Toyota is in the process of unveiling, on a national scale, its On-Time Collision Repair System (OTCR), claiming that it will increase productivity in shops by 40 percent. A pilot program of three shops was instituted over the last two and a half years, and those shops enjoyed much success with the OTCR. On average, the shop owners claimed to have delivered 98 percent of their light hit repairs on the promised delivery date, up from the 78 percent industry standard. And this reduction in light-hit cycle time reduced the overall cycle time for the three pilot shops.
It works like this: The system divides the shop into heavy hits and light hits – the light hits being on a sort of express lane like at the supermarket. This way, light hits can get out the door faster (three days or less) without getting in the way of the heavy-hit jobs. By focusing a few techs exclusively on the light hits, the techs working on heavies can go about their jobs without having to stop to do detour work on a minor ding.
But it’s more than just dividing the hits. Toyota claims a particular, hard-to-achieve mindset is necessary to make it work. So is this something only Toyota shops cans do, or is there a philosophy behind OTCR that most, if not all, shops can adopt?
The FYI on OTCR
Variations of this OTCR philosophy have existed in Europe and Japan for years, but it was only recently introduced in America. Why are we behind? Could it be possible the United States is no longer the most powerful and intimidating nation on the planet? Is this a sign of our downfall? Should we re-invest in fall-out shelters and stock up on canned goods?
Not so fast. It turns out our work ethic is slightly different from those of other nations. For one thing, when it comes to repairs, America’s mentality is one of individuality. This means one person doing a job, not six people doing it. In parts of Europe and Japan, where the OTCR philosophy has been successful, workers are more apt to work in teams. So does applying the OTCR principles mean an overhaul of American values, work ethics and the Constitution?
Probably not. But it does involve an adjustment in thinking, which would explain why Toyota gradually developed it, with a pilot program of three qualified shops. (Toyota wanted to find out how deep the pool was before diving in head-first.)
Using the OTCR program, lights hits are separated from heavy hits, and each set of repairs moves along its own progression. A tech working on light hits doesn’t work on a heavy hit, and vice versa. The original theory behind this was to speed up the process on the light hits – those hits defined as having less than 25 hours of total paint and body hours sold, no structural repairs, no weld-on panels and no heavy mechanical repair.
By having your top techs work on the heavy hits without doing the smaller jobs – what they might call the filler – the smaller jobs get to the customer faster. Why? Because instead of working on the smaller hits when a break came in the heavy repair action, those smaller hits have their own quicker path of repair.
And in the pilot shops, this held true. A bonus lesson was also learned. “The technicians [working on the heavy hits] got faster, as well,” says Randy Profeta, collision repair business expansion manager for Toyota Motor Sales U.S.A. “The filler jobs were actually more of an interruption in the daily operations of the facility than they were beneficial.”
In the three pilot shops where the system was implemented, production rates increased, technicians became more efficient and shops became more profitable. Sounds easy enough. And it would be, if there weren’t more to think about.
Qualities Needed to Qualify
The philosophy behind the OTCR program isn’t necessarily to speed up work in the shop, but to produce more jobs in the same amount of time, without the technicians having to do any more work. Sounds like a riddle, doesn’t it?
Where does this philosophy come from? The OTCR derives from the Toyota Production System (TPS).
“The TPS is at the heart of On-Time,” says Profeta. “It can be summed up in three words: production without waste.”
What the OTCR intends is that by removing all wasteful activities, nothing but productive work is done, improving the shop’s efficiency and increasing its production.
But the program is a business decision, which is why only some of Toyota’s certified shops qualify. Sure, most shops can implement the waste-cutting philosophies behind the program, but for a sure improvement, the program singles out shops with certain qualities.
For example, any shop that processes less than 120 repair orders a month won’t qualify because the program won’t be economically viable. And it helps if the shop is in a high-demand market.
“The goal here is to make them more productive,” says Profeta. ” If we make them more productive, there needs to be additional market demand so they can increase their repair order count.”
Toyota also looks for particular shop layouts and design. Two downdraft booths are necessary, one for the regular line (the medium to heavy hits) and one for the OTCR (the light hits.)
But the hardest thing to find may be shops with the right mentality. When it comes to attracting more work, many shops go the brick and mortar route, looking to buy new and expensive technology, expand the facility or hire new people. This is a costly route. The OTCR philosophy is designed to help shops fully utilize their current shop situation.
“The issue is not attracting work to our door, but how to satisfy our current customers,” says Profeta. “How do we process all these vehicles without telling the customers they need to wait eight weeks before we can schedule their work? We say shops aren’t fully utilizing their facilities. Let’s make them more productive given what they have.”
But getting past this part of the mindset is just the beginning.
Writing Estimates and Ordering Parts
There’s a number of qualifiers when it comes to repairs on a light-hit line like in the OTCR program. First off, the work order must be accurate. Following an estimate that only reports on the visible damage won’t make the process efficient, since anyone who’s spent more than two days in a shop knows a lot of damage can be hidden. This is where you learn to separate the work based on a few criteria.
“If I’m writing an estimate and I know it’s all cosmetic damage – all outer panel damage – we would classify it as an A-type repair,” says Profeta. “No supplement is needed.”
At the other end are the repairs where an effective work order shows it’s obvious a supplement or additional parts are needed. In this case, it would be necessary to strip the car down immediately when it comes in for its scheduled repair.
The condition that rests between these two extremes is a little more complicated. This is where a potential exists that a car will need additional repairs. So it takes a very good assessment once the car comes in to determine what, if any, additional parts or labor is necessary. The faster this determination can be made, the faster parts can be ordered, helping to better achieve the goal of a three-day turnaround or, at the least, returning the car on its promised delivery date.
Having parts ready is vital to this process. No parts means no repair, and the car sits. In this type of program, things must always be progressing.
“The goal is to have the parts once the car arrives,” says Profeta. “If the car is going to arrive on Tuesday morning, you want the parts ready by then.” This means not just having the parts, but making sure they’re edged and primed.
How can this happen? Since light hits can be scheduled for a particular day to come in – and since the car is still drivable – the shop has enough time to get parts. Essentially, the ideal situation is where the car, work order and parts are presented to the technician at the same time.
This speed things up in two ways: The elements of the job are completed faster, and turnaround time is improved. Instead of getting a car in on Monday and getting to it when the shop has a chance, Profeta says it’s better to tell the customer the shop can’t get to it until Wednesday, when repairs would actually begin. But shops worry too much about losing a sale if they don’t convince the customer to drop off his car that second.
“The fear is that, ‘If they leave my shop, I may never get a shot at them again,’ ” he says. “Our philosophy is it’s better to lose a job than to lose a customer [because the repair took so long].”
The system also runs more smoothly if you use OEM parts rather than aftermarket (A/M) or salvage. “I don’t want to tell a shop they can or can’t use [non-OEM] parts,” says Profeta. “That’s a business decision between the customer and the insurer. What we’re saying is if you want to truly reduce cycle time and keep cars moving through the process quickly … we recommend they don’t put the car [getting non-OEM parts] through the process because we can’t assure the timely repair of the vehicle.”
Adopting principles similar to that of the OTCR program can hit a brick wall with technicians, who often dislike massive change and who worry about how profitable the philosophy will be to them individually.
First off, the shop needs to find techs who are the best fit for the light-hit line. You don’t want your best tech working just on light hits. Save him or her for the heavies.
The painter on the light-hit line should be very good. Maybe he’s not your best painter, but he needs to be very good at color matching – someone who won’t cause a lot of redos.
In looking for a metal technician to fit the light line, find a conscientious worker who can replace parts well. He doesn’t necessarily need as much welding or structural experience.
Once you determine the right employee fit, you need to determine if they’ll work well together. This is easier said than achieved and involves a slight change in culture. In America, the one-man, one-job approach is quite strong. I’ll do my work, and you do your work. Just leave me alone.
But to make the program viable, you have to incorporate an all-for-one approach. “The body tech knows he can’t produce more cars than the painter can handle,” says Profeta. “So in certain cases, the body tech would help the painter produce work. Same thing with the painter. He knows if he can’t paint more cars, then the body tech can’t re-assemble because he won’t get any more work.”
Even with such teamwork, there’s no guarantee things will run perfectly. That’s why a production coordinator is necessary. While he works with other estimators and the rest of the shop, his primary concern is to oversee the OTCR segment. He determines who qualifies for the work, makes sure the work is flowing and parts are on-hand and correct, does a tear-down or repair work, if necessary, and fills in when needed.
Pay Me More
OK, assuming you get the techs working as a team, you still have to convince them this is a sound system that will generate more cash for them. If more cars are going out the door, it implies more work is being done, and therefore, the guys doing the work should get more money. Right? Maybe.
In a dealer environment, techs are paid a flat or commission rate, so the more hours they turn, the more they’re compensated. By increasing the amount of hours they turn, thanks to the program, their pay would also go up. That’s the easy situation.
The difficult scenario is where techs are paid hourly. In these cases, pay plans need to offer some sort of incentive. The best bet is to convince workers that an On-Time-like program will make their work easier. They may be doing more, but since the wasteful items will have been cut out, they can get a job done with less hassles. Why? They aren’t always under the gun, and if they’re not ordering parts or helping to write the estimate, then there’s more time to do the work.
One of the pilot shops for the program reported that its techs productivity rate doubled – from 150 percent to almost 300. As great as this sounds, when it happens, a new challenge forms.
“The dilemma for management is how we scale their pay so it provides them with incentives but also added profit margin,” says Profeta. “Overall, we found most of the shops were actually happy to pay a tech a higher wage or rate of pay because they knew it provided some serious incentives. Through it all, while they couldn’t increase their gross profit margin, their gross profit dollar grew dramatically.”
Can Anyone Do It?
The OTCR program is still pretty new here in the states, but it will likely have imitators if it proves to cut down cycle time. But mimicking the process isn’t always easy. Profeta has noticed that imitators look at the wrong thing.
“They’re looking for ways to speed up the process … and move the car through faster using technology,” he says. “It’s better to evaluate your shop and look for incremental improvements, trying hard to improve the process.”
While it may be harder to mimic the OTCR program if you run a smaller shop, it’s possible to adopt some of its philosophical standards, such as striving for continual improvement, eliminating waste, assisting others and making sure you have an accurate work order and the correct parts.
But to accomplish any of these requires the right mindset. Don’t fall into the trap of producing excuses as to why you can’t get them to work. Many shop owners blame insurers for writing insufficient estimates, for “forcing” them to use A/M parts, and so on. Instead, Profeta says, find what you can control and use it to better your shop and the process.
“Find out what you truly want,” he says, “and design the process around that.”
Mike Lawrence is associate editor of BodyShop Business.
A Tale of Three Scenarios
1. More cars can be processed through the same facility with the same equipment and staff as before. This is the ideal situation.
2. The same number of cars is processed as before, but the number of necessary employees must be reduced to make the situation profitable. “This wasn’t our intention with the program,” Profeta says. “Our intention was to increase market share for the dealer and increase the number of vehicles processed.”
3. The same amount of cars is done as before, with the same number of people. The problem is that when 3 p.m. comes around, there’s no work left.