Paint. It's one of your most frequent and largest monthly purchases. Given its magnitude, have you ever really looked at your paint system and how it affects your bottom line? You may be surprised by what you find.
Most collision repair facilities have never truly evaluated their paint shop operation. But it's important to look at benchmarks to determine whether the paint technicians are getting the most out of the system, if there's excessive paint and material waste, or if the square footage of the paint shop is fully utilized. By taking a close look at your shop's paint department, you may find hidden costs that can have a big impact on your bottom line. In fact, many paint department bottlenecks can actually be traced back to the front office.
Where do you start in the evaluation of your refinishing department? By looking at three key performance indicators:
1. Paint Labor Sales Per Repair Order.
2. Vehicles Per Booth Per Day.
3. Daily Paint Labor Hours Per Booth.
No. 1: Paint Labor Sales Per Repair Order
In analyzing the productivity of your refinish department, begin by looking at the paint labor sales per repair order. "It's as basic as 'Collision Repair 101,' " says a training center manager for a leading paint manufacturer. "To create more revenue in your paint shop, you have to get more cars in and out of the booth. The easiest way to do that is by looking at your paint labor sales per repair order."
To calculate the number of paint labor sales per repair order, you need to know your paint labor sales and the number of vehicles refinished. Divide paint labor sales by the number of vehicles repaired to determine your paint labor sales per repair order.
Paint Labor Sales/No. of Vehicles Repaired = Paint Labor Sales Per Repair Order
For example, if a shop's paint labor sales are $41,250 and the shop repairs 50 vehicles each month, the equation would look like this:
$41,250/50 = $825 Paint Labor Sales Per Repair Order
If the monthly paint labor sales of a shop are $15,000 and the shop refinishes 55 vehicles:
$15,000/55 = $273 Paint Labor Sales Per Repair Order
Generally, paint labor sales on an average repair order of $2,000 should be between $300 and $400. If your number is low, perhaps your shop is limiting its potential by only doing small repair jobs. In addition, your shop's estimator may be writing inaccurate estimates, which can hurt the overall profitability of your paint shop as well as labor efficiency. Lower refinishing sales also represents fewer paint labor hours, which will also impair material profitability.
•••Note:••• One of the biggest mistakes a shop can make in the beginning of the repair process is to expedite the estimating process. Many times, a shop will only use the insurance company's estimate to quickly load the car into production or the shop will write a fast estimate just to get the paperwork started and the car moving through the production line. Accelerating the estimating process will only cause additional problems in the long run. Writing a complete, detailed estimate will make all the difference in the world to your shop's production flow.
No. 2: Daily Paint Labor Hours Per Booth Per Day
To keep up with today's state-of-the-art automotive finishes, modern paint shops require a large amount of technical equipment. Because of this, the paint shop incurs the highest cost per square foot of any department in a collision repair facility. To achieve the highest return on investment, the paint shop should produce the maximum achievable hours per day. This is achieved by systematically lining up vehicles for refinishing.
To ensure that your paint shop is producing the maximum achievable hours per day, the second item to review in your refinish department is the daily paint labor hours per booth. This is a good cross-check of your paint shop's productivity. It provides a thorough review of your spraybooth's efficiency and is a good indicator in determining whether to install an additional booth.
To determine the daily paint labor hours per booth, you'll need your paint department's paint labor hours, the number of work days in the month and your number of spraybooths. To calculate, divide the paint labor hours by the monthly workdays to determine your paint labor hours per day. Then divide that figure by the number of spraybooths in your shop to determine the daily paint labor hours per booth.
Paint Labor Hours/Monthly Work Days = Paint Labor Hours Per Day
Paint Labor Hours Per Day/No. of Spraybooths = Daily Paint Labor Hours Per Booth
For example, a shop's paint labor hours is 500. In January, there were 20 monthly workdays. The shop has one spraybooth.
500/20 = 25 Paint Labor Hours Per Day
25/1 = 25 Daily Paint Labor Hours Per Booth
In another example, February has 22 monthly workdays. A shop has two spraybooths and 600 paint labor hours.
600/22 = 27 Paint Labor Hours Per Day
27/2 = 13.5 Daily Paint Labor Hours Per Booth
Assume your shop has one spraybooth with a 1 1/2 hour average cycle time (load, spray, bake and unload a vehicle). Your business could theoretically paint six vehicles each day during an 8 a.m. and 5 p.m. shift. If your average paint labor per repair order is seven hours, the refinish department has a daily capacity to generate 42 paint labor hours.
•••Helpful Hint:••• Establish a rule in your paint department that no one can go home unless there's a car prepped, masked and ready to be moved into the spraybooth the next morning. This way, when the paint technician arrives at the shop the next morning, he can move the car into the booth immediately and begin spraying. This is especially important to do on Friday nights to ensure a productive start to the following week.
No. 3: Ounces of Clear Per Paint Labor Hour
The final item is ounces of clear per paint labor hour. This benchmark is a good quick-check of your paint shop's material and production management procedures.
To calculate, you'll need to obtain the paint labor hours and the gallons of clear purchased, and then convert the gallons to ounces. To convert gallons to ounces, multiply the number of gallons purchased by 128 (the number of ounces in a gallon).
Gallons of Clear Purchased x 128 = Ounces of Clear Purchased
To calculate the ounces of clear per paint labor hour, divide the number of ounces of clear purchased by paint labor hours.
Ounces of Clear Purchased/Paint Labor Hours = Ounces of Clear Per Paint Labor Hour
For example, a shop generated 400 paint labor hours during the month and purchased 10 gallons of clear during the same period. First, convert gallons to ounces.
10 x 128 = 1,280 Ounces of Clear Purchased
Now calculate the ounces of clear per paint labor hour.
1,280/400 = 3.2 Ounces of Clear Per Paint Labor Hour
The benchmark for ounces of clear per paint labor hour should be between 2.1 and 2.4 for most shops. If the number exceeds the specified range, areas to investigate include over mixing and waste, re-spraying of panels caused by re-dos, inventory fluctuations and theft of material.
•••Helpful Hint:••• Bake your primers as you spray them. Many painters like to prime all of their jobs at night to allow them to dry overnight. The disadvantage with this is that the painter will then have to spend time the next day prepping cars before he gets one in the booth. It's best to prime a car, bake it, sand it and then get it in the booth.
Profits Are a Paint Stroke Away
Breaking down the collision repair process into smaller segments allows you to identify areas of process consistency and where you may be lacking. If you've never truly evaluated your paint department (or it's been a while since you rolled up your sleeves and dug into the numbers), you may be surprised by what you find. Hidden costs can have a big impact on your bottom line. Find them and you'll be on your way to higher paint department efficiency and profits.
•••Writer Steve Vail is training center manager for Sherwin-Williams Automotive Finishes Corp.•••
Formula for Success
Is there a secret to running a successful collision repair center? Not exactly. Successful repair operations may vary in the way they conduct their business. However, they consistently have a number of common traits:
• Paint and deliver a consistent number of vehicles daily.
• Establish production incentive plans with posted daily and monthly goals.
• Establish material incentive goals and plans.
• Effectively utilize equipment, products and training for efficiency.
• Accurately blueprint the repair process.
• Have written procedures in place.
• A common focus is shared by management and production staff.
• Maintain exceptional housekeeping in production areas.
• Have consistently steady sales growth.
Not surprisingly, unsuccessful operations also share similar traits:
• Schedule in Monday and try to deliver on Friday.
• Pay technicians on percentage of labor (instead of hourly or salary).
• Try to improve profit margins via discount.
• Have poorly maintained equipment.
• Don't train employees.
• Have low employee morale and high turnover.
• Write inaccurate estimates and don't blueprint repairs.
• Have dirty and cluttered production areas.
• Have large fluctuations in sales volume