WO Flat Rate Variance %

Purpose: WO Flat Rate Variance %,(Labor, Parts, and Misc.), is used as a measurement to show the positive or negative
performance of a flat rated repair, using sell price. A positive number reflects the additional amount of money
acquired by flat rating, and negative number reflects the amount lost due to flat rating. Used for exception
reporting on individual WO approaching negative variance.

Definition: Amount of variance on flat rated jobs expressed as a percentage of total flat rated jobs.

Unit of Measure: Percentage

Formula: (WO Sell (FR) - WO Sell (T&M on FR)) / WO Sell (FR)

Example: Dealer AAA has $500,000 of negative variance in their flat rated jobs with total flat rated jobs equaling
$2,000,000.
Flat Rate Variance % = ($-500,000)/ $2,000,000 = -25%

Financial Impact Example:

Variance Amount of Flat Rated Jobs -$50,000

Total Amount of Flat Rated Jobs $800,000
Actual Flat Rate Variance % -6.3%
Dealer Goal 0.0%
Financial Impact Improvement: $50,000
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Financial Influence on a Service Profit and Loss Statement (2006/Aug)

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Additional Definitions: WO Sell (FR) - Amount of flat rated Labor Sell on invoiced work orders

WO Sell (T&M on FR) - Amount of time and material Labor Sell on flat rated invoiced work orders

Related Measurements:
Technician Productivity % Standard Job Performance %
Rework Expense % of Total Service Sales Standard Job Utilization %
Work Order Flat Rate Variance

Impacted Measurements:
WIP PAD %
DCAL %
Example Reports:
DBS Examples
Work Order
Job Closing Summary
Work In Process Exception
Service Cognos KPI Cube Reports
KPI COGNOS Reporting
Operational Monitor
WIP Aging (1)
WIP Aging (2)

Successful Practices Overview:

Business Case:
Having the ability to track and manage Flat Rated repair jobs within their service department, Dealers will be
able to meet / exceed customer expectations while increasing the service departments profitability. Increasing
of a positive Flat Rate Variance %, Dealers will be able to further increase customer satisfaction and loyalty
through Dealer Excellence resulting in increased service sales.

Below is a list of the most common causes with associated possible solutions. This is not an all inclusive list
due to the fact that other variables play a factor in managing metrics of the service department. The
information contains common root causes with applicable solutions that will affect this particular measure in a
positive manner. Linked to some of the solutions are successful practices that have worked for Dealers in the
past. Dealers have to look at their own service business operations and utilize solutions that will maximize their
service department's profitability. Metrics affected by each of the root causes are shown in green text.
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Root Causes / Solutions:

The need for a quote is not identified while on the phone with the customer
Root Cause affected Metrics: Flat Rate Variance%
Establish clear, understood rules for customer quoting, such as, "We quote every job over $1000"
Standard jobs are not available to be used
Root Cause affected Metrics: Flat Rate Variance%
Establish clear Dealership rules on the use of standard jobs
Create a process where repair history is maintained so that it can be used for the creation of standard jobs
Tie parts lists to all standard jobs
Use standard jobs to segment work orders
Parts, tools, or special requirements are not identified or ordered before technician begins work
Root Cause affected Metrics: Flat Rate Variance% & Tech Prod%
Use a pre-work order form to document the customer and product information along with the repair description (2002/Sep)
Establish a process that parts, tools and special requirements are ordered before the technician begins the repair
Technicians can not start the initially requested repair without ordering parts, tools and technical information
Root Cause affected Metrics: Flat Rate Variance% & Tech Prod%
Use a pre-work order form to document the customer and product information along with the repair description (2002/Sep)
Establish a process of reviewing repair history and relaying that documentation to the technician before beginning the repair
Establish a process that parts, tools and special requirements are ordered before the technician begins the repair
Establish a process which allows the parts ordered to be delivered to the repair location (2002/Sep)
Segments do not have target labor hours provided
Root Cause affected Metrics: Flat Rate Variance% & Tech Prod%
Establish a process that documents the labor hours at the segment level
Segment level target labor times are given to the Technician in a documented format
Flat Rates are not available to be used
Root Cause affected Metrics: Flat Rate Variance%
Create flat rates from standard jobs
Publish flat rates
Use flat rate pricing in quoting service
Technicians do not receive appropriate technical information or repair history
Root Cause affected Metrics: Flat Rate Variance% & Tech Prod%
Establish a process of reviewing repair history and relaying that documentation to the technician before beginning the repair
Technicians do not have appropriate tooling for repairs
Root Cause affected Metrics: Rework%, Flat Rate Variance% & Tech Prod%
Track tooling being used from the tool room in order to better identify adequate quantity and quality of tooling (2006/Oct)
Establish calibration program for all tooling which requires calibration
Technicians do not use SIS for part lookups or do not have access to current technical information during the repair
Root Cause affected Metrics: Flat Rate Variance% & Tech Prod%
Allow SIS Web access to all service personnel before and during the repair (2002/Oct)
Allow Technicians SIS Web access within 1 bay of their repair bay, (at the minimum SIS Network is available within the
same location parameters)
Technicians do not have access to machine/engine repair history and information during repairs in process
Root Cause affected Metrics: Rework%, Flat Rate Variance% & Tech Prod%
Allow technicians access to machine/engine repair history within 1 bay of the repair bay
Train Technicians on the process of attaining machine/engine repair history and using it during the repair
Technicians do not have access to the dealers business system (DBS 2.3), SIS and other PC based tools during the repair
Root Cause affected Metrics: WIP Hours, WIP Financial, LL-INV, Rework% & Flat Rate Variance%
Allow Technicians access to the dealers business system (DBS 2.3), SIS and other critical PC based tools during the repair
(2002/Oct)
Train Technicians on accessing critical information during the repair
If additional parts are required for completing the repair, the technicians are not using SIS and Parts Integrator to order parts
Root Cause affected Metrics: Rework% & Flat Rate Variance%
Establish process which allows technician use of SIS and Parts Integrator within 1 bay of the repair bay