the right mix of Skill Levels.
Also, and perhaps most important is that all Scheduling Systems have to allow for Carry Overs and Customer "Walk-Ins" to their Overall Fill Rates and Shop Capacities.
6.) Poor Communication
This one is a big contributor to "Work-In-Waiting", or too many Open RO's which also usually includes a lot of "finger pointing". Advisors claiming they ordered the part, Parts Department saying the Advisor or Technician never ordered the part, part came in and the Advisor wasn't notified, Parts claiming they gave the Parts Received Slip to the Advisor, but the Advisor says they never got it...the list of excuses goes on and on.
This is exactly why, a Parts Special Order Process needs to be implemented, (see last two month's issues) where the Special Order Process eliminates all these excuses. It's all about "Accountability" with all key players.
Technicians are also included in this area of "Poor Communication" as all three parties, which include the Advisors, Parts Staff and Technicians don't communicate and parts either don't get ordered, wrong part ordered, or someone drops the ball in this three-way miscommunication resulting in extended Open RO times.
There is nothing more embarrassing than scheduling a customer in for Service and the part is not there for whatever reason...Sound Familiar?
Solution:
Whether the wrong part is ordered, the vehicle was misdiagnosed, the part is on back order or not available, the part was received but no one was notified, or whatever the reason for the delay for the extended repair time...we have to have a process that eliminates or minimizes these situations.
First, a Special-Order Parts Process must be implemented with consequences on parts that go past the 30-Day limit of not being installed. Return Fees must be applied to the responsible party that doesn't get these Special Ordered Parts installed.
Most importantly, there has to be a "sense of urgency" and a line of communication that includes a "state of mind" of acquiring parts to complete repairs, proper diagnosis and ultimately lowering the amount of Open RO's within a 30-Day Period or less.
7.) Technician Skill Levels/Stall Utilization
In my opinion, next to parts availability, this category is second in the reason we have so many Open RO's and a high "Work-In-Waiting" problem. Let's consider the number of times that we use the excuse that "we are waiting for parts". Let's look at the number of reasons that we are actually "waiting for parts".
If the vehicle is misdiagnosed because the Technician Skill Level causes the improper diagnosis in the first place and requires parts to be ordered multiple times, then of course we will "always be waiting for parts".
Then, if you add in all the normal time it takes to acquire, chase and find these parts along with the numerous back-order situations we have today, then of course the fault will lie on the Parts Department, regardless of who's fault it is.
In addition, and when we add in how many stalls get tied up waiting for these parts, or if a technician does not have the proper Skill Levels to complete the repairs, the "Work-In-Waiting" climbs even further.
Solution:
Even though Skilled Technicians have always been hard to find, they are out there. But unfortunately, and in my opinion, dealers today are still unwilling to pay what these Skilled A & B Technicians are asking for.
Here's your "News Flash"....A & B Technicians are getting the money and making 6-Figure Incomes! It's our job as Dealers and Service Managers to get our Customer Pay Effective Labor Rates up to where we can afford these valuable Technicians.
Dealers also need to invest in "portable lifts" that will allow us to free up more stalls with lifts as they can be moved out of stalls with lifts if vehicles are waiting for parts, or whatever other reason. There is no need tie up valuable lift space when we have other options.
8.) Service Department & Collision Center Supplements
Here's another area that seems to go "under the radar" with the eventual blame being passed down to the Parts Department as again and after all, we are still technically "waiting for parts!".
Whether repairs that were initially unseen, or if parts were missed, or if misdiagnosis is involved, the "Work-In-Waiting" grows even more. Even though this is an area that happens for obvious reasons, it can still be minimized.
When Supplements do happen, all the other previous areas come into play to multiply the extent of times these RO's remain open. Back Orders, Improper Diagnosis, Ordering the Wrong Parts, Improper Communication and all the other categories come into play.
Solution:
Even though we all know, especially in the Collision Center, we will always and most likely incur Supplements. That being said, and if we know this already, there needs to be a higher "sense of urgency" in these cases.
In other words, we need a "Code Red" Flag and Process on these situations where cost should not be the main concern. Dispatching priority should also be moved up as "Cycle Time" should be the number one issue and goal.
Moving that vehicle out just to bring another one in, and then to bring that same vehicle back in just lowers our overall productivity and profitability. These situations also require management involvement and accountability.
9.) Waiting For Authorization
This category usually involves the Manufacturer, or perhaps an Insurance Company to authorize the repair(s) or Supplemental Repairs. This may seem like this process really shouldn't add to our "Work-In-Waiting", but in today's world, it really does.
It seems like no one wants to take responsibility in making decisions that can come back and bite them, or they just "pass the buck" on to someone else in order to avoid the situation and blame altogether.
This is also another excuse that we hear as to why we have so many Open RO's as the answer to this one seems to always be..."We are waiting for the Rep, or Insurance Adjuster to authorize the repairs!"...
And then if that one doesn't work for the dealer, we can then say..."We just got approval, but now we are"...(you guessed it!) "Waiting For Parts!" No wonder it's the Number One answer, or excuse to our main question!
Solution:
The "Solution" to this one is simple and direct....
"Get Your Dealer Involved!"
The dealer is the one paying the bills and if there is one person out there that no one on the other side wants to deal with is definitely the dealer. As managers, we can't feel like we aren't doing our job because we have to get the dealer involved.
If you are the dealer, you can't feel your manager isn't getting it done as this is just the way it is. That is of course that the manager has gone through all the hoops and done all they can to that point where the dealer should get involved.
10.) Sublet Repairs
This last area that can be a reason for why we have too many Open RO's can involves other "entities" or companies that we "sublet" work to. Now have to deal with not only our schedules, but theirs as well.
This often happens if the dealer does not have a Collision Center, or any repairs for that matter where we have to ship the vehicle out to someone else that may be part of the overall repair, or the whole repair.
Either way, the customer is still holding us accountable and responsible. The RO was still open in our dealership, and our responsibility, and added to our own "Work-In-Waiting". I also put this in the category of putting a customer into a Rental or Loaner Vehicle.
It seems that often times, an Advisor puts a customer into a Rental or Loaner Vehicle. They may feel like the job is done as the customer is now out of their face, but much like in the Parts Department when a part goes on Back Order, our job is not over as it's now just beginning.
Solution:
In my opinion, and this goes for all these in our Top 10 Reasons for why we have so many Open RO's for that matter, there needs to be more accountability and consequences for how many Open RO's we have over a certain period of time.
In many cases involving Sublet Repairs, many Advisors and Managers just look the other way as in their minds, it's out of their hands as we are just waiting for someone else to do what is ultimately our responsibility.
Here's the best way to take care of those Sublet Accounts that do not hold up their end of the bargain...
"Don't Pay the Bill!"...if we are doing business with other companies that affect our reputation and are a mirror image to our customers expectation, then hold them accountable!
The bottom line is this...the Parts Department may just be the Number One "Excuse" as to why we may have too many Open RO's...BUT!...it may not be the Number One "Reason" why we have too many Open RO's!
The question we all have to ask ourselves is this....
"Why Are Some Dealers Out There Controlling Open RO's Better Than We Are?...After All...It Rains Everywhere!"
If you want to learn more about ACG Smart Parts "Eight Habits of Highly Successful Parts Managers", visit our website @ www.smartpartstraining.com, or...just pick up the phone and call me at :
(786) 521 - 1720...After all, not knowing is not worth not "fixing" it...
