Profit is the lifeblood of any successful
business in every industry, including autobody repair. And being
profitable requires constant and sophisticated management.

In today’s aggressive environment, business
owners search for ways to stay competitive while maintaining profit
levels, not only to sustain their businesses, but also to allow
growth. This is a difficult equation that has owners searching
for ways to control costs.

The industry as a whole is very focused on
reducing the costs of repairs and increasing productivity. And
one area in which shops can reduce repair costs is through better
paint-materials management. Changes in refinish-material technology
during the past 10 years – driven by legislation, auto manufacturers,
lifetime warranties and consumer awareness – have led to sophisticated,
high-quality materials containing high percentages of resin and
low solvent content. The raw material used in the manufacturing
of these high-solids (HS) refinish products is far more efficient,
but also more expensive than the previous generation of products.
If used correctly, however, these sophisticated systems can offer
true value to repair facilities; they provide greater durability
and lower VOCs (volatile organic compounds), meeting today’s environmental
standards, and they utilize high-efficiency coating technology.

One way to get the most out of these systems
is to utilize a computerized paint-management system – which will
help you to not only decrease waste but increase profits.

Repair Material Spend

The key to extracting the full benefit from
these systems is material management. In the past, mixing the
proper amount of material required for a particular job was not
typically given much priority within repair facilities. And this
poor material management leads to greater volumes of hazardous
waste that must be disposed of and large quantities of flammable
material that remain stored in cabinets throughout the paint area
– generally never getting used. This waste can account for 20
to 30 percent of a repair facility’s total refinish material spend.

Repair material spend can be measured as a
percentage of a facility’s gross sales. In the past, it ranged
from 7 to 9 percent, which means a facility generating $2.5 million
in gross sales would spend between $175,000 and $225,000 annually.
A reduction of only 1 percent in this ratio would save this facility
$25,000 per year in material spend, which translates into pure
profit for the repair facility. The use of today’s HS systems
in conjunction with proper management can easily reduce this ratio
by 2 to 3 percent.

Computerized Paint-Management Systems

While refinish-material technology has improved
during the last 10 years, so has the means for managing these
high-quality products. Computerized paint-management systems have
been developed and are the most efficient and effective way to
manage and track material consumption and reduce waste – hence,
increasing profit. Effective paint-management systems offer great
flexibility, allowing technicians fast and accurate color retrieval
and the option for ready for use (RFU): mixing directly on computerized
scales. These systems also allow refinish materials to be accurately
mixed, by weight, in small increments using the RFU format. This
information is stored by job repair order (RO) and technician
within the computerized scale for later retrieval. The information
can then be used to track material consumption within the repair
facility by vehicle and technician, giving better control over
total consumption and waste.

Before computerized paint management, repair
facilities found it difficult to accurately measure or track how
much material was used per repair. They had an idea how much material
was being mixed for each repair, but accurate analysis of material
purchase balanced against vehicle output and waste generated was
difficult.

Technicians used volumetric methods by placing
mixing sticks in containers of varying sizes, measuring to crude
increments by the lines on the mixing stick. This method not only
allowed for greater error, but also didn’t give much flexibility
in the amount of material being mixed. Technicians generally overmixed
to the nearest increment on the stick for the required volume
and, therefore, more material waste was generated – reflecting
the higher cost per repair.

The Potential for Savings

To understand the potential for savings through
the use of computerized paint management, let’s break down individual
refinish-material requirements and costs of repair. An average
RO of $1,500 will reflect a total repair refinish area of approximately
30 square feet. If, for example, you calculate typical area and
material required in an average repair, your approximate totals
will be:

2-Pack Filler

Primers

15 square feet

Wet-on-Wet

Sealers	20 square feet
Basecoats	25 square feet
Clearcoats	30 square feet

These figures reflect the surface area that these materials will
be required to coat. By calculating the square-foot coverage of
the HS material and factoring a transfer efficiency for the spray
equipment at 50 percent, we can determine the RFU material requirements
at the recommended film builds for each product. The result can
then be compared between computerized scale RFU mixing (ounces
by weight) and traditional volumetric methods:

Weight           Closest Volume (volumetric method)

2 Pack Filler Primers:

14 ounces

16 ounces (pint)

Wet-on-Wet Sealers:

10 ounces

16 ounces (pint)

Basecoats:

13 ounces

16 ounces (pint)

Clearcoats:

21 ounces

32 ounces (quart)

Totals:

58 ounces

80 ounces

If you then calculate cost per ounce at an average of $1, your
cost per vehicle by weight is $58, and by traditional volumetric
methods it’s $80. This difference of $30 per vehicle will generate
added profit of $1,500 per week for a shop repairing 50 cars per
week!

Although this sounds complex, it’s not. With today’s HS systems,
the amount of material required, as most technicians know, can
be measured in ounces as opposed to traditional pints, quarts,
etc. Without a paint-management system, technicians don’t have
the flexibility to accurately mix the required amounts in ounces.
This leaves them overmixing to the nearest volume measurement,
therefore generating waste.

Although these figures can vary from repair to repair, this example
shows how using computerized paint management decreases waste,
which, in turn, reduces costs of repairs and increases profits
in the repair facility.

A Shop That Saved

Alamo Body and Paint in San Antonio, Texas, knows the importance
of using a paint-management system. The company has three locations,
generates gross sales of $17 million annually and is preparing
to open a fourth location next month. The owners pride themselves
on the quality of their management practices and cost-control
programs and have always been extremely conscious of material
expenditure as a percentage of gross sales – with 4 percent being
their target.

Alamo Body and Paint began using a paint-management system in
1996. Prior to that, the shop’s paint expenditure as a percentage
of gross sales came in around 5 percent. Although a very good
number by industry standards, it didn’t achieve their target figure.
Since implementing a paint-management system, Alamo has reduced
its materials cost as a percentage of gross sales to 3.8 percent
through the use of the RFU mixing option and by tracking material
usage on each vehicle.

Because the company is able to monitor paint and material consumption
as a cost per vehicle and per technician, it holds weekly meetings
with managers and technicians to review material usage at each
location. What this has meant to Alamo is a substantial increase
in profit and a decrease in material waste – all from proper management
of its repair materials.

Why Bother?

Using computerized paint-management systems not only allows greater
flexibility during the mixing but also saves steps for the technician,
allowing for more productive labor hours. It also enables repair
facilities to track and document the repair materials used on
each vehicle, giving greater control over material spend.

You’re doing OK without a computerized system, you say? Maybe
for now. But as competition gets more intense – and as cost control
becomes more and more important – businesses wishing to remain
profitable in today’s competitive market will find sophisticated
material-management systems a necessity – not an option.

Writer Mark Rapson is the North American technical service
manager for ICI Autocolor.