Improvement in your business requires knowing what’s wrong with it. Pretty simple, right? I mean, you wouldn’t just start throwing suspension parts on a car that doesn’t take an alignment, would you? (Just a little joke for you damage appraisers out there.) But you get what I’m saying. In all seriousness, if you’re going to fix anything properly – and that means done exactly right on the first try – you have to first know exactly what’s wrong with it.
So what’s wrong with the collision repair industry? Based on my experience and from what I hear from the shop owners I talk to, it’s things like low gross margins, high overhead costs, low net profits, pricing pressure, alternative parts pressure, inconsistent volume of work, the shrinking labor pool, etc.
But are these the actual problems or just the symptoms? In other words, is the problem the pull to the left or the bent knuckle?
What is it that’s causing these symptoms we experience every day? For most of us, it’s the way we operate our businesses. You see, the outcomes we experience (the results) are a direct result of how we do things. You can’t play golf with a 2-foot-long driver and expect to shoot even par (John Daly notwithstanding). It’s the fundamental way we work that causes these disappointing outcomes.
Today, the basic requirements for the business remain the same: Fix the car – and that’s the stuff we understand and execute best.
When that was the majority of the requirement, we had successful outcomes. However, fixing the vehicle is now just a portion of what we need to perform to meet the customer requirement. It’s the other stuff that now holds back performance. Today the requirement also includes:
- Completing repairs by a certain date.
- Managing rental cars.
- Processing a large portion of the paperwork.
- Keeping the price in line with the competition.
- Researching alternative parts.
- Communicating with the customer.
- Communicating thoroughly with the insurer.
- Meeting training and certification requirements.
- On and on – and growing with every new program.
Like it or not, this is the new value stream we own. Our portion of the activities required to get a customer back into a repaired vehicle from the moment of the accident has grown. So it’s this current value stream that’s broken – the series of activities we now must perform to take our customers from “I need my car fixed” to “Thanks for the business.” It’s how you go about fixing this new value stream that you need to consider.
What are your options? Most hired guns would tell you that you need to break down the whole thing into its basic elements and examine each, looking to see how you might get better results from the components. Often, benchmarks will be targeted, and you’ll start making changes because the math says it’s better. But because you haven’t identified the problem, in most cases,
you’ll never see any maintainable improvement.
Think about it this way. Let’s say you’re talking about improving the performance of your car, and the measurements show that your fuel injection system is restricted, your exhaust doesn’t flow well and your gear ratio is wrong. Will fixing these things help if your tires are flat?
You’ve got to understand that you cannot independently improve pieces of your business and expect to see overall improvement. It doesn’t work! The only way you ever make any sustainable improvement is to work from the top down. You must look at the overall picture of performance and then drill down to the thing that’s constraining the results.
This is how “lean” works. It builds a system that shows you what to fix.
Think ‘Overall’ Performance
Think about your business as a set of railroad cars rolling down the track. The objective of this train is to go faster because that’s what the customer wants. They want quick and correct service at a value. So if this train goes faster, everybody wins …
- The train going faster gets the product or service to the customer faster.
- The train going faster has forced the train company to improve the train’s quality because the train can’t go faster unless everything happens correctly. If the train is built poorly, it will derail. The only way to go faster is to improve its quality. (Fast and good do go hand in hand, they have to.)
- If the train goes faster, it can make additional runs per day, or it can make the same runs with less resources because it’s easier to do. Either way, this means a lower cost per trip, more profit for the business, more opportunity to compete on pricing, more potential customers.
Get that visual in your head. Got it?
Now here’s the question: How fast can the train go? What limits its ability to go faster?
It can only move as fast as its slowest car!
You can grease the wheels, align the tracks or remodel the lobby, but it still ain’t going no faster until you find the slow car!
It’s the big picture that counts – the overall performance of your business. I’m talking about the net profit, the level of quality, the level of service and the value the customer receives. That is what verifies success. The problem is that we tend to use other measurements to attempt to get there, measurements that only reflect the performance of individual components and almost never all of the components.
The truth is that observing how all of the components work together to deliver the overall outcome is rarely even visible. This is why we go through the trouble to rebuild the business – so that all can be seen. This is why you must create a process of interdependent flow, where not only can you see all the railroad cars, but you can also connect them to identify the slowest one.
This is what “working from the top down” means. Look at the overall business, the relationship between all the steps you must perform and begin to incrementally improve the areas of constraint. How wonderful would that be, knowing exactly what’s wrong with the business and knowing that if you fix that one thing, you and your customers will experience overall improvement? See box below:
|Your Business (the Train) = the Top|
|The tasks:||Write note|
|Print parts list|
|**The sum of the tasks equals the step
**The sum of the steps equals the process
Built to Improve
Over the last few months, we’ve helped outline how to build your train using a specific, proven process called kaizen. Thanks to Toyota, we don’t need to spend years trying to figure it out. But understand, the process is there to serve one purpose – to improve.
Most people who visit our BodyShop @ stores get the wrong impression. They see what looks like an assembly line (the railroad cars) and think, “Oh, that’s a production facility. I know how that works, and our employees aren’t assembly line workers.”
But what is a production facility anyway? I don’t know anyone who wants to fix less cars slower.
But I digress. You see, the train isn’t there because it’s a better way. It’s there to identify the problems that, when eliminated, lead to the better way.
When Taichi Ohno (the father of the Toyota production system) walked into Ford’s Dearborn plant for the first time, he didn’t see a clever new way to build cars; he saw a clever new way to identify problems. The visual flow of work said to him, “If you watch how this flows (and
doesn’t), it would be easy to fix.”
That’s the key! Build a system that shows you how to improve. Get into the business of improvement. Not something you do when the crap hits the fan. Something that you always do.
One last dose of reality, especially for those of you who are working this way: Don’t think that doing this instantly makes you twice as good as you were before and as everyone else. What you’re looking for is incremental improvement. If you can just get a little bit better every day, maybe make that train roll half a mile per hour faster each week, how fast will it be going next month, next quarter, next year?
Take a look at how you work.
Is labor profit the problem, or is it all the starting and stopping your techs must do every day because something like parts or approval or information is missing? Why do you let that
Is a lack of technicians the problem, or is it that you can’t possibly produce any more work due to how your process lets them work? Why do you let that happen?
Is the pressure on pricing or parts usage the problem, or is it that your overhead is too high to make any money at these rates? Do you really need this much overhead? Why do you work this way?
You don’t have to.
Pull all the pieces together so you can see how they affect each other – and you’ll discover what the real problem is.
As always, hang in there and let us know if we can help. Until next month …
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].