Parts X-Factoring

I get a lot of requests for X-Factoring. X-Factoring is where you have purchased something i.e. Nuts and bolts but they are not usually added to a WO’s, but you want to make sure that all the units get these costs. X-Factoring allows these costs to be added to each selected unit. With a push of a button, the problem with Quick WO’s is that you have to post the quantities to each unit, if you have a fleet of 200 units that’s a lot of posting to be done.

@afoote, when you say X-factoring, are you talking about general shop overhead costs or something more specific?

We can do shop overhead costs today either at the facility level or at the customer level:

Parts, labor, tires, and other costs posted are added to the cost of the work order. If you also want to include the cost of unbilled shop expenses on work orders (nuts, bolts, lubricants, rags, etc.), there are two methods of doing so. One method uses the facility file; the other uses the customer file. Read the following sections describing each option and then set the “Overhead Fac/Cust Flag” switch to FACILITY or CUSTOMER based on the method to use (SSM, switch 34).

from Applying Overhead or Shop Costs

Thanks Doug but those are Percentages. The problems is with Percentages (I have found) is how do you set them? Put them at 1% and a 1,000 Work order has $10 in nuts and bolts but if you put the percentage at 10% you now have $100 in nuts and bolts for that same Work Order (a bit high). Also that would be on all WO’s even if the WO did not require any extra costs. X-factoring is a bit more exact. if you purchase $500 in nuts and bolts and you have 10 units (you select 10 but you have 12 in your fleet) that you want to apply that cost to. X-factoring will apply the $50 in costs to each truck.

OK, I’m beginning to understand your request.

The percentage in the Overhead Cost/Shop Supplies is a percentage of the labor cost for the work order, so if you put 5 hours of labor at $25/hour, total labor cost is $125. If the shop charge assigned to the customer is 1%, then the work order will be assessed $1.25 in shop charges for that job.

The reason the percentage of labor is used is that typically jobs that take more time consume more shop supplies. This also ensures a more equitable method of charging out supplies to the vehicles consuming more supplies.

One way to determine the percentage is to look the total labor cost for a prior period and divide your total shop supplies by that value. For example, if in Quarter 1 you spent $5,275 on shop supplies and a total labor cost or $295,000, the percentage you would apply would be 5,275/295,000 = 1.78%.

But what if those 10 had no work done last month. Does it make sense to divvy it out across those vehicles? What if 1 of those ten was in the shop for 2 weeks, while the others were only in for a few hours?

Ron went through all of this when he was at UPS, and that’s how he came up with tying shop supplies to Labor $. Since my labor rate per hour doesn’t change typically between jobs (unlike parts, which can be all over the map), the only significant way to increase labor cost is to increase the time spent on the job. We’ve also found that the longer I work on a vehicle, the more likely I have nuts/bolts/towels/soap/wd40/pb/drill bits/etc that I’m going to consume during that job. There’s a positive correlation between Labor $ and Shop Supply $, which is why the % has worked so well over the years.

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We run them all thru the parts module. ex. SHOP is the part number and we have that price set at $5.00. we receive them in thru the PO module and divide the total cast of the invoice by $5.00 and put that in as the quantity. it doesn’t always come out even but it works OK. then on each work order the technician can decide how many SHOP charges to post at $5.00 each based of what he feels was reasonable for what he used. We do the same this for tire repairs and balancing but use TS for tire supplies $5.00 per tire to cover wheel weights, patches, glue and other supplies.