Operating a world-class shop
TORONTO, Ont. – One of the key features of this year’s Truck World was the addition of the National Truck Maintenance and Technology Conference, which took place in conjunction with the show on Sept. 26-27.
Renowned shop guru, Kelly Walker visited from Dallas, Tex. to demonstrate just how to achieve and maintain a world-class shop.
Armed with many years of experience in the industry, and a binder packed with facts and statistics to back his claims up, Walker delivered a series of six workshops designed to help the average shop manager achieve ‘world-class’ status.
Unfortunately, operating a world-class shop isn’t as simple as following a floor-plan blueprint. Each is different but one key element is always present, according to Walker.
“We’re talking about control, control, control,” says Walker. He has developed a 14-point checklist to determine just how much control a shop manager has over his shop.
One of the keys is enforcing regular driver inspections of equipment. Walker stresses it’s the responsibility of the shop manager to prepare a checklist and have it readily available for drivers to do their inspections.
“If we don’t produce the list and put it in the vehicle, then I don’t see how we can have enforcement,” says Walker.
Having control over your shop is now more important than ever with truckmakers facing difficult economic conditions
“As the truckmakers profits go south, warranty service deteriorates,” says Walker, pointing out one major manufacturer has quietly stopped servicing warranties.
Having said that, Walker adds about five per cent of the cost of new and used equipment repairs and the cost of replacement parts should be recouped through a warranty of some sort.
That adds up to substantial savings for a savvy shop manager who takes full advantage of the various warranties available.
Another factor shared by most top-notch shops is that efficiency reigns supreme.
On average, a mechanic wastes about 7.5 per cent of his time fetching parts.
“We’re trying to eliminate all this wasted time mechanics spend fetching parts, fiddling with work orders and washing parts,” says Walker.
When operating a fleet of any size, it’s inevitable there will eventually be the odd lemon that infiltrates your fleet.
Walker stresses it’s important to identify a lemon and dispose of it right away.
“A lemon’s a lemon and if you’ve got a lemon, you’ve got to take the bullet right away,” says Walker.
Shop managers should also clearly post the estimated disposal date of all vehicles, whether they’re healthy or not.
“If the technician doesn’t know you’re planning to get rid of this equipment in 12 months, you may find a re-man’d engine in it,” says Walker.
Placing the estimated date of disposal on each unit can help eliminate under-repair and over-repair, another costly mistake plaguing many fleet maintenance programs.
While the idea of running a world-class shop is undoubtedly appealing to anyone in the truck maintenance business, getting everything up to snuff is a costly process.
“In the first year your costs are going to be higher than historical costs because we’re paying for all of our sins of the past,” says Walker.
“It may take to year three before you see the fruits of a world-class shop.”
Spending more money in maintenance in the short-term to yield long-term results isn’t always an easy sell when seeking approval from the bean-counters, points out Walker.
So, it’s important to consider all the benefits of implementing a world-class shop and deliver them in the same manner a heavyweight boxer wears down his opponent.
“There’s no knockout punch, we keep jabbing them until they fall,” says Walker.
Once a fleet manager is well underway to establishing a world-class shop, the next step is to address some other important business decisions, such as when to insource and when to outsource certain jobs.
Outsourcing work to a third-party supplier is a difficult decision that must deliver tangible benefits to be worthwhile.
Walker says there are several reasons outsourcing often fails.
“The major reason is the shop manager has not defined suitable work or the volume of work to be outsourced,” says Walker.
“And we don’t specify to our supplier our quality expectations.”
If the proper precautions aren’t taken before outsourcing work to a supplier, it’s easy for that supplier to take advantage of the situation, cautions Walker.
One of the best ways to keep a supplier honest, is to pop by its shop unannounced, from time to time.
“You scare the heck out of them because they never know when you’re going to show,” says Walker.
“If you’re getting too many re-dos, it could be because the supplier has a Jiffy-Lube kid rebuilding your Caterpillar engine.”
Another suggestion Walker offers is to implement financial penalties for each re-do or inadequate job done by the supplier.
“Financial punishment is usually the best way to train them,” he says.
When considering whether to outsource certain shop jobs to a supplier, a detailed cost-comparison is necessary.
Walker says you must bear in mind that a technician’s costs are actually triple his actual wage when factors such as overhead and employee benefits are considered.
Calculating fully-loaded labor rates is just one way to determine whether outsourcing will save, or cost your fleet money.
If, after doing your homework, outsourcing seems like a good idea for your shop, Walker stresses there are still certain jobs that should never be sent outside the shop.
“Never give up overall fleet and shop management activities to suppliers,” says Walker.
“And don’t give up the interaction with your customers. Don’t put them face to face with your supplier. Those things must remain in-house forever.”
Otherwise, you run the risk of losing the control that is the key aspect to running a world-class shop.
Also, while many shops start outsourcing by sending low-cost, repetitive, preventive maintenance jobs out to a supplier, Walker insists those jobs should always remain in-house, as it’s usually cheaper than sending the equipment out to be serviced.
It’s generally thought that low employee turnover is an asset to any company. However, that’s not necessarily true. Consider the California-based utility fleet that found itself with 20 technicians on-staff, each with 20-years seniority.
By this time the shop’s technicians had accumulated four weeks of paid vacation time each, causing the company to lose 2.3 heads per year to vacation alone.
Their steadily-escalating salaries also froze up the company’s budget meaning it couldn’t afford to hire the proper support staff.
So, in the end, the shop found itself with overqualified technicians doing menial jobs such as washing parts and fetching tools.
This combination of factors resulted in an attack by labor-contractors – a breed of companies Walker warns to guard against.
“They will make money at your expense,” says Walker.
Therefore, if you want to maintain control over your shop, it’s essential to keep shop staffing levels balanced.
Otherwise, Walker says you’ll be defending yourself from a labor contractor-led attack.
“If I’m a labor contractor, I know you probably have four soft spots in your underbelly,” says Walker.
He lists them as excessive wages and benefits, below-average productivity, overstaffing and mismatching skill sets to work activities.
Any of those factors can make your company a ripe target for a labor contractor.
“The next time you see your most talented technician washing parts, think about how much that’s costing you,” says Walker.
He suggests there are a number of ratios available to determine whether your shop is properly staffed.
Unfortunately, he says most companies have adopted the SWAG ratio – Scientific Wild-Assed Guess.
Or in other words “We’ve evolved into this and it seems to get it done,” he explains.
Fending off labor contractors is more difficult than ever, thanks to the shortage of skilled technicians.
Labor contractors are an attractive option for young technicians, since they can usually offer a more attractive package.
Not surprising when you consider technicians earn a labor contractor money, while they are seen as an expense for fleets.
The situation is exacerbated by the fact there are many other job options available to qualified shop-technicians.
“There are lots of other industries that have better images than us that are competing for the same skill sets,” says Walker.
That being said, it’s important to take into consideration what today’s generation of technicians really value when preparing an offer.
“These young people coming into the industry don’t want overtime,” says Walker.
“And they’re not overly concerned about benefits at that point.”
Instead, he says there must be other attractions such as access to frequent training (at least 40 hours per year), a well-defined career path within the company and a squeaky-clean working environment.
Another key way to attract young help is to ensure pay is based on performance, not longevity.
“A young person doesn’t want to hear ‘We pay based on seniority,'” says Walker.
Becoming a world-class shop manager isn’t going to happen overnight, but Walker says this goal can be attained by recognizing the pitfalls facing each and every shop.
In order to bring about the changes required to become world-class, it’s important to be well-versed and confident when you approach the fleet’s chief executive officer and the company’s bean-counters.
“To them, you’re just a graduated mechanic,” says Walker.
He insists it’s important to consider yourself a businessperson first and foremost, and suggests taking accounting and public speaking courses to better prepare yourself for those essential brainstorming sessions with the boss.
In the end, as a shop manager you have the ability to turn an ordinary, run-of-the-mill shop into one of world-class calibre.
Or you can just as easily find yourself watching in from the outside as your shop is handed over to the ever-opportunistic labor contractors.
The result is up to you.
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