64

SEAT
No.1 MANAGEMENT BOOKLETS
Management and Profitability of the Service Centre
1
 CONTENTS

1. The service centre challenge 4

2. The local vehicle service market 6

3. Sales targets 12

4. Principles of economic management 20

5. Management indicators 30

6. Budget 40

7. Results and deviations 46

8. Improving results 48

2
 1. THE SERVICE CENTRE CHALLENGE

Until a few years ago, product and price were the factors which marked
the difference between competing companies within a given sector.
However, with products now standardised at the highest technological
level, and prices having been cut by manufacturers and distributors,
the service factor now represents the most important aspect in customers’
perception of the quality of the product they purchase.

In the automotive sector, vehicles offer attractive designs and advanced

technology, and the prices of models within the same segment vary by
only a few hundred euros. However, customer experience in terms of the
quality of after-sales service differs noticeably from one make to another,
and in particular from one workshop to another.

Focusing the Authorised Service Centre strategy towards offering excellent

vehicle service with tangible features represents a differentiating
commercial factor for the workshop, without the need to take actions
in terms of pricing, which will be a decisive factor in purchasing decisions
if one is not able to convince customers of the advantages of one service
centre over another.

A high proportion of owners of SEAT vehicles, in particular after the

warranty period has expired, choose to take their vehicles to workshops
outside the SEAT Service Network for servicing and for certain repairs.
The SEAT Authorised Service Network is therefore devoting major efforts
towards maintaining the loyalty of its customers.

4 5
 2. THE LOCAL VEHICLE SERVICE MARKET

MARKET SEGMENTATION

Actions must be taken to capture customers and increase their loyalty,

in order to achieve a greater level of penetration in the marketplace. As
customer expectations vary depending on the type of job they are having
done on the vehicle they own, we must segment the market as follows:
- Type of job
- Age of vehicle

The jobs to be performed may be grouped as follows:

- Inspection Services
- Maintenance
- Mechanical and electrical repairs
- Minor repairs to the paint and chassis
- Bodywork and paint repairs

Meanwhile, we must also address the body of cars in circulation with

reference to the age of the vehicle, focusing on the three segments indicated:
- Segment 1. Vehicles 4 years
- Segment 2. Vehicles 4 years and 7 years
- Segment 3. Vehicles 7 years

In order to adapt our actions to customer expectations, our first priority

is to segment the body of vehicles addressed by the Authorised Service
Centre in terms of their age, and to focus on Vehicle Service depending
on the type of job.
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 2. THE LOCAL VEHICLE SERVICE MARKET

BODY OF CARS IN CIRCULATION POTENTIAL SALES

The body of cars in circulation is the number of SEAT vehicles within the The potential sales figure is the result of multiplying the number of vehicles
catchment area of the Authorised Service Centre. within the overall body of serviceable vehicles by the vehicle consumption/year.

VEHICLE CONSUMPTION/YEAR Potential Direct Labour (DL) Sales

The vehicle consumption/year is the average number of hours or value of Regular Service + Maintenance + Mechanical / Electrical
spare parts consumed in one year by one SEAT vehicle of this overall group.
SEAT has estimated an average annual value of 6.6 hours per vehicle/year Potential sales of direct labour hours = Body x 4 hours
(4 hours for Inspection Services, Maintenance and Mechanical/Electrical,
and 2.6 hours for Bodywork and Paint).
Bodywork and Paint
By segment, the 6.6 vehicle hours/year is divided up as in the table below:
Potential sales of direct labour hours = Body x 2.6 hours
Vehicle hours/year by segment Seg. 1/Up to 4 years Seg. 2/From 4 to 7 years Seg. 3/More than 7 years Average figure
Inspection Services + Maintenance
+ Mechanical/Electrical 3.7 Hours 4.2 Hours 3.9 Hours 4.0 Hours
Potential Spare Parts Sales
Bodywork and Paint 4.1 Hours 1.5 Hours 1.3 Hours 2.6 Hours
Total 7.8 Hours 5.7 Hours 5.2 Hours 6.6 Hours Potential Spare Parts sales = Body x € 350

In terms of consumption of spare parts, the estimated SEAT figure is an RRP

of around € 350 per vehicle/year, equivalent in terms of €/hour to:

€ 350/6.6 hours = € 53/hour.

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 2. THE LOCAL VEHICLE SERVICE MARKET

ESTIMATE OF POTENTIAL SALES Spare Parts

Overall, the potential for spare parts would be:

Example
6,000 vehicles x € 350 = € 2,100,000
Express Service + Mechanical/Electrical

Age of cars in circulation (no. years) 4 4 7 7 Total or, in terms of the €/hour ratio:
SEAT units in the area 2,850 1,600 1,550 6,000
Vehicle hours/year 3.7 4.2 3.9 (1)

Potential sales of direct labour hours 10,545 6,720 6,045 23,310 (23,310 hours + 16,100 hours) x € 53 = € 2,088,730

(1)
The average total value would be estimated at 4 hours. In this case, given the weight of the body of vehicles
in each segment, this gives an average value of: 23,310 hours / 6,000 vehicles = 3.89 hours.

Bodywork and Paint

Age of cars in circulation (no. years) 4 4 7 7 Total

SEAT units in the area 2,850 1,600 1,550 6,000
Vehicle hours/year 4.1 1.5 1.3 (2)

Potential sales of direct labour hours 11,685 2,400 2,015 16,100

(2)
The average total value would be estimated at 2.6 hours. In this case, given the weight of the body of vehicles
in each segment, this gives an average value of: 16,100 hours/6,000 vehicles = 2.68 hours/vehicle.

10 11
 3. SALES TARGETS

The sales targets of an Authorised Service Centre will always be below

its potential, since however great the loyalty of its customers, some
work will always be performed on some of the body of SEAT vehicles
within its catchment area at other workshops (independent workshops,
chains and major retailers, etc).

PENETRATION RATE

The term “penetration rate” is applied to the ratio between sales made
and potential sales, measured as a percentage and always below 100%,
for the reasons explained above.

Service Penetration Rate (S.P.R.)

Sales of direct labour hours

x 100
Potential sales of direct labour hours

Parts Penetration Rate (P.P.R.)

Sales of spare parts at RRP

x 100
Potential sales of spare parts at RRP

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 3. SALES TARGETS

SALES TARGET FOR DIRECT LABOUR HOURS SPARE PARTS SALES TARGET

The sales target for direct labour hours is estimated on the basis of the
potential sales of direct labour hours and the SPR target.
Sales target for direct labour hours = Potential sales of direct labour hours x target SPR
Depending on the potential sales of Spare Parts, an overall estimation is
generally made as above in order to calculate the target. This could take into
overall consideration the potential sales of Spare Parts and the target P.P.R.
Spare Parts sales target = Potential sales of Spare Parts x target P.P.R.

Example
Example
Express Service + Mechanical/Electrical
Potential sales of direct labour hours: 23,310 hours Spare Parts sales potential: € 2,100,000
Target S.P.R. 50 % Target P.P.R.: 70 %
Sales target for direct labour hours: Spare Parts sales target: € 2,100,000 x 70% Sp.P.R = € 1,470,000
23,310 hours x 50% S.P.R.= 11,655 hours
The Spare Parts sales targets may also be estimated on the basis of the
Bodywork and Paint consumption figures for the various Authorised Service Centre Workshops
Potential sales of direct labour hours: 16,100 hours using the €/hour ratio obtained in each case, with the planned corrections
Target S.P.R. 60% for the prices of parts, and taking the target hours for each Workshop as
Sales target for direct labour hours: a reference.
16,100 hours x 60% S.P.R.= 9,660 hours
As Spare Parts, in addition to sales performed through the various
Authorised Service Centre Workshops (Self-consumption) are also sold
externally (External Sales), we need to add to the Self-consumption sales
target the External Sales total (spare parts store, independent workshops,
other Authorised SEAT Service Centres, etc).
14 15
 3. SALES TARGETS

The Spare Parts department of an Authorised Service Centre should not

Example settle for simply estimating the target for sales channels as in the above
examples, but should also break down the sales target per channel by
SELF-CONSUMPTION SALES product, at least as follows:

Express Service - Parts with high competition - Accessories

Sales target for direct labour hours: 7,000 hours - Oils and other fluids - Other spare parts
Ratio total spare parts (€)/Workshop hour: € 50 - Tyres - Bodywork and Paint
Spare Parts sales target: 7,000 hours x € 50 = € 350,000
Mechanical/Electrical
Sales target for direct labour hours: 4,655 hours Example (In thousands of Euros)
Ratio total spare parts (€)/Workshop hour: € 55
Spare Parts sales target: 4,655 hours x € 55 = € 256,025
Bodywork and Paint OBJECTIVE Parts with high Oils and Other Bodywork
Sales target for direct labour hours: 9,660 hours CHANNEL/PRODUCT competition other fluids Tyres Accessories parts and Paint Total
Ratio total spare parts (€)/Workshop hour: € 55 Express Service 142 140 60 8 - - 350
Spare Parts sales target: 9,660 hours x € 55 = € 531,300 Mechanical / Electrical 46 20 - 90 100 - 256
Total sales target for Self-consumption spare parts: € 1,137,325 Bodywork and Paint - - - - - 531 531
Total Self-consumption 188 160 60 98 100 531 1,137
EXTERNAL SALES
Spare parts store 2 5 - 7 5 - 19
Total sales target for spare parts (100%): € 1,470,000 Independent workshops 5 - - - 20 100 125
Sales target for self-consumption spare parts (77%): € 1,137,325 Other SEAT Services 50 25 4 10 25 75 189
Sales target for External Sales of spare parts (23%): € 332,675 Total External Sales 57 30 4 17 50 175 333
Total Spare Parts target 245 190 64 115 150 706 1,470

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 3. SALES TARGETS

SEASONALITY

Once the annual sales targets for direct labour hours and Spare Parts have
been estimated, the Authorised Service Centre must produce monthly
figures for these targets based on the particular seasonal fluctuations within
its catchment area.

An analysis of past figures can be taken as a reference point, in addition to

the expectations for the economic cycle within the local market.

Producing monthly target figures allows us to monitor sales in accordance

with the targets set, and correct any deviations observed in a timely manner.

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 4. PRINCIPLES OF ECONOMIC MANAGEMENT

The main activity of an Authorised Service Centre involves selling hours

of labour and spare parts as a result of inspection and maintenance
services, in addition to diagnosing and repairing any incidents affecting
SEAT vehicles.

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 4. PRINCIPLES OF ECONOMIC MANAGEMENT

The basic economic concepts involved in managing the Authorised Service These basic economic concepts and results are described in more detail in the table below:
Centre with regard to the various activities could be summarised as follows:

WORKSHOP ACTIVITY ECONOMIC CONCEPT SPARE PARTS ACTIVITY CONCEPT WORKSHOP SPARE PARTS

Total sales of labour Total sales Resulting from the

TURNOVER GROSS Resulting from the sum
applied to services. of spare parts. multiplication of the
TURNOVER of all the spare parts
hours of direct labour
GT units sold at RRP.
sold by the rate/hour.
Acquisition price
Cost of direct labour. COST of parts sold.
Amounted to be Amount to be deducted
DISCOUNT deducted from the from the RRP of the
Disc rate/hour. parts sold.
Indirect staff costs. Spare Parts staff total.
Organisation and EXPENSE Organisation and
management of the management of
Workshop. Spare Parts.
NET Net revenue from sales Net revenue from sales
TURNOVER of direct labour hours. of spare parts.
Operating stock. NT GT - Disc = NT GT - Disc = NT
Provision of spaces,
facilities, equipment INVESTMENT Provision of warehouse
and tools. spaces, shelving and
equipment.

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 4. PRINCIPLES OF ECONOMIC MANAGEMENT
CONCEPT WORKSHOP
Total for direct labour in
accordance with the time
applied to work on vehicles
(productive hours).
For the purpose of calculating
DIRECT the cost/hour, the standard
COST cost/direct labour hour concept
DC is used, estimated using the
expression:
Annual direct labour cost
No. of employees x annual
paid hours
INDIRECT Direct labour total for the
COST difference between paid
IC hours and productive hours.
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SPARE PARTS CONCEPT WORKSHOP SPARE PARTS
Difference between the net Difference between net
GROSS MARGIN revenue and the direct and revenue and the cost
GM indirect cost of direct labour. of the parts sold.
NT - (DC + IC) = GM NT - DC = GM
Acquisition price of the
parts sold.
This price is estimated for each
spare parts reference as the
average price of the units in The main items are: The main items are:
stock for each reference.
- Indirect staff salaries - Spare Parts staff salaries
and social costs and social costs
MANAGEMENT
DIRECT EXPENSES - Training - Training
DE - Advertising - Advertising
- Maintenance of courtesy - Maintenance of delivery
vehicles vehicle and equipment
- Maintenance of equipment - Stock adjustments
This concept is not applicable and tools - Transport of parts
to Spare Parts and has - Other costs - Other expenses
no meaning.
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 4. PRINCIPLES OF ECONOMIC MANAGEMENT

CONCEPT WORKSHOP SPARE PARTS Activity development and resource use optimization aims to achieve financial
profits.
Difference between the Difference between From this perspective, a table of the financial results account for the Authorised
NET MARGIN gross margin and the the gross margin and Service Centre would look like this:
NM direct expenses the direct expenses
GM - DE = NM GM - DE = NM

AUTHORISED SERVICE CENTRE

NET MARGIN Total of the net margins from Workshop WORKSHOP SPARE PARTS
AFTER-SALES and Spare Parts business
NMA NWT + NMR = NMA Gross turnover GTW GTP
– Discount DiscW DiscP

Common to the Workshop and Spare Parts, and other = Net turnover NTW NTP
areas of activity of the Authorised Service Centre – Direct cost of production DCW DCP
INDIRECT attributable to after-sales. – Indirect cost (non-production) ICW
AND GENERAL
EXPENSES For example: Management and other staff, rental, = Gross margin GMW GMP
IE auxiliary and professional services, supplies, insurance, – Direct expenses DEW DEP
financial expenses, amortisations and other expenses
and sundry revenues. = Net margin NMW NMP
= Net after-sales margin NMA
RESULT FOR AFTER-SALES Result of deducting the indirect and general expenses – Indirect expenses IE
BUSINESS from the net margin for after-sales
RAB NMA - IE = RAB = Result for after-sales business RAB

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 4. PRINCIPLES OF ECONOMIC MANAGEMENT

A similar table could also be applied individually to the various areas or PROFITABILITY AS A BUSINESS OBJECTIVE
sections of the Workshop (Express Service, Mechanical/Electrical and
Bodywork and Paint), although this sectional analysis would only include Profitability, as expressed through the rate of return, is the basic objective
the items of turnover, cost and gross margin. of any business, in order to maintain itself and plan for the future.

Often direct management expenses are shared between different areas of The rate of return is defined as the relationship between the profit obtained
the Workshop, making it difficult to allocate these separately. For this and the investment made, normally expressed as a %.
reason, a standard practice is to calculate the gross margin for each area
or section of the Workshop and then subtract from the total the bundle of
direct management expenses in order to give an overall net margin for the Profit
Workshop’s business. Rate of return = x 100
Investment

The profit made by the Authorised Service Centre is the sum of the net
margins of the Workshop and Spare Parts (net after-sales profit), less the
indirect and general expenses of the Authorised Service Centre.

Investment is the fixed capital dedicated to the acquisition of buildings,

facilities, machinery, equipment and operating stock.

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 5. MANAGEMENT INDICATORS

WORKSHOP

In order to analyse the activity of direct Labour employees, SEAT has

established the following activity indicators.

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 5. MANAGEMENT INDICATORS

This can also be calculated as:

Attendance hours
Attendance rate (At) = x 100 Overall productivity (OP) = At x Ut x Eff
Paid hours

These ratios can be obtained on an individual basis for each employee,

for each section of the Workshop or as the Workshop total.

Actual productive hours

Labour utilisation rate (Ut) = x 100
Attendance hours

Hours sold
Labour efficiency rate (Eff) = x 100
Actual productive hours

Hours sold
Overall annual productivity (OP)= x 100
Paid hours

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 5. MANAGEMENT INDICATORS

The relationship between the different types of direct labour hours and the We should also highlight, among others, the following indicators used
above activity indicators could be illustrated as follows: to analyse Workshop management:

Direct labour hours sold/direct Direct labour hours sold

=
DIRECT LABOUR EMPLOYEES x HOURS/YEAR TOTAL PAID HOURS labour employee No. of direct labour employees

This can be obtained for a specific period, by Workshop section or as the

At Absenteeism Workshop total.

HOURS OF ATTENDANCE HOURS OF ABSENCE Net direct labour turnover

Turnover/direct labour employee =
No. of direct labour employees

Ut This can be obtained for a specific period, by Workshop section or as the

Workshop total.

PRODUCTIVE HOURS NON-PRODUCTIVE HOURS

No. of Workshop steps
Steps/direct labour employee =
No. of direct labour employees
Eff
This can be obtained for a specific period for the Workshop total. It could
also be obtained by section, although the Workshop steps considered as
vehicles entering for one or more jobs may or may not coincide with the
HOURS SOLD number of Repair Orders open for a single vehicle being worked on.

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 5. MANAGEMENT INDICATORS

The two indicators above may be applied to Service Advisers instead of direct Total stock last 12 months / 12
labour employees.

Warehouse rotation
Net direct labour turnover
Turnover/step =
No. of Workshop steps Warehouse rotation is defined as the quotient obtained by dividing the cost
of sales by the average stock, both for the same period.
This may likewise be obtained for a specific period, for the Workshop total
or for Workshop sections, bearing in mind the above points. Sales Cost / Mean stock

SPARE PARTS Depreciation and obsolescence

In order to meet service and profitability targets, good stock management
is required, ensuring that no sales are lost because the desired parts are not
held in the warehouse, while also avoiding money being tied up in parts
which are move slowly or not at all, above all if these have a high value.
Mean stock
The mean stock is generally estimated on an annual basis in order to
calculate rotation, by adding up the stock in place at the end of each of the
12 preceding months and dividing this figure by 12. This allows us to correct
any deviations caused by variations in the stock held in the warehouse at
particular periods.
The stock value must be adjusted periodically to its true value, taking into
consideration the following criteria:
- Market value depreciation
- Depreciation through deterioration or breakage
- Technological obsolescence
- Obsolescence through lack of movement
Market value depreciation requires proof that the sales value is lower
than the purchase value, by means of a price list.

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 5. MANAGEMENT INDICATORS

Deterioration or breakage of a part represents a reduction in its value Gross turnover, Parts (Self-consumption)
equivalent to its total price or, if sold, the difference between the acquisition €/hour direct labour sold =
Direct labour hours sold
price and sale price, in all cases where the latter is lower than the former.

Technological obsolescence is caused by any regulation, Brand circular This can be obtained for a specific period, by Workshop section or as the
or specification making the reference void. Any of these facts represents Workshop total, Self-consumption only at RRP.
immediate depreciation by the total value of the reference.
Gross turnover, Parts
If a reference shows no movement, it may be depreciated progressively until it Turnover/Parts employee =
No. of Spare Parts staff
reaches a value of 0 euros. The procedure to be followed comprises allocating
the reference annual depreciation percentages based on the criteria
established by the Spare Parts division. One such criterion could be: This is obtained in order to establish the contribution of the Parts workforce
to RRP parts sales (Self-consumption + External Sales).
- Parts showing no movement for 1 year: 50% depreciation
- Parts showing no movement for 2 years: 100% depreciation Net Parts margin (cumulative yearly figure)
Parts Rate of Return = x 100
Average stock
After two years without any movement, the reference would have a value
of 0 euros, and would be deleted from the warehouse stock and scrapped.
This allows us to assess the rate of return on Parts stock.
In addition to the indicators specified for analysing Spare Parts management,
the following may also be highlighted: Gross turnover, Parts (Self-consumption)
Turnover/Workshop step =
No. of Workshop steps

This may likewise be obtained for a specific period, for the Workshop total or
for Workshop sections, Self-consumption only at RRP.

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 6. BUDGET

A budget is an economic plan based on sales targets, establishing

hypotheses for pricing, discounts, costs, expenses and investment
in order to obtain certain results.

In section 3. Sales Targets, criteria and examples were developed

to estimate:
- Direct labour sales targets by Workshop
- Spare Parts sales targets by channel
- Spare Parts sales targets by product

40 41
 6. BUDGET
GROSS TURNOVER (GT)
In the case of Parts, sales targets would correspond to gross turnover,
while in the case of the Workshop, in order to obtain gross turnover we
must multiply the sales target for direct labour hours by the rate/hour.
GT WORKSHOP = Direct labour hours sales target x Rate/hour
DISCOUNTS
The discount policy planned by the Authorised Service Centre must take into
account both direct labour for the various Workshop sections and spare
parts by sales channel and by product in order to meet the planned sales
targets, taking into consideration not only the end customer but also warranty
work, agreements with insurance companies, renting companies, etc.
In a simplified manner, hours sold may be grouped into:
- Customers
- Warranties
- Internal
42
In accordance with the discount applied to Customers, Warranties (by agreement)
and Internal Sales (at cost), and bearing in mind the weighting of hours sold by
each Workshop section, the corresponding discounts may be estimated.
NET TURNOVER
The net turnover budget corresponds to the gross turnover target less the
discounts planned by the Authorised Service Centre, expressed by Workshop
for direct labour, and by channel and by product for Spare Parts.
COSTS
The direct labour cost budget requires us to estimate the number of employees
based on the direct Labour sales targets, the Workshop management indicators
and the employees’ pay. In practice, we would estimate the standard
cost/direct labour hour.
The Parts cost budget is estimated on the basis of the cost of spare parts,
accessories, etc. in accordance with the purchasing agreements established
with the supplier. For sales by channel we must estimate a mix of products
for each channel, using this to allow us to estimate the sales cost in each case.
43
 6. BUDGET
GROSS MARGIN
The concept of the gross margin was examined in section 4. Principles
of economic management. The Workshop and Parts gross margins
budget is calculated by subtracting sales costs from net turnover figures.
DIRECT EXPENSES
The concept and breakdown of direct expenses were examined in section
4. Principles of economic management. The Workshop and Parts expenses
budget is the sum total of the various expenses attributable to each of
the two activities.
NET MARGIN
The concept of the gross margin was examined in section 4. Principles
of economic management. The Workshop and Parts net margins budget
is calculated by subtracting the expenses of each of these activities from
their gross margins.
44
INDIRECT AND GENERAL EXPENSES
The indirect and general expenses budget is calculated in accordance with
those expenses which are common to the Workshop and Parts department,
together with other general expenses for areas of the Authorised Service
Centre’s business attributable to after-sales, such as annual amortisation
figures, financial expenses, etc.
RESULT FOR AFTER-SALES BUSINESS
As we saw in section 4. Principles of economic management, the result for
after-sales business represents the difference between the net after-sales
margin and the indirect and general expenses of the Authorised Service
Centre.
RATE OF RETURN
In accordance with the concept of rate of return as defined in section
4. Principles of economic management, the profitability budget is
represented by the percentage obtained by dividing the budgeted result
for after-sales business by the budgeted investment.
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 7. RESULTS AND DEVIATIONS

Results for sales and turnover, costs, expenses and margins obtained,
in addition to the main management indicators of the Authorised
Service Centre, must be monitored on at least a monthly basis, and
contain information expressed in a format identical to that of the
budget, in order that a comparison may be made of the results
obtained with those budgeted for, an analysis performed of any
deviations which have occurred, and corrective actions determined
with the aim of achieving the targets set.

46 47
 8. IMPROVING RESULTS

By way of example, you will find below a series of tables suggesting

guidelines intended to improve results, indicating possible causes
and corrective actions.

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 8. IMPROVING RESULTS
RESULT
Sales of direct labour hours
and spare parts have fallen
in comparison with the same
period in previous years.
Sales of direct labour hours
and spare parts for Inspection
and Maintenance Services
have fallen in comparison
with the same period in
previous years.
50
POSSIBLE CAUSES
New competitors in the area.
Services and prices more
competitive than those of the
Authorised Service Centre.
New Rapid Service competitors
in the area.
Services and prices more
competitive than those of the
Authorised Service Centre.
Excessive times for reception
and work performed.
CORRECTIVE ACTIONS
Analyse competitors’ offers.
Promote campaigns.
Undertake personalised
customer contact actions.
Analyse the Rapid Service
offers of the competition.
Boost Express Service.
Locate Express Service
in commercial areas.
Promote campaigns.
Undertake customer contact
and follow-up actions.
Establish agreements with
renting companies and fleet
operators.
RESULT
Sales of direct labour hours
and spare parts for repairs
in the Mechanical and
Electrical department have
fallen in comparison with the
same period in previous years.
POSSIBLE CAUSES
Positive impact of new
technology on SEAT vehicles.
Deficiencies in quality control
of repairs.
Uncompetitive labour and
spare parts prices.
CORRECTIVE ACTIONS
Increase quality control
of repairs.
Analyse the pricing and
discount policy for repairs.
Promote additional services:
- Home collection and
delivery of vehicles
- Replacement vehicles
- Pre-MOT
- Diagnostic service
- Financing plans
- Etc.
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 8. IMPROVING RESULTS

RESULT POSSIBLE CAUSES CORRECTIVE ACTIONS

Training plan adapted

RESULT POSSIBLE CAUSES
Excessive times for reception
and delivery.
Sales of direct labour hours
and spare parts for Bodywork
Deficiencies in quality control
and Paint repairs have fallen
of repairs.
in comparison with the same
period in previous years.
Uncompetitive labour and
spare parts prices.
to each speciality.
Lack of technical training.
CORRECTIVE ACTIONS Payment and incentive system
based on Eff.
Lack of stimulation or
motivation in the workplace.
Ensure all employees have
Promote Rapid Service access
for bodywork and paint Difficult access to technical
to technical documentation.
(Express Bodywork). documentation.
The Labour Efficiency Rate (Eff) Review and renew supplies
Increase quality control Inappropriate equipment
is lower than the target. of equipment and tools.
of repairs. and tools.
Plan work on the basis of
Establish agreements with Poor organisation and
resources and demand.
insurance companies. planning of work.
Appointment.
Offer financing plans. Loss of time in transferring
Rational distribution of spaces.
vehicles or supplying spare
parts.
Organised supplies of parts.

Self-supply in Express Service.

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 8. IMPROVING RESULTS

RESULT POSSIBLE CAUSES CORRECTIVE ACTIONS

Demand has dropped off

RESULT POSSIBLE CAUSES
The Eff incentives motivate
employees.
The Labour Efficiency Rate (Eff)
is higher than the target.
Favourable conditions are
in place for this.
CORRECTIVE ACTIONS
Review the incentive if any
deficiencies are noted in the
quality of work.
Review the target for
subsequent months and years.
The Labour Utilisation Rate (Ut)
is lower than the target.
in the Workshop.
Analyse offers of the
New competitors. competition and decide
More competitive services on positioning.
and prices. Promote campaigns.
Economic cycle. Personalised offers.
Changes in the structure Analyse each workshop and
of purchasing behaviour its management in order to
and habits. optimise results.
Impact of new technology Review facilities and adapt
on vehicles.
the necessary resources.
Inconvenient facilities. Analyse attitudes of staff
Poor attitude of staff. towards customers and
modify behaviour.
Lack of quality in work
carried out. Ensure the quality control
procedure in work carried out.
Poor organisation and
planning of work. Uncover and properly deal
with customer complaints.
Too many hours spent
on other work.

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 8. IMPROVING RESULTS
RESULT POSSIBLE CAUSES
Lack of staff motivation.
Poor working atmosphere.
Poor working conditions.
The Attendance Rate (At) Poor physical and emotional
is below the target. health.
Lack of interest and initiative.
Information does not flow
properly.
56
CORRECTIVE ACTIONS
Review staff incentives
and motivation.
Establish causes for personal
relationships in the workplace
and correct deficiencies.
Review and adapt health
and safety at work factors.
Plan for absences
and substitutions. Staff leaving
and joining.
Incentivise ideas
and suggestions.
Involve staff in the analysis
of results.
RESULT
Spare Parts Warehouse
rotation figure lower than 4.
Spare Parts Warehouse
rotation figure higher than 6.
POSSIBLE CAUSES
Too many slow-moving
references.
High risk of obsolescence.
Stock may be too low to
guarantee a good level
of service.
Check Non-Conformity rates
caused by lack of spare parts
or accessories.
CORRECTIVE ACTIONS
Boost sales through
Workshop campaigns.
Analyse slow-moving and
high-cost references.
Promote low-cost sales
actions for slow-moving
references.
Depreciate parts showing
no movement.
Delete and scrap obsolete
parts.
Maintain a register of lost
sales and lack of supply.
Analyse urgent orders and
consider the possibility of
dealing with them as
normal orders.
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 8. IMPROVING RESULTS
RESULT
ABC analysis
- The percentage of A
references is below 20%.
- The percentage of A + B
references is below 60%.
Non-moving references
represent more than 10%
of the total.
Downward trend in the ratio:
Spare Parts Euros/direct
labour hours
58
POSSIBLE CAUSES
Excess stock of B and C
references.
Excess stock of C references.
No depreciation plan.
Overly aggressive spare
parts discount policy in
the Workshop.
The Workshop is repairing
parts or units instead of
replacing them.
CORRECTIVE ACTIONS
Analyse C references and find
a means of outlet at highly
competitive prices.
Analyse slower-moving B
references and perform
promotional campaigns in
cooperation with the Workshop.
Depreciate.
Liquidate.
Scrap.
Reduce discounts provided that
this does not adversely affect
Workshop labour’s sales.
Incentivise replacement rather
than repair of parts.
RESULT
Sales of spare parts with
high competition and
accessories are low.
Sales of spare parts and
accessories through the
Workshop represent less than
70% of the total sales of spare
parts and accessories.
POSSIBLE CAUSES
Uncompetitive prices.
Most customers only go to
the Workshop for major repairs
and warranty repairs.
Poor management in selling
of Workshop hours, or high
level of management of
external sales of spare parts
and accessories.
CORRECTIVE ACTIONS
Boost Express Service.
Offer competitive fixed
packages.
Customer loyalty and
follow-up campaigns.
Pricing and discount policy
based on loyalty.
Maintenance plan included
in new vehicle sales.
Agreements with renting
companies and fleet operators.
Workshop Campaigns
Diversify services offered
by Workshop sections or
specialities.
Offer fixed packages
(labour + parts).
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 8. IMPROVING RESULTS
RESULT POSSIBLE CAUSES
Arrivals at the Workshop have
dropped off.
Discounts are high.
The Labour Utilisation Rate
(Ut) is low.
External sales of spare parts
Turnover is lower than have dropped off.
forecast in the Workshop
and Spare Parts. Most customers go to the
Workshop for warranty jobs.
Prices agreed with insurance
and renting companies
are low.
The customer hourly rate
is low.
60
CORRECTIVE ACTIONS RESULT POSSIBLE CAUSES CORRECTIVE ACTIONS
Turnover is low.
Low Labour Efficiency Rate (Re).
See on previous pages
Gross margins are low the correlation with the
Low Labour Utilisation Rate (Ut).
on labour sales. corrective actions proposed
for each case.
Low Attendance Rate (At).
See on previous pages
the correlation with the High labour costs.
corrective actions proposed
for each case.
Turnover is low. See on previous pages
Gross margins are low on the correlation with the
spare parts and accessories. The costs of spare parts corrective actions proposed
are high. for each case.
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 8. IMPROVING RESULTS

RESULT POSSIBLE CAUSES CORRECTIVE ACTIONS RESULT POSSIBLE CAUSES CORRECTIVE ACTIONS

Gross margins are low.

Gross margins are low.
High Workshop expenses:
High Spare Parts expenses:
- Indirect staff.
- Spare Parts staff.
- Maintenance.
See on previous pages See on previous pages
- Delivery vehicles.
Net margins are low - Campaigns. the correlation with the Net margins are low on spare the correlation with the
on labour sales. corrective actions proposed parts and accessories. corrective actions proposed
- Inventory adjustments
- Service vehicles. for each case. for each case.
and depreciations.
- Repeat or warranty work
- Campaigns.
in the Workshop.
- Other expenses.
- Workshop consumables.

- Other costs.

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