sect 2 kpi's
DESCRIPTION
This section covers various KPIs for service, definitions, why they are important and how they impact your businessTRANSCRIPT
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Profitable Distributor
Service Management
Make Your Service Department the Driver of Your Dealership
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Section 2
Distributor Service Department Key Performance Indicators (KPIs) Definitions and Reasons For Deviations
Key Performance Indicators
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2.1 Why KPI?
2.3 KPI, Definitions, Impact, Reasons for Deviations and Actions
2.2 Time to Sell
Key Performance Indicators
2.4 5 x Super KPIs
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Section 2.1 Why KPI?
2.1
Key Performance Indicators
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Uniform Snapshot of Department Performance
2.1
Key Performance Indicators
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Enables Performance Health Checks
2.1
Key Performance Indicators
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Forces the Department to
Capture All Relevant Data
2.1
Key Performance Indicators
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Will Enable Correct Measurement of
Progress Made
2.1
Key Performance Indicators
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Food For Thought:
“The beginning of wisdom is to call things by their right names”Chinese Proverb
Know Your KPIs!
2.1
Key Performance Indicators
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Section 2.2 Time to Sell
2.2
Key Performance Indicators
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2.2
Key Performance Indicators
Total Calendar
Time
Total Available
Time
Productive Time
Sick leave, vacation, unauthorized absence
Unsold time:Idle timeOther unsold time
Improvement Area
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Parkinson’s Law #1:
“Work Expands to Fill the Time
For Its Completion”
Cyril Northcote Parkinson, 1909-1993
2.2
Key Performance Indicators
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Parkinson’s Law #2:
“Expenditures Rise to Meet
Income”Cyril Northcote Parkinson, 1909-1993
2.2
Key Performance Indicators
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Section 2.3
Distributor Service Department Key Performance Indicators, KPI
2.3
Key Performance Indicators
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2.3.1
Technicians Availability Against
Calendar Time, %
2.3
Key Performance Indicators
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2.3.1
Technician’s Availability Against
Calendar Time, %
Definition
Technician’s attendance hours/Theoretical calendar time = Technicians Availability, %
Target >87%
2.3
Key Performance Indicators
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2.3.1
Technician’s Availability Against
Calendar Time, %
Impacts
Total Hours to Sell
Turnover
Profit
2.3
Key Performance Indicators
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2.3.1
Technician’s Availability Against
Calendar Time, %
Reasons
Management?
Time Management?
Follow Up Attendance?Dissatisfaction?
“Ownership”?
2.3
Key Performance Indicators
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2.3.1
Technician’s Availability Against
Calendar Time, %
Actions
2.3
Key Performance Indicators
Awareness
Attitude
Care
Educate
Ownership
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2.3.2
Technicians Productivity, %
2.3
Key Performance Indicators
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2.3.2
Technician’s Productivity, %
Definition
Technician’s Sold Time/Technician’s Attendance Time = Technicians Productivity, %
Target >85-90%
2.3
Key Performance Indicators
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2.3.2
Technician’s Productivity, %
Impacts
Turnover
Margins
Net Profit
2.3
Key Performance Indicators
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2.3.2
Technician’s Productivity, %
Reasons
Low Sales?
Management?
Awareness, Hrs to sell?Pre-planning?
Workshop layout
2.3
Key Performance Indicators
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2.3.2
Technician’s Productivity, %
Reasons, Cont’d
Workshop MaintenanceParts Availability?
Skill levels?
Incentive systems?
Management System?
2.3
Key Performance Indicators
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2.3.2
Technician’s Productivity, %
Actions
Increase Sales
Awareness
Attitude
Pre-plan
Management
2.3
Key Performance Indicators
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2.3.3
Technicians Efficiency, %
2.3
Key Performance Indicators
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2.3.3
Technician’s Efficiency, %
Definition
Technician’s Allotted Time/ Technician’s Used Time = Technicians Efficiency, %
Target >100%
2.3
Key Performance Indicators
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2.3.3
Technician’s Efficiency, %
Impacts
Turnover
Margins
Net Profit
Bay Utilization
Turnaround Time
2.3
Key Performance Indicators
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2.3.3
Technician’s Efficiency, %
Reasons
Skill Match?
Complex, Frequency?Non-Productive Time?Wrong Method?
More Than Required?
2.3
Key Performance Indicators
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2.3.3
Technician’s Efficiency, %
Reasons, Cont’d
Separate Operations?Availability, Manuals?Improper Procedures?Supervision?
Job Planning?
2.3
Key Performance Indicators
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2.3.3
Technician’s Efficiency, %
Reasons, Cont’d
Workshop Layout?
Tool Maintenance?
Climate/Environment?2 Technicians not 1?
Lack of Training?
2.3
Key Performance Indicators
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2.3.3
Technician’s Efficiency, %
Actions
Improve Supervision
Better Planning
Correct Job cards
Education
Awareness/Attitude
2.3
Key Performance Indicators
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2.2.4
Recovery Rate on Technician’s
Available Time, Money/hr
2.3
Key Performance Indicators
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2.3.4
Recovery Rate on Technician’s
Available Time, Money/hr
Definition
Total Labor Sales/Total Available Time = Recovery Rate, Money/hr
Target: 3-4 x cost direct productives
2.3
Key Performance Indicators
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2.3.4
Recovery Rate on Technician’s
Available Time, Money/hr
Impacts
Turnover
Net Profit
Required Charge Rate
Margins
Break-even level
2.3
Key Performance Indicators
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2.3.4
Recovery Rate on Technician’s
Available Time, Money/hr
Reasons
Attendance?
Productivity?
Efficiency?
Internal/External?
Management?
2.3
Key Performance Indicators
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2.3.4
Recovery Rate on Technician’s
Available Time, Money/hr
Actions
Improve Attendance
Improve Productivity
Improve Efficiency
Increase External SalesManage and Coach
2.3
Key Performance Indicators
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Workshop 2
Attendance, Productivity and Efficiency, How They Impact Turnover and Gross Margin
2.3
Key Performance Indicators
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2.3.5
Technician’s Unsold Time, %
2.3
Key Performance Indicators
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2.3.5
Technician’s Unsold Time, %
Definition
Technician’s Non-productive time/Total Attendance Time = Technician’s Unsold Time, %
Target <10-15%
2.3
Key Performance Indicators
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2.3.5
Technician’s Unsold Time, %
Impacts
Turnover
Net Profit
Required Charge Rate
Margins
Break-even level
2.3
Key Performance Indicators
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2.3.5
Technician’s Unsold Time, %
Reasons
Low Sales
Awareness, Hrs to Sell?Pre-planning?
Management?
Workshop Lay-out
2.3
Key Performance Indicators
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2.3.5
Technician’s Unsold Time, %
Actions
Increase Sales
Awareness
Attitude
Pre-plan
Management
2.3
Key Performance Indicators
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2.3.6
Work-bay Utilization in % of Potential
2.3
Key Performance Indicators
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2.3.6
Work-bay Utilization in % of Potential
Definition
Sold hours per work bay divided by total available hours to sell per work bay = work bay utilization, %.
Target >90%
2.3
Key Performance Indicators
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2.3.6
Work-bay Utilization in % of Potential
Impacts
Turnover
Net Profit
Sales Potential
Margins
Expansion Plans
2.3
Key Performance Indicators
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2.3.6
Work-bay Utilization in % of Potential
Reasons
Pre-planning?
Productivity/Efficiency?Admin Process?
Units Waiting For Parts?
Supervision?
2.3
Key Performance Indicators
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2.3.6
Work-bay Utilization in % of Potential
Reasons, cont’d
Service Marketing?
Cleanliness?
24/7 Operation?
Workshop Layout?
Low Skill Levels?
2.3
Key Performance Indicators
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2.3.6
Work-bay Utilization in % of Potential
Actions
Workflows
Parts Planning
Training
Clean up Workshop
Management
2.3
Key Performance Indicators
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2.3.6
Work-bay Utilization in % of Potential
Actions, cont’d
Marketing Plan
Supervision
Customer InteractionWorkshop Layout
Extend Operating Hrs
2.3
Key Performance Indicators
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2.3.7
Gross Profit on Own Labor, %
2.3
Key Performance Indicators
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2.3.7
Gross Profit on Own Labor, %
Definition
Total Labor Sales less Direct Expenses for own productive staff = Labor Gross Profit
Target 65-80%
2.3
Key Performance Indicators
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2.3.7
Gross Profit on Own Labor, %
Impacts
Net Profit
Required Charge RatesExpansion Plans
Break-even level
Investments
2.3
Key Performance Indicators
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2.3.7
Gross Profit on Own Labor, %
Reasons
Productivity?
Unrealistic Salary?
Labor Rate?
Efficiency?
Internal/External?
2.3
Key Performance Indicators
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2.3.7
Gross Profit on Own Labor, %
Actions
Service Marketing
Training
Differentiate ChargesSupervision
Procedures
2.3
Key Performance Indicators
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2.3.8
Workshop Direct Expenditures
2.3
Key Performance Indicators
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2.3.8
Workshop Direct Expenditures
Definition
Includes personnel expenditures for Technicians (salary, HRA, visa cost, vacation package, health insurance, etc.)
Target 20-35%
2.3
Key Performance Indicators
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2.3.8
Workshop Direct Expenditures
Impacts
Margins
Required Charge RatesNet Profit
Break-even level
Indirect Expenses
2.3
Key Performance Indicators
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2.3.8
Workshop Direct Expenditures
Reasons
Salary Level?
Budget?
Management?
Overtime, Sick Leave?
Follow up KPI?
2.3
Key Performance Indicators
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2.3.8
Workshop Direct Expenditures
Actions
Differentiate ChargesAttendance
Realistic Budget
Supervision
Management
2.3
Key Performance Indicators
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2.3.9
Workshop Indirect Expenditures
2.3
Key Performance Indicators
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2.3.9
Workshop Indirect Expenditures
Definition
Costs which can not be directly allocated towards a specific job such as rent, entertainment, head office expenses, etc.
Target <35%
2.3
Key Performance Indicators
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2.3.9
Workshop Indirect Expenditures
Impacts
Net Profit
Investments
Break-even Level
Required Charge Rates
Company Future
2.3
Key Performance Indicators
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2.3.9
Workshop Indirect Expenditures
Reasons
Management?
Budget?
Supply Agreements?
No Control?
In Expansion Mode?
2.3
Key Performance Indicators
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2.3.9
Workshop Direct Expenditures
Actions
Procedures
Controls
Realistic Budget
Supply Agreements
Delegation
2.3
Key Performance Indicators
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2.3.10
Service Department Net Contribution, %
2.3
Key Performance Indicators
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2.3.10
Service Department Net Contribution, %
Definition
Total Sales – Direct Expenses – Indirect Expenses = Net Profit
Net Profit/Total Sales = Net Profit %
Target 25-30%
2.3
Key Performance Indicators
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2.3.10
Gross Profit on Own Labor, %
Impacts
Company Performance
Investments
Company Future
Expansion Plans
Future Bonus, etc.
2.3
Key Performance Indicators
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2.3.10
Gross Profit on Own Labor, %
Reasons
Sales, Charge Rates?
Productivity/Efficiency?Internal/External?
Direct Expenses?
Profit Generator?
2.3
Key Performance Indicators
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2.3.10
Gross Profit on Own Labor, %
Actions
Price Management
Salary Levels
Supervision
Management
Service Marketing
2.3
Key Performance Indicators
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2.3.11
Spare Parts Sales Through Own Workshop, %
2.3
Key Performance Indicators
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2.3.11
Spare Parts Sales Through Own Workshop, %
Definition
Sales of Spare Parts Through Own Workshop/ Total Sales of Spare Parts = Sales in %
Target 30-70%
2.3
Key Performance Indicators
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2.3.11
Spare Parts Sales Through Own Workshop, %
Impacts
Company Performance
Margins
Net Profit
Turnover
Company Reputation
2.3
Key Performance Indicators
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2.3.11
Spare Parts Sales Through Own Workshop, %
Reasons
Favor Counter Sales?
Contracts, Combos?
Service Marketing?
Workshop Discount?
Profit Generator?
2.3
Key Performance Indicators
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2.3.11
Spare Parts Sales Through Own Workshop, %
Actions
Discount ManagementContracts and CombosStructured MarketingManagement
Customer Satisfaction
2.3
Key Performance Indicators
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2.3.12
External Workshop Sales Versus Internal,
%
2.3
Key Performance Indicators
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2.3.12
External Workshop Sales Versus Internal,
%
Definition
Sales of External Jobs/ Total Workshop Sales = External Sales in %
Target 80%
2.3
Key Performance Indicators
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2.3.12
External Workshop Sales Versus Internal,
%
Impacts
Turnover
Net Profit
Service Penetration
Margins
Company Performance
2.3
Key Performance Indicators
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2.3.12
External Workshop Sales Versus Internal,
%
Reasons
Service Marketing?
Contracts, Combos?
Manage KPIs?
Workshop Discount?
Profit Generator?
2.3
Key Performance Indicators
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2.3.12
External Workshop Sales Versus Internal,
%
Actions
Management
Structured MarketingAdd Value
Contracts and CombosCustomer Satisfaction
2.3
Key Performance Indicators
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2.3.13
Redo Work in Percent of Total Workshop
Sales
2.3
Key Performance Indicators
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2.3.13
Redo Work in Percent of Total Workshop
Sales
Definition
Redo Sales, parts and labor/ Total Workshop Sales, parts and labor = Redo in %
Target <1%
2.3
Key Performance Indicators
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2.3.13
Redo Work in Percent of Total Workshop
Sales
Impacts
Productivity
Net Profit
Customer Satisfaction
Margins
Company Reputation
2.3
Key Performance Indicators
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2.3.13
Redo Work in Percent of Total Workshop
Sales
Reasons
Training?
Definition of Work?
Supervision?
Diagnostics?
Wrong Technician?
2.3
Key Performance Indicators
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2.3.13
Redo Work in Percent of Total Workshop
Sales
Actions
Staff Development
Proper Procedures
Management
Proper Tools
RTFM
2.3
Key Performance Indicators
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2.3.14
Time, Vehicle In to Invoice Out
2.3
Key Performance Indicators
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2.3.14
Time, Vehicle In to Invoice Out
Definition
Time elapsed from vehicle arrives to workshop until invoice is issued and sent.
Target: 1 workday after technical completion
2.3
Key Performance Indicators
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2.3.14
Time, Vehicle In to Invoice Out
Impacts
Cash Flow
Net Profit
Productivity/Efficiency
Margins
Company Reputation
2.3
Key Performance Indicators
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2.3.14
Time, Vehicle In to Invoice Out
Reasons
Pre-Planning?
Procedures?
Customer Approvals?
Parts Availability?
Supervision?
2.3
Key Performance Indicators
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2.3.14
Time, Vehicle In to Invoice Out
Actions
Better Pre-Planning
Parts Forecasting
Detailed Procedures
Approvals Process
Management
2.3
Key Performance Indicators
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Section 2.4 5 x Super KPIs
2.4
Key Performance Indicators
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Recovery Rate/ Calendar Hr
2.4
Key Performance Indicators
Parts Sales Through Workshop
Work-bay Utilization, %
Redo Work Versus Total Sales, %
Time, Vehicle In to Invoice Out
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Recovery Rate/ Calendar Hr
Covers:
Charge Rate(s)/Hr
Attendance
Productivity
Efficiency
Internal vs. External
2.4
Key Performance Indicators
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Parts Sales Through Workshop vs. Total
Parts Sales
Gives an Indication of Total Growth Potential For the Workshop
2.4
Key Performance Indicators
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Work-bay Utilization Versus Potential
Gives an Indication of Growth Potential Within Existing Premises
2.4
Key Performance Indicators
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Redo Work Versus Total Workshop Sales
Gives an Indication of Total Repair Quality of the Workshop
2.4
Key Performance Indicators
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Time, Vehicle In to Invoice Out
Covers:
Approval Process
Management
Productivity/EfficiencyParts Availability
Admin Procedures
2.4
Key Performance Indicators
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Section 2, Summary
Measure Performance
Key Performance Indicators
Uniform Snap Shot
Correct Decisions
Measures Trends
Capture Relevant Data