Our labor rate is competitive with the large truck and automobile market. Service vendors in this area have a posted labor rate of between $ 60 and $100 per hour. It is helpful to keep in mind that they are trying to keep their labor rate as low as possible so that they can make up any losses by marking up the parts they use. A typical parts markup in the repair industry is between 25% and 50%. The savings realized by having an in house repair shop is much more than the basic my labor is cheaper than your labor it is also the fact that this one facility can and does repair all types of equipment for the town on a moment’s notice.
There are a couple of dirty little secrets about private repair facilities. The first reality is the fact that the municipal garage is not selling the departments anything. As a rule everyone in a private repair facility or dealership is on commission. Commission is great if you are the one selling the product but it too often results in let the buyer beware mentality. At the point where the service advisor is telling you ”Mr. A B you need Y Z part or service” keep in mind that he or she is adding money to their paycheck if you say yes. A related issue is that your municipal garage has no other customers; we are at your service 24/7, there is never a more profitable job or a more important customer than you. It is direly important for a fleet manager be engaged in the productivity of the municipal garage and to keep the reputation for quality at its most excellent.
In my opinion there is just simply no way to overstate the importance of this labor rate concept. Issuing a charge-back to a department for services performed is the most accurate way to identify both problematic equipment and fruitless repair practices. Identifying the best practices requires hard data and then applying that data to better promote productivity. The municipal garage is one of the key players in the Town of Jonesborough’s overall productivity and the responsibility is not lost on any of its staff. Through accountability and support we can achieve many things in the municipal garage.
Having said all that let me be clear oursourcing is essential to a healthy operation when done correctly and with the greatest of scrutinity. Furthermorethe fleet department not the customer should always make the outsourcing decision to avoid the inflation of internal labor rates caused by outsourcing . The typical outsourcing nod may go to transmission work, towing or paint and body but outsourcing the jobs you do in the shop everyday can also benefit the bottom line as well as customer satisfaction.
Answer these questions for a sucessful outsourcing program:
Can we do it?
Can we do it cheaper?
Can we do it cheaper and faster?
And most important; What could we be doing while we are tied down to this job?