IMI PowerPoint template

Maximising ROI with irtec

Steve Nash FIMI CEO, The Institute of the Motor Industry

Dr Paul Spear MIMIHead of Return on Investment

IRTE Conference 20131irtec inspection licence ROI study outlineInstitute of the Motor Industry (IMI) and SOE

The irtec ROI study

The industry speaks - for video, please visit http://www.theimi.org.uk/agenda/return-investing-irtec-inspection

The irtec data

The irtec payback (ROI)

Conclusions2The Institute of the Motor Industry (IMI)

3The irtec partnershipIRTE

Professional Sector of SOEIMI

Sector Skills CouncilIMI Awards

Awarding OrganisationAssessment Centres

Industry facingGovernanceSteering Group Marketing

Develop Practical AssessmentsDevelop Underpinning Knowledge questionsExpert Working Group

Quality Assure irtec Assessment Centres

Deliver irtec Assessments

4irtecirtec assesses the knowledge and competence of technicians in the commercial vehicle, trailer and passenger carrying sectors.

Technicians can be assessed on theory and practical skills at 4 levels:Service & Maintenance TechnicianInspection TechnicianAdvanced TechnicianMaster Technician

This ROI study focuses exclusively on the irtec inspection licence.

5irtec inspection licenceThe MOT Initial Pass Rate (IPR) relies on an effective process for vehicle inspection before annual test. Poor inspection can result in a VOSA prohibition notice requiring rectification and a vehicle off road (VOR).

A good roadworthiness OCRS is evidence of effective inspection and maintenance and a good MOT IPR. The way to achieve recognition of current competence in HGV inspection is through the irtec inspection licence.6irtec ROI studyThe IMI objective was to measure and assess the business impact and ROI of adopting irtec inspection accreditation.In particular, increases in productivity and impact on MOT IPR as a means to improve their OCRS.We also wished to observe how companies expectations of improved OCRS through increased MOT IPR are driven by their technicians skill and will to attain the irtec inspection licence.

DAF2010-12 analysis of MOT data pre/post rollout of irtec inspection.DSV Commercials2010-12 analysis of MOT and utilisation pre/post rollout of irtec inspection.Morrisons2012/13 assessment of irtec inspection pilot prior to national rollout.7The irtec data

8DAF Trucks Dealer NetworkIn 2010, DAF Trucks wished to shift the perceptions and behaviours of its service centre technicians in how the outcomes of vehicle inspection within the workshop environment have direct implications for the roadworthiness OCRS of their customers on the UK roads.

Tony Shepherd, DAF Trucks After Sales Manager, committed DAF to putting all of its network technicians through the irtec inspection accreditation.

This also served as an example to the industry that even a leading company recognises the need to ensure all its technicians work to a common, robust inspection standard. That standard is the irtec inspection accreditation.9DAF Trucks Dealer NetworkThere was an implicit belief at DAF that focus on OCRS through a common inspection standard would impact the networks MOT first time pass rate. DAFs belief was correct.

We looked in detail at DAFs consolidated network MOT data for 2009, 2010, 2011 and 2012 comprising around 100,000 MOT test submissions providing IMI with excellent statistics.

We are unable to release the data charts shown at the IRTE Conference but will describe the results here.

10DAF Trucks Dealer NetworkThe trend for 2009 was an increase in MOT pass rate from around 83.5% in January to about 89% in December.

DAF networks MOT pass rate varied throughout 2010, but remained flat, averaging around 89%.

It was in 2010 that DAF refocused its inspection technicians on the significance of the OCRS to their clients and its foundations in vehicle inspection.

Recall that DAF, even as a leading company, wanted to demonstrate that all its inspection technicians work to a common, accredited standard.

11DAF Trucks Dealer NetworkThe outcome of this refocus on the importance of customer OCRS across the DAF network is demonstrated in DAFs MOT performance for 2011 and 2012.

The flat MOT performance for 2010 is followed by a lift in the network average MOT pass rate from March 2011 which continues through 2011 and throughout 2012.

12DAF Trucks Dealer NetworkBy modelling the DAF MOT pass rate data for 2009 and 2010, we can project what the expected DAF MOT pass rate would have been in 2011 and 2012 if DAFs incremental growth in MOT pass rate had continued. This we call the counterfactual with which we compare actual performance.

The projection closely resembles a learning curve and illustrates the diminishing returns a company can expect over time as they pursue only incremental growth in MOT pass rate.

There is a clear, statistically significant, step change in DAF MOT pass rate from March 2011 above that predicted by the 2009 and 2010 data.13DAF Trucks Dealer NetworkWe need to be certain that any change in the DAF dealer network performance is not mirrored in the MOT data for the whole of the UKs truck and trailer MOT pass rate data. There is not a step change in the 2011 data for UK plc.

The step change in the DAF data therefore represents a performance change attributable to the DAF dealer network substantially due to the focus on customer OCRS and the drive to get its network technicians irtec inspection accredited.

The expected 2011 IPR for DAF was 90%. DAF exceeded 92%.

The expected 2012 IPR for DAF was 90.5%. DAF achieved 93.5%.

14The irtec data

15DSV Commercials LtdThis case study concerns DSV Commercials service centre, Immingham which we will refer to as DSV Commercials.

In 2010 Chris Marshall, Dealer Principal, DSV Commercials recognised his business needed to meet increasing customer expectations through an improved focus on customer roadworthiness OCRS.

From Jan 2010 to July 2011, DSV Commercials MOT first time pass rate averaged a respectable 92%.

However, the pass rate in any successive month was unpredictable. A 100% pass rate occurred only once; in any one month the MOT pass rate varied unpredictably between 82% and 100%.

16DSV Commercials LtdThe mechanism by which DSV Commercials attempted to take control of its MOT pass rate was through a more efficient inspection routine for vehicles and trailers.

Chris Marshall decided to tackle this problem by recruiting a very experienced workshop manager. He also trialled two of his technicians on the irtec inspection accreditation from May to Aug 2011.

The feedback from the technicians regarding the learning process involved in achieving the irtec inspection licence and the promising changes in performance and perceptions of the two pilot technicians following irtec convinced Chris Marshall to ensure all his 16 technicians achieved irtec inspection accreditation.

17DSV Commercials LtdThe process of coaching and getting the remainder of the technicians through the irtec inspection accreditation commenced in Nov 2011 and was completed by Oct 2012.

This period is marked by a striking transformation in the MOT first time pass rate achieved by DSV Commercials over this period.

From Jan to Dec 2012 DSV Commercials achieve a 100% MOT first time pass in 8 months out of 12, as Chris Marshall remarked, a paradigm shift in business performance.

18DSV Commercials Ltd the ROITechnicians have gained confidence in their competence and now have a more efficient and improved inspection routine.

DSV Commercials have seen an increase in up time of their customer assets their vehicles - by decreasing the return of faulty work.

Customers of DSV Commercials have been attracted by its improved MOT first time pass rate.

Less return of faulty work and decreased inspection times translates to more available hours to sell by technicians, getting it right first time on the day of the inspection and in between inspections.

19The irtec payback (ROI)Key guiding principles of the Phillips ROI methodology

Credible sources of dataVOSA, DSV Commercials Director, Workshop Manager, Inspection Technicians

Conservative estimates of benefitsIsolate the effects of the intervention.Conservative estimates and confidence levels discussed with DSV Director

Ideally capture only 1st year benefits

Account for all costs20DSV Commercials Ltd the ROIWe have isolated the effect of the irtec inspection accreditation process to a 4.5% increase in technician utilisation.

Using the principles of the Phillips ROI Methodology:Credible sources of dataConservative estimates of benefitsIsolate the effects of the intervention.Ideally capture only 1st year benefitsAccount for all costs

We have demonstrated that DSV Commercials generated (conservatively) 220% ROI from irtec inspection in the first year

in addition to increases in MOT first time pass rate and new business.

21irtec technician feedback

22irtec technician feedbackirtec [inspection] showed me a different and shorter routine which is very thorough. I still use it now and am much quickerirtec is a good way of knowing you are competent at your jobirtec provided me with more confidenceWe get through more vehicles a day, so productivity has increasedIf trucks are more reliable and not breaking down it will give the Heavy Vehicle sector a better profile in the publics eyes

23irtec logistics industry feedback irtec played a fundamental part in bringing Greggs to Imperial, it opened the door for negotiations based on a huge step change for their business Willie Hensman - Service Manager, Imperial Commercials Bellshill (DAF)DSV Road Ltd expect a maintenance provider to have a high MOT pass rate, with irtec inspection accredited professional technicians providing an outstanding service, with the minimum amount of downtime and disruption to our business. Keith Northen - Fleet Manager Haulage and Equipment, DSV Road LtdCEMEX as a large organisation felt safer in the knowledge that our service and maintenance provider has irtec licensed technicians throughout the DAF network. This gives CEMEX peace of mind in the produce we utilise every day in our business Mike Fowler - Area Logistics Manager, CEMEX (Customer of Watts Truck and Van (DAF))24Conclusionsirtec inspection is a repeatable, systematic process against a robust accredited standard.irtec inspection is a mechanism to take control of MOT IPR.

DAF Trucks and DSV Commercials have shown that adoption of the irtec inspection standard has improved their MOT IPR.

DAF Network average IPR2011 IPR projection was 90%. DAF exceeded 92%.2012 IPR projection was 90.5%. DAF achieved 93.5%.

DSV Commercials a paradigm shiftBefore irtec: achieved 100% IPR in only 1 month out of 12.After irtec:achieved a 100% IPR in 8 months out of 12.25ConclusionsMorrisons, DAF Trucks and DSV Commercials have shown that a change in technician culture can be achieved through focus on OCRS.

DSV Commercials generated 220% ROI from irtec inspection in the first year, achieved increases in MOT IPR and new business.

We suggest a similar organisation could achieve 200% ROI with a light ROI measurement process.

The business benefits gained by the organisations in this study were the result of their technicians achieving irtec inspection accreditation.26Please visit

www.theimi.org.uk/roi

for more information

27The IMI acknowledges the help of DAF Trucks LtdTony Shepherd - After Sales Services ManagerTony Pain - Marketing Director(DAF) Watts Trucks and Van Simon Griffin - Dealer Principal Cardiff John White - Service Manager CardiffBen Adams - Service Manager Newport(DAF) Imperial CommercialsWilliam Hensman - Bellshill Service ManagerJim McGuckin - Cumbernauld Dealer Principal Morrisons Garth Braithwaite - Engineering/Services National Controller Dave Seddon - General Manager for Vehicle Maintenance UnitDSV Commercials LtdChris Marshall - DirectorLes Smith - After Sales Manager Tim Twidale - Quality and Compliance ControllerVOSASteve Kendall - HV Testing and Approvals Schemes Manager, Scheme Management and External Relations

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