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The Need for Speed

Want more claims dollars? Strive to standardize your business.

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Another year has passed, during which our industry has continued to evolve, as so many other industries have done before us. Consolidators have gotten larger, insurers have entered the repair business, independent franchises have continued to grow and OEM franchise dealers have begun placing a much greater emphasis on collision repair.

How can all this growth and focus on collision repair be possible? Claim frequencies aren’t increasing at this rate, are they? No, they’re not. Still, the bigger and better-run organizations are getting even larger — and those of you who want it to be like it was 20 years ago are being shut down.

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Though this isn’t intended as doom and gloom, the fact remains that claims dollars are going to those who provide customers and insurers with what they’re looking for today. And those of you who want to get those dollars and wish to stay in the collision business must look at how these successful operations are conducting business — and then make the necessary changes to your own business to stay competitive.

It’s been a year since I wrote Part III of this "Industrialization of the Collision Industry" series and two years since I wrote Parts I and II. I highly suggest you re-read these past articles. In this article, Part IV of the series, I’ll expand on those ideas and explore new ideas — all designed to reduce your costs — that are being implemented today in collision repair facilities all over the world, including in the United States. More specifically, I’ll examine a system to accomplish the highest effectiveness of operations (profit, cycle times, quality, etc.) and the human resource challenges that are hindering our progress.

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Moving Toward Industrialization
A system is one of the key points required to move a typical collision repair facility or an entire industry in the direction of industrialization. Industry and shop improvement ideas and programs have been around for years, but none have "set the standard" for operations, processes and accountabilities.

This is certainly changing with the introduction of Quality Assurance Systems based on ISO 9000:2000 Quality Standards into our industry. The entire process is a system that can be used as the framework to standardize a single business, multiple operations or an entire industry.

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This standardized process of doing business is based on the most internationally recognized set of operational standards, ISO 9000:2000 — which is already a key requirement for collision repairers in other countries in order to conduct business with insurers. (For more information go to www.QASIDirect.com.)

Many programs in the past were simply marketing programs and didn’t focus on the operations and validations of what’s said and what’s actually being done. Many inspect a facility to ensure that the esthetics are pleasing, that minimal equipment is on site and that minimal training has been completed. But they don’t ensure operationally that the equipment is being used and that quality-assurance steps have actually been implemented. Don’t get me wrong, having a nice office, waiting room, bathroom, the latest repair equipment, and I-CAR or manufacturer training are all important. But they don’t verify daily processes with a system.

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Still others are simply benchmarking programs that use financial metrics based on a wide range of operating platforms. And while having key performance indicators (KPIs) in place is also critical, they themselves don’t fix the problem (system) and often are very difficult to compare between businesses without a great deal of "adjustments."

Having a framework to follow is what’s been missing for years. Setting the true standard of operating effectiveness, accountabilities and auditable standards for the collision repair industry will provide the means for the certified to be more profitable and more efficient operationally, and to set themselves apart from everyone else in their market in regard to customer satisfaction and quality.

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This ability will allow them to market themselves and is just another resulting benefit of an auditable system to offer the customer, insurer and other work providers. From this

systematized approach will develop user groups, peer groups and discussion forums that are comparing "apples to apples" and can share common strategies. This way, a shared group environment can be very powerful and rewarding for all.

Many of these shared groups are currently in the form of a "20 group" setting. A 20 group is generally made up of 12 to 20 businesses in different markets that meet to improve their operations and to hold each other accountable. It may sound scary to some, but I believe it’s critical for businesses to grow. Currently, many groups are available through paint companies’ value-added programs and through independent organizations such as Chelsea Management, The Dewing Group and The Genesis Marketing Group. The sharing and learning that takes place in these groups is critical for business growth. And adding a common framework (system) will greatly enhance that growth.

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In addition to 20 groups, Internet-based discussion forums also assist a business. Sharing information with peers in this type of forum is very valuable and supplements regular 20 groups.

The Greatest Challenge: Overcoming Ourselves
When times begin to change, many elect to ignore what’s happening and either fight the changes that are coming or believe the changes won’t affect them. And if you’re in a small market — far enough away from a major market — you just might be right. Otherwise, you need to be aware of what — and whom — you’ll be competing against.

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Why? Because there are no guarantees in business. You, I and everyone else aren’t entitled to automatically receive work because we’re in business, regardless of how long we’ve been around or how much work we’ve done in the past.

Future business relationships will be driven by change and what the market demands. If the customer wants less hassles and his vehicle back in a few days rather than weeks — and he decides to purchase an insurance policy that accomplishes that — then we had better be prepared.

If all vehicles have installed "On Star"-type devices that determine the severity of the accident and automatically dispatch an ambulance when needed and a tow truck to deliver the vehicle to the approved repair facility in the area, how will you compete?

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More importantly, is this sense of competition reaching the front line staff in your organization? Are technicians part of your organization’s strategy sessions? Do you provide two-way communication to everyone in your organization? This is, by far, the greatest challenge today. There’s still too much "Them" and "Us" going on internally in the majority of collision operations today.

Often, it’s the estimators against the techs, the metal men against the painters, management against everyone else, etc. But this has to stop — or the shop won’t be able to maintain an operational effectiveness and remain competitive. This is a hard pill to swallow for many managers and owners. But this cultural change of working as a unit to meet the customer’s needs and expectations is the most important change that needs to take place in our industry. And this means everyone in the organization, not just customer service.

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Training to Remain Competitive
All these changes require a commitment to training by all. Your organization must be willing to provide it, and your staff must be willing to take it, embrace it into daily operations and be aware that it must be auditable and verifiable. Despite what you may think, this isn’t a pipe dream; this is what it will take to remain competitive and profitable. This training will soon be accomplished by private networks, and open-platform Internet and satellite offerings, as well as through CDs, mentoring programs and internally designed training programs.

The introduction of a mentoring program into an organization will also be a must and has been accomplished by many companies already. Programs such as Mentors at Work (www.MentorsatWork.com) provides the system to manage such an internal program. But again, the benefits that occur because of such programs require a commitment to accomplish. This commitment, however, is rewarded with productivity increases.

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"A few years ago, we realized that how we’re doing business in regard to how our techs worked together just wasn’t maximizing our facility," says Byron Fisher, owner of Naper North Auto Body in Naperville, Ill. "Everyone worked on their own island, not concerned about what anyone else was doing or how the organization as a whole did. We knew this had to change. We’ve implemented an internal mentorship program and have a lead mentor who’s done a fantastic job with our apprentices. The productivity gains have been incredible.

"We’re now opening a new facility that relies on straight-line processing and the mentorship program to achieve the results we have planned for the facility. We’re very excited about the opportunities."

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Learning to Function As a Unit
When an organization begins functioning as a single unit (like a unibody), it changes the way vehicles are repaired. And those who make this cultural change reap the benefits.

The shop layout, equipment choices and technology systems do play a big part in the industrialized equation. However, the cultural change of the organization — which includes the communication, training and ability to work together within a system that can be certified and verified — is the key to implementation and future success.

Contributing Editor Tony Passwater is president of AEII, a consulting, training and system-development company. He’s been in the industry for more than 27 years; has been a collision repair facility owner, vocational educator and I-CAR international Instructor; and has taught seminars across North America, Korea and China. He can be contacted at (317) 290-0611, ext. 101, or at [email protected] Visit his Web site at www.aeii.net for more information.

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