Companies brandish the term “Return on Investment” (ROI) frequently and casually, most often to encourage a sale. Few companies, however, offer clients and potential clients a “What if” model to calculate and reflect the real ROI
In order to develop the “what if” model for the ROI, ROR procured and analyzed over 600,000 invoices representing more than 730,000 repairs. The resulting data has been validated by MHE industry experts. Below are some interesting facts gleaned from this data analysis:
1. Our research shows repair shops were notified an average of 5 times that a PM was due, with PM’s performed only 2.5 times per year. The repair shops actually performed PM’s only about half the time, failing to provide the most cost-effective service on the forklifts—Preventive Maintenance.
2. Repair shops performed an average of 6.5 corrective repairs per year. In other words, repair shops performed more corrective repairs than PM’s on forklifts. Given that repair hourly rates are higher than PM hourly rates, it is clear that the repair shops are looking out for their own financial well-being—not that of their clients.
3. A client’s administrative costs will vary due to salary expenses, employee benefits, software requirements, office space expenses and other costs associated with the processing of an invoice. Depending on the administrative costs to process a single invoice companies paid:
|No. of Invoices||Administrative Cost per Invoice||Total Administrative Cost|
4. 80% of the invoices had only one repair. Therefore, the actual cost of an invoice with a single repair will increase relative to the administrative costs to pay that invoice.
5. 49% of invoices totaled $100 or less; 24% were between $100 and $200; and 27% of the invoices were greater than $200. In 49% of the cases companies spent more money paying for the invoices than the invoice value.
6. Clients paid 36% more in sales taxes than travel and freight fees combined. Those taxes are considered double taxation because the repair shop providers paid sales taxes and clients paid taxes over taxes.
7. Repair shops billed their clients the time technicians spent driving from repair shops to company sites and from company sites to repair shops; the shops also billed travel 15% of the time—an example of “double-dipping” that cost their clients thousands of dollars!
8. Repair shops billed freight on 18% of the invoices, often for parts the technicians should have on-hand.