Pretty much in every aspect of our economy today, you can find examples of high-volume production services mixed with lower-volume custom services to meet the varying needs of end-users and consumers across the country. When it comes to consumable goods, Wal-Mart sets the standard for high-volume, mass consumerism. Yet, their mega-store, hyper-mart approach is offset by thousands of independent merchants vying for consumer traffic by offering something different, such as higher-quality products, more unique or harder-to-find products and personalized service.
Home Depot and Lowe’s have cornered the “big box,” high-volume home hardware category. Heck, they invented it! Yet, Ace and True Value (among others) are doing quite well as smaller, independent franchisees catering to the female buyer with outstanding customer service and offering more convenience in specific markets. Back up the channel, many manufacturers today are finding bigger profits by catering to niche markets and meeting specialized needs by producing smaller quantities of many different products rather than ramping up to produce millions upon millions of one or two Stock Keeping Units.
In the world of automotive engines, you have production engine builders and custom engine builders. When it comes to owning the American dream (i.e. your very own home), you can choose from many production or “track” home builders, or you can have a custom home built just for you! The list goes on and on, and there are thousands of examples of huge successes and tragic failures on either side of the equation. So, what does this have to do with collision repair? Well, everything.
Certainly, in our very colorful industry, the overriding shade is gray. Whether it involves the many issues and topics we debate, such as blending or labor rates, parts or DRPs, cycle times or supplements, every subject has its pros and cons, its supporters and detractors. And, so it will be when deciding on what type of shop you will ultimately be: a high volume production shop or a custom shop providing unique and specialized services. I proclaim that, in order to maximize your profitability, you’ll need to be one or the other. Some will argue that you can be both, and even others will debate that you should be neither.
However, what can’t be debated is that the most efficient practitioners in any industry are ultimately the most successful. And, the most efficient practitioners always have a crystal clear identity of what they are, what they do and how they do it. There will always be a steady supply of vehicles to be repaired. The shops that remain to provide this service will have clearly determined how they’ll provide it and to which segment of that supply they’re most beneficial. Insurers will play no role in your decision as to which business model (high volume or custom work) is best for you, but they will play a huge role in enabling you to implement it. No gray matter there!