SHOP STATS: All Tune and Lube Location: Olathe, Kan. Operator: Stephen Good Staff Size: 9 Shop Size: 10 bays; 8,000 square feet
Steve Good had a lot going for his shop when he acquired it 16 years ago. It was a solid-running business that, importantly, had a good manager in place who knew the ropes.
Coming from a background as a project manager in the IT world, Good found a steep learning curve for the close oversight roles of running a shop—details like staffing and labor, for example.
“I didn't really have to staff anything prior,” he says. “It was always, ‘This guy is a developer and he works for this guy and you’re going to use him.’ It was matrix management prior. And in IT, that’s a lot of what it is when you’re a project director.”
The matrix management system was more task-based. Sometimes Good didn’t even have face time with the people who were working assignments for him. The matrix did that work seemingly on its own.
Coming into All Tune and Lube in Olathe, Kan., gave Good a chance to be more hands-on when he wanted. He read up a lot on leadership strategies, but he says that most of his schooling came via “learning under fire,” or gaining experience on the fly.
Roughly three years ago, Good met a real challenge when he moved the shop into a newer, more expensive building. The costs sank profits. He and his colleagues put in a lot of work to find out how to manage the staff’s workflow to maximize cash flow, otherwise the lube-plus operation wouldn’t pencil out.
“Over at the other place, we were making money just because the cost of the building was less,” he says. “This gave us a swift kick in the pants and made us realize that we need to do a better job.”
The work was worth it, and the shop is profitable again.
The new building was across the street from the old one, and it was a bigger facility. Good says that the moving process was draining, but it was the right choice.
“We outgrew the old location, and the building was deteriorating,” he says. “There was a Hobby Lobby in there, and they have since moved. Nobody has rented the building (since).”
When they settled in the new building, the realities of higher operating costs set in. It was rather fortunate that, after much research, he realized that a revised labor strategy might help out.
“The rent went up of course, and operating expenses went up,” Good says. “So we had to reevaluate everything we were doing. Reexamine the hours of the employees, because we found that that was one of the biggest drains in our business—the overtime work and letting people stay”
The idea behind the changes needed at Good’s shop seemed simple: Allocate service jobs more efficiently. But carrying it out proved to be more of a challenge. It required a bit of sweat equity, as they say.
First, he assessed the current state of his assets. Good’s All Tune and Lube shop has a manager and 5.5 technicians. The most experienced tech had been there for eight years. Two more have three years’ experience with the shop, and the rest are newer. Two bays are dedicated to quick maintenance, as are two of the greener techs.
Good says that guidance from Steve Brosseau, All Tune and Lube’s senior operations manager, was instrumental in crafting the comeback that his shop needed.
Previously, Good says they handed out service tickets on a more first-come, first-serve basis. One tech might spend four hours on a job that the more experienced tech might do in a half hour. Those were the inefficiencies they found.
The solution came when they put greater discretion in allocating jobs, because they wanted to keep paying on an hourly basis. Putting the right service with the right tech, while still allocating work as evenly as possible, was a surmountable challenge.
“It was a lot of scheduling,” Good says. “It was a lot of making sure that they were busy and the work went to the right person.”
Identify key performance indicators.
This was the big one for Good’s shop. He says he did a lot of research on the KPIs that shops implemented, and he even considered bringing in an outside consultant for help. Working closely with his manager, Good ultimately worked out the shop’s own set of KPIs.
“After that investigation and asking questions and trying to figure it out, we finally came up with our own KPIs and started tracking those,” Good says. “We have an Excel spreadsheet, and that has helped immensely.”
More than just a broad number, these were detailed vitals for the business. There were a few different KPIs that they started tracking more closely. Parts costs were certainly an overhead item that needed more scrutiny.
“Following up on the percentages of parts and what it’s costing, as well as how much we’re charging,” he says. “But the biggest was labor.”
Good’s goal is to have labor at no more than 30 percent of sales. Parts should not exceed 20 percent.
Labor, and how they allocated it, became the major item that made a profit difference. Knowing his techs and their capabilities, it was a matter of making smart decisions on the fly.
“Just a lot of fine tuning of who got what job,” Good says.
Track more often.
One part of Good’s turnaround was developing more detailed KPIs. The other part was that they needed to be tracked more closely.
“We were tracking it monthly, prior. But now we’re tracking it daily,” he says. “And, actually each job, we track and see how much we’re making. How much were doing.”
That detailed oversight takes some time to analyze, but it allowed them to have a better understanding of how each job allocation affects profitability. They ended up making decisions based on those numbers. They even looked at numbers from job to job.
“The profit at the end of the job or the profit at the end of the day,” he says. “And then we can see if we need to move somebody or assign differently.”
The main result was profitability. Good says that after running a deficit, the shop produced a respectable profit in 2019 thanks to the organization and attention to detail that he and his manager added.
“I think we’ve found a good system,” he says. “It’s continuously worked month over month.”
Today, experience and technicality of a job are the factors that determine who gets a job. And due to the collaboration among techs, Good says that his crew has been operating at a high level.
Good says the shop has also been blessed with relatively low turnover, which means that techs can learn skills within the system and help improve the effective labor rate. It’s no longer first come, first serve.
“This way, we can control more of the quality of the work versus just throwing it out there and who’s ever hungry,” he says.
According to an industry survey from Ratchet+Wrench magazine, 83 percent of shop operators reported tracking their KPIs. Those that didn’t cited reasons like being short on time, lacking a system to track and just falling out of practice.
But for those that did track KPIs, profits exceeding $1 million were more prevalent. Shops more often had higher repair orders and greater efficiency. In short: Knowing the numbers like a vital sign allows operators to make tweaks in real time.
Transition is tough. But for lube plus operations who haven’t taken a close look at their number and how they track them, it may be time for an upgrade.