As the old year turns into the new one, it’s traditionally time to do a little business planning.
This is my 47th year in our industry and my 29th as an author for BodyShop Business. For all the extraordinary changes in vehicle construction, automotive coatings, specialized equipment and overall repair complexity, we still manage to return Mrs. Smith’s damaged vehicle to pre-accident condition in her neighborhood body shop. This year, plan on getting some advice from your various paint, body and equipment (PBE) vendors to help accomplish that. Partnering with your suppliers, where both parties win, has always been a sure road to greater shop success in each of my 47 years.
Two Basic Paths
The distribution channel in our industry takes two basic paths from manufacturer to body shop user. The manufacturer of the goods – whether it’s paint, sandpaper, spray guns, spraybooths, sanders or sheet metal – must find some road to market. Getting someone to buy their stuff generally requires a good salesperson.
One option is to hire their own sales force. Typified by the major paint brands, they have thousands of salespeople directly on their payrolls. Those people make sales calls on both the manufacturer-authorized jobber distributor and directly to the body shop. They have the latest and most accurate information about their brand’s offerings. Developing a relationship with the “direct factory” guy or gal will serve you very well. Part of their contribution is their experience in other markets; it’s a big help to have someone who sees a more diverse collision repair picture. If “it” worked well in a faraway shop, it might work in yours, too.
Another option for a PBE manufacturer is to employ an independent rep agency, whose sales force is paid a commission on their sales of that brand. These folks typically have several smaller PBE manufacturers in their company stable and have good advice and the latest literature, sample products and often hands-on demonstrations from all the brands they represent. These ladies and gents make sales calls on warehouse distributors, local jobbers, body shops and industrial accounts. Their informed advice can make a big difference in your production.
Our Distribution Chain
Our industry’s roads to market are described as either two-step or three-step distribution. These terms identify how many stops the manufactured goods make on their way to the body shop. The major paint brands typically have a two-stop path: the goods go from the paint company warehouses to their local PBE jobber’s store (1) and then to the shop (2).
Most other PBE tools and supplies are likely to go from the manufacturer’s assembly plant to a regional WD (warehouse distributor) (1) and then to the local PBE jobber (2) and to the body shop (3). Whichever way they arrived at the local jobber store, they will most often be the direct vendor to the shop and the most able to partner up.
The PBE industry players with helpful input include the manufacturer, their salespeople, the manufacturer’s reps and the warehouse distributors, along with your local PBE jobber. And every one of them is looking to create loyal repeat customers by delivering useful knowledge and superior service along with the goods themselves. It’s called value-added and refers to all the good things that a great vendor partner can bring to the transaction.
In the interest of full disclosure, I should say that I was a PBE specialty jobber for 28 years and am biased toward the value of distribution. In these days of body shop consolidation and few new shop start-ups, the competition for existing body shop customers is fierce. To quickly win business away from the current supplier and paint brand, competitors arrive at the shop door offering big discounts and cash money to switch brands and jobbers. Tempting as a lower initial paint and material (P&M) cost may seem, the cheapest price isn’t the best answer to shop profitability. Producing more work faster with the same crew and facility is the better road to shop profits.
Data suggests that P&M costs run around 7 percent of shop sales. For many shops, their monthly check to the paint jobber is the largest one they write. While it’s for sure real money, both parts and labor represent much larger percentages of sales than the P&M’s single-digit cost. Labor costs about 20 percent of shop sales and parts around 30 percent, but both are paid with checks written to many different recipients. Reducing your overall P&M costs to 6 percent would be a great goal and can be expedited with help from your PBE jobber partner.
A monthly rebate or discount that reduces P&M costs looks good in the front office but often leaves the back end with many more duties and much less help. Labor time is the most expensive thing in any body shop (a $50 door rate means every minute of every tech’s time is worth 83 cents). Good jobbers can make a big difference by saving the shop labor time; it’s a key part of a vendor partnership. As many shops have discovered to their detriment, a giant discount on paint doesn’t leave enough margin for the jobber to do much more than slow the delivery truck down to 20 miles per hour and shove the boxes off the back once a week.
I’m always impressed by the array of services great PBE jobbers bring to their body shop partners. The common thread among them is the notion that solving your customer’s problems is the best value-add and the mark of a great vendor. By thoroughly understanding the ins and outs of collision repair, the great PBE jobbers set themselves apart by solving existing shop problems first.
Body shops are good at collision repair, and jobbers are good at inventory, as it’s the biggest number on their balance sheets. Letting your jobber manage your shop’s inventory saves the techs labor time and provides an accurate count to establish cost and usage. A strip of masking tape under each can that says (2) on it isn’t an inventory program. Overall P&M costs, cost by product category (clear, tint, undercoats, etc.), usage by product category, usage by technician, stock on hand and many more are part of a good inventory management program. You must identify the problem before you can solve it, and great PBE jobbers have the industry benchmarks to compare with your shop’s results. Extra cool body shop inventory programs include electronic scanning, intranet ordering (you and the jobber are linked), multiple reports with shop results in easy-to-read graphs, a regular 5S-type cleanup in the mixing room and, of course, solutions for any problem areas.
Alternate color decks, chip books, chromatic arrays, spectrophotometer calibration, computer retrieval programming, mixing scale maintenance and someone to answer technical questions right now are crucial to productive paint work. All those color-related tools require close attention and updating. Great PBE jobbers do it all, leaving the shop’s painters to get right to work and make the best use of all those 83-cent shop minutes. When the color tools are not maintained, the painter can’t find the right match and mixes and tints the days away.
Jobber partnering can include leading an annual or semi-annual shop audit. By preventing problems before they arise, production is not affected by malfunction. Great PBE jobbers have comprehensive checklists that test everything from the air temperature in the spraybooth to the moisture content in the airline to the operation of the pulling posts to the age of the mixing tints. Are your required EPA or air quality permits current? Is your hazardous waste properly stored and shipped? Ask your jobber if they provide such a program. The great ones do.
Financial & Operations Reporting
Truly partnering with your jobber means you’ll share some operating numbers, and their various value-added programs will generate reports, graphs, charts and key profit indicators that clearly identify areas where improvements could be made. Numbers rule the business world; if you don’t know yours, ask your jobber or paint rep for their help calculating them.
You don’t know what you don’t know. All the great jobbers (and shops) I know believe in training. Finding out how to do “it” quickly and correctly wins the race every time.
Here’s a little parable that one of the great jobbers told me. His customer was reluctant to attend the estimate-writing program he was sponsoring. The shop wanted the jobber to pay the tuition when it was a waste of his time. The jobber agreed that if he didn’t learn enough to earn back his investment in time and money, he would pay. The shop called the jobber at lunch to say never mind, he had already learned enough to win on just the cars already in his shop.
Train, train, train. Great jobbers have a training matrix that will help your shop keep track of who should attend what and which certifications are due.
Consultative selling and identifying and duplicating best practices are what great PBE jobbers do. Threatening your jobber to depart for another vendor to gain a bigger discount isn’t partnering. You want a vendor who will help you do more and spend less. So does your true partner; they make money when you make money.
Paint more cars, buy more paint and sandpaper. It’s not what percent the paint discount is; it’s the net income percent on the bottom line. The great jobber’s road to market is through exceptional service and contribution. If this doesn’t sound like your current PBE jobber, then shop for a better one. But bullying them into some staggering discount won’t allow them to employ the technical staff, provide inventory help or produce their best shop management tools.
Don’t just shop on discount; paint is not just paint, as many believe. Your paint brand, your jobber and their salespeople want nothing more than your success. Give the great ones a chance to show you what they know.