Making Your Service Department Profitable

For a long time in our industry, it was thought that the service department was “special.” In other words, it was a necessary part of the distributorship, and if it made money, great; if not, oh well. We all know that those days are over, and a service department, if run like the rest of the business—with goals, objectives and accountability—can make a profit.

Getting Down to Business
A few years ago, Cee Kay Supply went through the Lean 5S process, a management strategy designed to increase efficiencies. Begun in Japan to make manufacturing more productive, it has evolved into a process for companies to evaluate and improve how they do business. There are five phases to Lean 5S:

  1. Sort – All unnecessary tools, parts and instructions are eliminated. Everything is prioritized and only essential items are kept. Everything else is stored or discarded.
  2. Stabilize – Everything is put in its proper place.
  3. Sweep – The work area and equipment are cleaned and organized, making it easy to know what goes where.
  4. Standardize – Work stations are standardized and consistent. All employees doing the same job should be able to work in any station with the same tools that are in the same location at every station.
  5. Sustain – Maintain the standard of the new way to operate.
Cee Kay service department

(L-R) Cee Kay Supply's Rick Wilson, Jeff Pflasterer, Steve Gianino, Jerry McCann, Linda Brandt, Paul Martin, Mike Toso, and Joe Salarano accept a plaque from Miller Electric in recognition of 30 years of service.

The Lean 5S process was a huge metamorphosis for Cee Kay Supply, including the service department. We went through the five phases, eliminating everything that did not add value to the customer. We developed standards and methods to achieve them. We reinvented our workstations and purchased computers for each station to help technicians be more productive. Now they can look at schematics right online as they work. We implemented a work order system where every machine that comes in gets logged. Any salesperson can look up a ticket and know exactly where it’s at.

Prior to 5S, the service department was the last stop when a customer was on a tour of our facility. This was because of the way it looked—machines were all over the place, tools were everywhere—like a typical service center. It doesn’t look like that anymore. Now the service department is the first part of the tour.

The service department developed a mission in support of the company’s vision: to deliver superior equipment rental and service to support our customers. To meet this mission, we developed targets for billable hours, days to turn machines, labor costs, rental fleet utilization, dead stock ratio, even mistakes. Everyone in the department knows what the targets are, and how they compare to others. We post the hours the technicians are here and the hours that are actually billable, including time for research.

Technicians work hard to meet the targeted goals. For example, in 2011, we dropped our average days to turnaround a machine by almost 50 percent. Was this due to our new efficiencies? We think so.

Making It Work
This is a business where a distributor has nothing exclusive. The only thing any of us have exclusively are the people who work for us. Cee Kay Supply has three full time and one part time technicians and one front counter person who enters all work orders. We’ve recently added a new technician trainee and have begun his certification process.

While some electrical knowledge and experience is important for an individual wanting to be a technician, we think energy and a positive attitude are more critical.

During the interview process, we assess whether the applicant meets our company objectives. We also administer the Wonderlic Test, a quick and simple IQ test that has been used in industrial settings for many years. We expect new hires to comprehend and process information, and the test provides some markers.

Once hired, the new technician begins a training program. We take advantage of what our vendors offer, including online courses, books and CDs. We start with welding and equipment service engineering. The goal when hired is to get a passable grade within six months before the technician can attend vendor training schools.

The technician trainee is also getting hands-on experience working in our rental fleet, doing oil changes and getting the machines set up and ready to go out. He’s not fixing anything yet.

Something’s that’s changed in our service department is the idea that we have to stock every single part for every single machine. We’re moving away from that, since vendors now ship parts next day or second day air. To make things more efficient, we triage the machines when they first come in. A technician does a quick look-over; if parts are needed, an order is made, and they are here when the technician is ready to work on the machine.

Service technicians do not give service recommendations over the phone. This is a philosophical change for us. It used to be that when someone called in, even competitors, we would talk to them and tell them what to do. We should not be making a diagnosis over the phone on 400 amp machines in which people put their hands. The liability is just too high. We can’t do that with our auto mechanic; we can’t do that with our doctor. Why would we do it with our technicians? So we tell the customer to bring the equipment in or allow us to come out and look at it.

Lean 5S has brought many changes to our service department, including how parts are ordered, how machines are staggered, how we look at the turnaround getting machines tagged properly, the steps we take to move the repaired machines—little things that at first glance didn’t seem like that big of a deal. But they are a big deal. Breaking down each activity of the service department into 5S allowed us to really focus on efficiencies.

It All Adds Up
The service department recognizes that it is part of a larger group, and we help our salespeople gain leverage to get more customers. A sales force is much like the military, even using  military terms like “blitz” and “guerilla tactics.” Our technicians think of our salespeople as Marines who go out on the firing line to take the hill. The salespeople are the ones out there getting the heat when things go wrong. Our technicians and those of us in the back are like the supply line. Once the Marines get the hill, they never have to fight for that hill again. They can go on to other things and not worry about it. Our goal is that once the salesperson gets the account, he or she doesn’t have to worry about keeping the account because the service department is going to take care of them and make sure the customer never has a reason to leave.

Gases and Welding Distributors Association
Stephen Gianino Meet the Author
Stephen Gianino  is the director of operations at Cee Kay Supply in St. Louis, Missouri, and at www.ceekay.com.