Many of you (at least those of you who’ve been reading my “Lean & Meaner” series) have taken steps to learn and implement lean in your businesses. Obviously, this is happening at many different levels through many different resources at varying degrees of success. Lately, however, you’ve been calling for more. You want a deeper understanding because you’ve been doing lean for several years and have gotten to the point where its real value has been revealed and real results generated. Since I’ve been writing these articles for about four years now, I suppose we’re at the point of taking it to the next level.

Clearing the Fog

Beyond the tools of lean and kaizen, 5-S organizational tactics, visual management systems and standard work lies the secret of the Toyota Production System (TPS). Frankly, many businesses never clear the fog in order to see it, but it’s right there in front of you and has been since you’ve started your journey. In fact, everything you’ve created, the things I’ve described above, are there to serve only this end. They’re there to help your organization uncover the future, to reveal a better way for the sake of all parties involved in the business scenario. Like a sculptor standing at a new stone, the masterpiece is already inside. It’s your job now to simply reveal it by taking away all the extra and unneeded crag.

Years ago, I was told that lean is a “learn by doing” process. Like many things I’ve learned about lean, I thought I knew what that meant the moment I heard it. I thought it meant that you can talk about it, read about it and go to every seminar available, but you won’t understand it (learn it) until you get your hands in there and just start doing it. The truth is, I was wrong, and I’ve discovered that you can learn about it without actually doing it. But that’s where the meaning ends. You see, the phrase “learn by doing” doesn’t mean “learn lean.” It means “learn how to create the future,” and know which way to go next – just like the sculptor learning which cut to make next, which hammer to hold, which chisel to strike.

Why are you a lean shop? What is it that you’re trying to achieve? Do you want your picture in a magazine or to wow your 20 group with some crazy-looking shop floor setup? What Toyota’s Tachi Ohno saw when he first visited Ford’s Dearborn plant after World War II was not the revolutionary production area setup. While a line of vehicles flowing down from step to step with all the tools and equipment needed secured to each station was new and fascinating, he saw that this line could be the most clever way to make problems within it important and simple to fix. What he saw was that problems within the production line would shut it down quickly. And when it was shut down, the effect would be costly, therefore driving a need to not make mistakes, to do it exactly right the first time.

At Dearborn, Ford addressed these potential problems by adding massive amounts of inventory at areas where breakdown was likely. The focus was, “Don’t let the line shut down,” which was opposite of Ohno’s. Ohno’s was, “In order to improve, we must let the line shut down.”

So how does that relate to you? If you have flow through your shop today, in any manner, you have the same line that Ohno saw in Dearborn. You have the tool to identify and make critical the problems your business experiences. Your flow line you see was not built to make a work step more efficient but to highlight a step’s most important component: its relationship with other steps that make up the whole of your business. Now, things like standard work, visual management systems and 5-S organizational techniques are simply improvements made to processes once flow is established, because without them, the line would not work well. It would constantly shut down.

But flow is king! It’s the most critical part of all the lean tools.  So why do you have lean? If you don’t have it for the sole purpose of creating the future, to create a much better outcome for everyone involved, then your gain in going lean is going to be minimal.

This is where people get stuck. The problem is that some of the tools of lean, like 5-S or standard work, do create efficiency, but when taken out of their proper context, they can create some disappointing results. But lean is not about all these tools; it’s specifically about getting better, quickly and forever.

Pursuit of Perfection

The fifth fundamental of lean says that you must not pursue your competition or a benchmark but rather perfection. That means that if you’re going to change the outcome or build a better future, you must start at the end and let the pieces fill themselves in.

So you have to paint a picture of the future. What does it look like? It has to be clear in your organization’s mind because without it, how do you know where you’re going? Like the sculptor, he knows what’s inside the stone before the first strike.

Let’s be specific here to better illustrate this concept. What would a better world look like for a collision repairer? Here’s my quick estimate:

Work would be performed immediately (within an hour) after an accident.

Work would be completed on average within two days.

It would take techs one-quarter of the time to perform the repairs as it does today.

All repairs would be of perfect quality.

New work would always be available to the shop (because customers would demand you).

The work would be very profitable.

The price of repairs would become more affordable.

Employees would be engaged as important components of the business, not as equipment.

Customers would enjoy the repair experience.

Insurers would act as partners in the transaction and look at the shop as such.

Vendors would gain value from doing business with you.

What’s important is that you define the future you’re trying to create. What I’ve described here is just an example to set up the explanation.

Pull the Trigger

You have to create a trigger event to take the snapshot that begins to teach you the next move. What triggers are commonly used? There are many options and you should feel free to create your own unique way, but lean businesses most commonly use a measure of time, a measure of throughput or a measure of quality. For example, if time will be your trigger, determine a consistent pace for your line (like one every two hours) and check at that moment whether it worked or not. If not, why? If throughput is your trigger, determine how much of whatever you choose should be produced every [time factor]. Did it happen? If not, why? If quality is your trigger, determine a quality standard and, each time your line moves, check to see if it meets the quality standard. If not, why? Any of these triggers can be used and will, in fact, improve all of them since time, throughput and quality are interrelated. In other words, if you improve quality (make it right without doing over), then the whole line goes faster. If you increase speed in the line, then quality must improve (because a do-over will slow you down). If you increase throughput, the speed and quality had to be there or it wouldn’t have been finished. What’s important is that you pick the right trigger one for you – one based on your future goal. So if you know your line today can produce a perfect car every three hours, you better not choose three hours as the trigger or you’ve done nothing except prove you’re right.

The Act of Doing

Now that you have painted a picture (for example, the above is what your organization is now going to go build), how do you go about it doing it? When Ohno saw Dearborn, he knew he wanted a high-quality car made very quickly so inventory levels could be at nearly zero, keeping costs down to generate large profits and make the product affordable to many. He saw that if he set up his factory’s line to do this, he could quickly identify the problems that kept him from realizing his vision. Specifically, his line needed to start with low inventories, and was expected to go very fast, and was expected to deliver perfect quality. And that’s what he built – a line that “looked like” it would do this. But he built it knowing that it wouldn’t work like that once started. He knew that he would have to pay close attention to the problems and have resources at the ready to solve them. He knew that the problems were going to be best solved by the people doing the work, so they needed to be used to doing so.

As you can see, all of the elements of TPS began to develop but started with this first basic concept. Define perfection and start creating it. Now that you have the basic tools in place, you must begin to change the process to move towards your goals.

Nearly every business would take these newly defined goals back to the highest levels of the organization and begin to draw up the road map. Many consultants would be consulted, specialists specialized, analysts analyzed and all kinds of money spent to learn how to create this future. Lots of experiments would be run, tests conducted, study groups grouped and the like, with the objective of knowing all the potential problems and pitfalls so in the end the business would know the best possible way to get where it wanted to go.

We all know what that looks like: a watered down pile of garbage that, at best, gets one metric to tick up for a quarter or two. In the end, these exercises are rarely successful and almost never sustainable. They really only stick when you’re lucky enough to capture that one-in-a-million person who has enough experience and insight and has been there before to make all the best moves. But
for you, this kind of inefficient learning isn’t needed. This is where the phrase, “You must learn by doing,” kicks in.

So instead of analyzing how to get there, you’ll simply start by doing, by making a change at the very first thing that pops up in your flow line and learning what happens once you’ve made the change. This is the entire objective. Use flow and all its supporting tools to teach you what to change next. With that, it becomes obvious that change and, specifically, continual change, is what’s needed to move toward the goal. So your business then changes and you move from the collision repair business to the process change business. We at The Body Shop @ say we don’t fix cars but fix the process of fixing cars. For us, we learn how to get closer to our future by actually doing the process as if the future were here.

5 Whys

So here’s what to take home. What’s required is a snapshot comparison in time of where you stand against this perfect state. This snapshot is the thing that begins to teach you the next move. For example, if your goal is to fix every car in three days, you need to understand where a specific car should stand after day one or day two or whenever. It’s the comparison of current state to perfect state that allows you to ask the question, “Why is it at this point and not at the point we want it to be?” or, “What is the thing or things that have kept this one from being there?”

This information needs to first be sifted down to expose its root cause. Toyota refers to this as the “5 Whys,” which says that if you ask why a problem happened five times, you’ll get to the real cause. Once the root is understood, this info must recorded and prioritized so that you can use it to identify which problem you must go fix now. We’ll talk more about the tools of problems solving later. Right now, it’s the trigger event that you have to create to take the snapshot.

New Outcomes

The next step must begin with changing your process to achieve new outcomes. The other pieces will begin to fill themselves in. This process of continual change for the sake of improvement is what creates the future. Change is going to continue to happen anyway, but you need to be in charge of to what end that change will create.

Today, we’re all faced with an ever more difficult business situation. You must be able to define your advantage to the customer. Are you the quality shop, the friendly shop, the fancy shop, the insurer shop or the non-insurer shop? At the end of the day, does the customer really care much about any of these things when it comes to choosing you or me? Let’s face it, we’re all pretty good, at least those of you reading this. If you’re going to make it and build something worthwhile instead of just make a paycheck, you have to be substantially better. This is how Toyota has done it, it’s how The Body Shop @ is doing it, and hopefully some of you will do it as well so that we, as an industry, create better outcomes for all of us.

As we all know, as improvements happen anywhere, in any industry, they’re quickly and broadly adapted across the balance. But those who create the improvement remain the strongest.

The “I Regret to Inform You” DRP Downsizing Trend

The start of any “lean” transformation begins with identifying the customer and their needs, so that you can build a process to specifically serve them. Your entire business model then is organized around this objective, and continual improvement activities start moving toward their desired outcomes. But what if the customer is the insurer? What if you’re one of those shops that has to work to meet the insurers’ needs to survive? We would all like to think that steering doesn’t exist and an environment exists today where we can compete for the collision repair customer on an equal basis. But the truth is that for many of us today, competing for this customer’s business isn’t possible. In other words, I can’t do a better job than my competition and have that result in more work from the insurer. So how do you compete for customers when the insurer, in some cases, won’t let you get to them? It’s nearly an impossible situation. Most “lean” consultants would tell you that in these cases, you need to reconsider the needs of the customer. The need you’re used to trying to fill for the primary customer (the vehicle owner) may not be the need of the secondary customer (the insurer in the above scenario). The primary customer wants the things that we all are used to trying to deliver: high repair quality, fast turnaround and great service. But the secondary customer here probably doesn’t want those things. Of course, if you ask the senior-level management team, they’ll  tell you that “We want that stuff as well.” But the problem is that it never gets translated that way when it comes down to the street level – to the men and woman we have to deal with and make happy each day. In most cases, the desk reviewer or reinspector doesn’t ask you, “How’s the quality on this one?” or, “Is the customer feeling good about the job so far?” He or she asks you specific things intimating that someone above him or her has translated the primary customer’s needs into some internal metric. The intent is there, but it’s the translation that misses the mark. The kicker is that these metrics often are different from insurer to insurer, and they also change as some new senior-level manager gets promoted. So how can you build a better business model if the customer’s needs are that varying and inconsistent? On top of that, even if you can deliver the metric, does it build you any loyalty with the insurance customer? Does it do you any good? Today, many shops are experiencing the next new fad in insurer-collision repairer relations: the “I regret to inform you” DRP downsizing trend of 2010. Many of you are getting the letters and calls or at least know someone who is. You’ve spent years trying to service these customers and their insureds. You’ve built relationships based on mutual respect and service, but suddenly things change and you find yourself with 20 percent less volume in a day. What can you do to avoid this? How can you build a business model to meet needs when you’re not sure what they are? There’s one thing that’s certain in our business: The person who drives that car every day will appreciate your work if it’s all delivered at a level substantially better than your competition’s. But don’t mistake pretty good for great. Pretty good just puts you in with most shops. Great means delivering something that no one has ever delivered. Lean can be the key to getting to this new level of service if the right end goal is kept in mind. So, imagine a world where we no longer have to jump through hoops to meet some metric, or a metric that will change next quarter but we end up without that business anyway the following year. Wouldn’t that be something? The takeaway here is this: No matter what an insurer might ask you to do and no matter which new program you may have to implement, never stop trying to serve the vehicle owner. If you serve the customer, he or she will be loyal. So, in your lean transformation, put the vehicle owner’s needs first because doing the right thing by them will always be a good thing. Today, most insurers dictate how we should work because, on average, we haven’t been able to deliver what they want on our own. That’s why it’s so inconsistent and is the “let’s try something else” maneuver. But you can change this cycle and create a future in collision repair where your product is so good that customers will demand only your business for their repairs. Insurers’ attitudes will change when we can perform at new levels and cost, quality and service are at the forefront of how we work. There’s an old saying that goes, “You can change the people around you, or you can change the people around you.” What’s it going to be?

Contributing editor John Sweigart is a principal partner in The Body Shop @ (www.thebodyshop-at.com). Along with his business partner, Brad Sullivan, they own and operate collision repair shops inside new car dealerships, as well as consult to the industry. Sweigart has spent 21 years in the collision repair industry and has done everything from being an independent shop owner to a dealership shop manager to a store, regional and, ultimately, national director of operations for Sterling Collision Centers. Both Sweigart and Sullivan have worked closely with former manufacturing executives from Federal-Mogul, Morton Thiokol and Pratt & Whitney in understanding and implementing the principles of the Toyota Production System. You can e-mail Sweigart at [email protected].