Is your Hold for Parts number above 12%? Brace yourself. That number is costing your dealership.
Date: WED MAY 02, 2018 Written By: Bud Karakey
In a typical month, BEI Services monitors over 800,000 service calls, performed by 14,000+ technicians. One statistic we watch closely is the percentage of calls a service team cannot complete because they don’t have the right part. That’s right, the dreaded Hold For Parts (HP) call status. What strikes us about HP is that almost 30% of dealers have their HP number below 12%. These dealers get an “A” on their report card when it comes to HP. You can never eliminate your HP because it would be impossible to have the exact inventory, all of the time. It’s a balancing act. But getting the right balance like our “A dealers,” can save you between $40,000 and $80,000 for every ten technicians you employ. Have you been asked to cut expenses lately? Read on.
If you are not in that group of A dealers, then it’s easy to quantify just how much your inventory issue is costing in terms of extra service calls per month.
The median dealer in our database has an HP rate of 21%. The difference, however, is not 7%, it’s 50% because the median dealer has to register a call as HP, 50% more often than an A dealer! How can we assign a cost to the difference in HP?
1. Both dealers have a fully burdened hourly service rate of $60/hour
2. Both dealers average 80 calls/month per service technician
The A dealer will HP 9.6 calls, while the median dealer will HP 16.8 calls per month. So, if we multiply those extra 7.2 calls x $60 per technician that equals $432 per tech. If you have 10 technicians, then that’s $4320 per month or $51,840 annually.
We consider that 21% HP rate the threshold for a failing grade: F. One-quarter of the dealers we collect statistics for have rates that are double the A grade dealer—a whopping 27% HP! That level of performance should be considered unacceptable. At that rate, dealers are spending (at minimum) $80,620 per year, for every 10 technicians. Interestingly, that is also about the annual cost of 1.5 service technicians.
It’s Easy to Reduce Your HP Rate
The two biggest factors that determine your HP rate are in your control, car stock and proper territory management. The quick reaction when owners and service managers find out that their HP rate is high is, “well that wouldn’t work for us, our territory is unique, and we have such a diverse MIF…”
But, it is possible, because the top 30% of dealers do it every month. By leveraging the BEI WorldStats™ database, we can help you build manageable territories by predicting the amount of service the machines in the territory will require. Once you’ve created an acceptable territory, BEI will generate a list of required car stock for each technician. Managing the inventory and territory using this model, will reduce your HP rate and move your dealership toward an A grade.
Let’s face it; keeping your business profitable is getting more and more difficult. Increasing your profits by managing your service team’s territory and inventory better, can have a huge impact on your bottom line. The best news is that it’s not an extra cost; it’s included in your BEI subscription.
What’s your HP number? Contact BEI Services today to find out.