BodyShop Business
  Repair
The Perfect Storm
7/1/2014

By Lou Berman

If Old Man Winter had an axe to grind, this winter was certainly the year he decided to do it…and boy did he make that sucker sharp! With more than 60 inches of the white stuff and 13 separate storms, we had the third highest snowfall ever in the Philadelphia area. Without question, this winter was a collaboration of perfect “storms.”

In the modern collision repair era, it has never taken longer to process estimates, customers and claims. As a regional MSO in the Philadelphia area, the average amount of time it takes us to document damage and process an estimate for our insurance partners is one to two hours per vehicle. Combine that with the amount of claims, which were up approximately 20 percent over last year due to the weather, and you’re talking major delays. And I haven’t even touched on other factors that delayed the process.

In fear of sounding like someone crying hunger with two loaves of bread under my arms, let me state that my goal in writing this article is to share what we went through last winter to hopefully impart some lessons that the average shop can learn from and use to improve their own operations. After all, it’s extremely important that we, as our industry moves forward, meet any and all challenges, expected or unexpected, in an efficient and effective manner.

Extended Hours
Before I decided to write about this challenging winter, I interviewed all of our stores and most of our administrative and office personnel, asking them how they got through it all. The common theme among them was: they came in early, stayed late, and performed temporary repairs to buy more time and make a vehicle drivable to A) avoid an unnecessary delay to the customer and B) allow us to get caught up. Extended hours and double shifts were the standard over this winter and not the norm. Our version of extended hours was 6 a.m. to 7 or 8 p.m.

We subcontracted help to assist us with much of our administrative duties. We also had out-of-pocket expenses for rentals due to delays on repairs, even though they weren’t our fault. Here are some other expenses we had to deal with:

  • Overtime for techs. Based on missed days, weather, etc.
  • Car rental. Due to weather, parts delays, injuries, manpower, etc.
  • Subcontractors. We hired additional administrative temporary staff and second shift evening techs to make up production from “over in-flow” (when you take in more than you can effectively produce in our cycle time goal of eight days keys to keys).
  • Snow plowing.  We had to do this 15 separate times. Includes lot maintenance, salt, etc.
  • Additional parking. We rented lots adjacent to our stores for car storage, etc.
  • Damage to cars in lots. There were so many cars in tight spaces, we saw a large increase in lot damages, unforeseen circumstances, etc.
  • Weather-related injuries, workman’s compensation. Three employees slipped and fell, other employees were injured shoveling snow at home.
Most of our production employees sacrificed their weekends, and even spouses pitched in with callbacks, making files and delivering customers’ vehicles. Customer invoices and paperwork were taken home at night, and the load was spread among family and friends. We hired more people in the last three months than we have in the last three years to help offset the volume. We had to lease land in many of our markets to accommodate vehicles that were either totaled or waiting to be worked on. Parking spaces at all of our stores were allocated for customers so we could meet their needs in a convenient, efficient manner.

Walk-Ins
The additional “X factor” in this equation, observed by our CEO, Val Fichera, was all of the additional walk-in business that occurred, mostly due to the weather. From an administrative perspective, that’s a larger challenge as you don’t have an assignment waiting for you in your inbox. You have to make phone calls, assist the customer in determining whether to pursue a first-party or third-party claim, etc. It was very time-consuming, and time was what we needed during this period. But first impressions are lasting ones, and we needed to maintain that presence with our customers. Our business, despite the prolific volume of work, still needed to operate at the customer’s leisure and convenience.  

Parts
I interviewed three parts managers from three major manufacturers to get a better grip on the challenges they faced in obtaining and delivering parts. They all agreed this past winter was the most challenging one in modern-day crash parts history – not even considering some new wrinkles in parts procurement. As John Hatchell, parts manager at Cherry Hill Nissan, put it, “This winter was just brutal.”

One of the issues was snow delays with factory parts transportation from the manufacturers (delivered by union drivers). Often, at the slightest hint of snow, transportation was either delayed and/or cancelled.

Like us, the parts managers also had to deal with employees either showing up late or not at all due to the weather. According to Jeff Potteiger, parts manager for Main Line BMW Eurocars, FedEx and UPS aircraft were diverted and could not land in Philadelphia on several occasions. Also, parts from Germany were severely delayed either by bad weather grounding aircraft or storms in the Atlantic Ocean causing significant disruption out of all German ports.

“Wheels this past winter became the hot commodity,” said Ray Gluch, parts manager at Bryner Chevrolet. “There were so many potholes from the ice expanding on the roadways that we couldn’t order and get wheels fast enough. I never saw anything like it before.” Gluch listed some challenges he and other parts managers faced:
  1. Snow delays. These were weekly. It’s so much harder to deal with many separate storms than just a few. Each one took up huge blocks of time. Three storms averaging two inches of accumulation is way worse than one storm with six inches.
  2. Warehouse power outages.
  3. Tractor trailers not delivering orders due to bad driving conditions.
  4. PDC running out of crash parts due to the spike in business.
  5. Shortage of wheels due to poor road conditions.
  6. Parts on major backorder as inventory got consumed.
When you factor in the economy and how most dealerships are keeping a lean inventory to keep expenses down, you can see how significant a one- or two-day delay became when trying to obtain parts and meet cycle times. Also consider manufacturers’ projections of PPCP (post-production crash parts), or parts budgeted for and manufactured strictly for crash replacement. Simply put, all businesses forecast sales according to need. But when the demand exceeds the supply that’s been calculated at a certain rate for years, you can imagine the delays it causes. Manufacturers live and die by projections.  

Car Rental
The car rental industry is critical in giving MSOs like us the flexibility to repair customers’ vehicles and address the serious backlog that can occur when extreme, unforeseen weather hits.

“You cannot fleet forecast, hire or plan for what we all experienced this winter,” said Christine Gallagher, RVP for Enterprise’s Eastern PA division. “What we had was a tough one, and this was a biggie.”

Like everyone else, Enterprise had to make significant changes to meet their customers’ needs. According to Gallagher, cars were brought in from all over the country and websites shut down, preventing retail customers from renting cars. Employees were hired and moved to high traffic areas to meet demand.

Locations opened earlier, extended hours were offered and one-way rental traffic out of the area was shut down to avoid reducing the fleet. Car sales were practically shut down from December until late March so they could commit to service first before any fleet planning. They did the best they could to stay connected to body shops and insurance companies to stay on top of their renters’ files and control the rental life. Despite these efforts, there were still situations where expectations fell short, so compensation had to be made.
 
Who’s Your Customer?
 As a Six Sigma-trained lean facility, any time you get this type of extreme influx of work, one of the biggest challenges is customer service. Along with that is the elevated level of stress among employees working their fingers to the bone to appease your insurance partners and customers.

Do you know who your customers are? Our organization defines the customer as “anyone/anything who has a vested interest in the successful completion of repairs.” So, to us, our customers are:
  1. The consumer
  2. The insurance company
  3. The insurance agent
  4. Our employees
In the past, customer service was solely focused on the vehicle owner – and that was if you were a good shop. But there are other people who factor into many business models, and we treat them as customers, too. Customers are concerned less with your challenges as they are with their own, and rightly so. That’s human nature. Creating ways to connect with customers is the only key to keeping them, and that’s called communication.
 
Your customer will be a lot more understanding regarding winter challenges when you already have a plan in place and make that preemptive call or text, advising them of winter-related delays/challenges. Sadly, many shops today are still not prepared for the unexpected. Advising a customer that their car is late after the delivery date has expired is too late. Being proactive is the key to a calm, understanding customer.

I would hate to see what our stores would look like if we didn’t require daily documented communication. Updating every other day is a day too late because too much can happen in one day. In the customer’s mind, as soon as the snow melts, it’s as if it never happened. Despite all of the effort, communication and extended hours, there are those out there who will hold you to the same standard in the beginning of September (traditionally a slow month) as they will in the peak of winter. Pair this with a brutal winter, complex parts procurement and delivery challenges, continued emphasis on performance measurement such as CSI, cycle time, loss severity, etc., and…well, welcome to our world.

Our KPIs were negatively impacted. Time from parts order to deliver doubled, time from car arrival to shop to estimated doubled and cycle time increased like never before in the last quarter of 2013. But fortunately, none of our insurance relationships were compromised. We were still held to the same standards with KPIs despite a 20 percent increase in cars to the stores (not including customers coming to stores just for estimates and ultimately not choosing us to do the repair). There were some unofficial considerations made by our insurance partners in lieu of the extraordinary circumstances, and for that we were extremely grateful.

A 20 percent increase in revenue might sound like a godsend to some, but when you operate on the margins we do and employ Six Sigma lean practices, 20 percent for too long can suffocate you as you’ll bottleneck at some point. There is only so much nitrous in the canister.  

Our profit margins in fourth quarter 2013 and first quarter 2014 were the worst we ever had. We were in the red, and that pretty much says it all.

Are You Ready?

Are you ready? I don’t know about you, but the next time someone tells me how lucky we were to have gotten all this business, I’ll happily agree. But silently, to myself, I’ll be praying that Old Man Winter takes a well-deserved vacation.

Lessons Learned

1. Tie up your loose ends and evaluate all of your policies and procedures. You can’t fix these problems when your shop is in crisis and you have no techs, adverse weather, no parts, etc. Make your improvements and become as efficient and lean as you can. This will serve you better than you could hope for in a time of extreme challenge.

2. Being proactive is the key to a calm, understanding customer. Make that preemptive call or text, advising them of winter-related delays/challenges.

3. Schedule, schedule, schedule! Live and die by the schedule. You want to help a customer in need but you only have so much production capacity. The road to hell is paved with good intentions…and how true that is. In our opinion, customers give you only about a 24- to 48-hour grace period regarding weather-related delays. A big component of this is parts. “You can’t make the dinner without the groceries!” Collision Care CEO Val Fichera is known for saying. If we could do it all over again, we would have turned off some accounts in the few locations that suffered power outages. Even when customers come in and see we’re without power, as they probably are too, they sometimes still expect that we’re going to repair their vehicles in record time. They just don’t understand the dynamic of production and orchestrating collision repair and all of the components that need to be in sync to make the miracle of what we do happen on a consistent and timely basis…and please both the vehicle owner and insurance company.

4. Warn employees as much as possible on the dangers of the weather. Snow shoveling and even walking can be hazardous. While we all want to step up to the plate and hit a homerun, we need to be mindful of our employees first, keeping them healthy and able to produce effectively. Collision Care is a company that has always relied on and valued our employees. We’re proud that we have one of the best employee retention rates in our region. This storm reminded us that the engine that drives this company is not our process or procedures or our Six Sigma but our people. We couldn’t have been more proud of our employees for stepping up when the systems failed, computers went down and the power disappeared. This company still ran well!

5. Be flexible. We certainly were not more efficient during this storm. We were so accustomed to the efficiency we developed through our Six Sigma training and implemented at all our stores that we had to revert back to the “old way” of doing things, like ordering parts from cell phones. We had to adjust on the fly and adopt the Marine-type mentality of “Improvise, Adapt and Overcome.” So from that standpoint, our company got stronger because we had to operate without our big guns and no cover. At the same time, it was a measure of our company’s X factor of talent. Who can think on the fly, outside the box and outside the system? It was kind of like a flight simulator that’s doomed to fail. Nothing was working. Computers were down, parts were hard to come by, raw materials were at a standstill, etc. If you can produce in that kind of environment and still keep your vendors, it’s a testament to your company. (Side note: in the last quarter of the year, our CSI remained at a constant high, helping us achieve an AutocheX Premier Achiever Award from Mitchell International.)


Lou Berman is vice president of sales for Collision Care Auto Body Centers. He can be reached at [email protected].


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