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Going Lean Leads to Increased Profits

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Going Lean Leads To Increased Profits
Bob Razenberg, started at K&R Truck Sales and immediately sought ways to improve processes.

SHOP STATS: K&R Truck Sales   Location: Kalamazoo, Mich., Holland, Mich., Grand Rapids, Mich.  Operator: Ed Reitnan  Average RO: $12,00 per car  Staff Size: 24 Shop Size: Kalamazoo: 7,800 sq ft, Holland: 15,00 sq ft, Grand Rapids: 7,500 sq ft; Annual Revenue; $3.5 million

Unlike the light-vehicle collision repair industry, lean processes are hard to implement in the heavy-duty truck business. If a truck’s damage is to, the axle, for example, then the truck cannot be moved through each step of the repair process, due to the sheer size of the vehicle. That drives up cycle time, which leads to a slow in production. And if a fleet services truck is stuck in the shop, that means the company loses business every day that vehicle is not on the road.

That’s the exact issue that Bob Razenberg encountered as the body shop operations manager at K&R Truck Sales. The shop’s cycle time was at 18 days, a far cry from the industry benchmark of 8-10 days.

So, the shop looked to outside help.

Razenberg hired Aaron Marshall, former shop owner, lean guru, and now global program manager of body repair for Tesla, to implement Toyota certified-lean processes that his light-duty collision repair shop practiced.

The team quickly learned that the process failed in the disassembly stage. The team struggled to reach a complete 100 percent disassembly.

Now, the average monthly car count has increased to approximately $12,000 per month and a total revenue increase of $210,000 per month to $295,000 per month.

 

The Backstory

When Razenberg joined the team, the business was growing. He went out and got the shop involved in some direct repair programs and hired more technicians—a number that’s grown to 18 since then. While the company is an independent body shop, the owner also purchased three dealership locations in the western Michigan area.

 

The Problem

When Marshall visited the shop, he quickly pointed out that the team was missing a system that organized parts and made sure the estimate was thorough. This meant that because the estimates were not thorough, additional damage was discovered later on in the repair process, leading to an increase in cycle time.

At the time, the disassembly process looked as follows:

When the techs tore down the trucks and analyzing the damage, parts were placed on a shelving unit that was cluttered and not labeled.

Schedules and supplements were organized in a manila-folder filing system, with all the information tucked away. Technicians had to take time to dig through folders and search for the supplements.

Finally, it was stop and go for the team because there was no mirror-matching system in place. The team also racked up costs with emergency purchases when they could have added in small items like clips, fasteners and bolts to the initial parts estimate list.

 

The Solution

In 2016, the team began the lean process. The first step to cutting down on time-wasting processes was reorganization. All tools, parts and equipment were moved to spots on the wall where they could be visible at a glance for technicians and not thrown around in various cubby holes in a shelving unit.

A floor-to-ceiling whiteboard was installed so everyone could see the next job. The board is divided into parts: K&R rebuild trucks and customer/insurance pay. Then tags were placed in the truck windows to signal the next step in the process. Techs hang parts tag to signal the need for the parts cart and any pre-ordered parts. The estimator reviews the estimate and then dots the truck with a certain color, either red, green or yellow to signal the next step. If there is no estimate written, the estimator writes what can be seen and then dots the truck.

The estimators were introduced to a mobile estimating cart roughly two years before the full lean switchover. These carts became especially important in light of the other processes implemented, as the estimator can easily access the estimating program and also search for OE parts.

Then everything is disassembled from the truck. All removed items are packaged and placed on the parts cart. The parts bags are labeled and then go to the mirror-matching staging area,

Carts vary in size depending on the size of the repair truck.

 

The Aftermath

In just two months after going lean, the team saw zero supplements on light to medium hits. Previously, the team was averaging two supplements per job. The team reduced cycle time on severe damage and jobs with no frame damage. The shop gained 2-3 days on the no frame damage jobs and 3-4 days on the heavy hits.

In addition to a reduced cycle time that was originally around 18 days on average, billed hours increased by 24 percent.

Now, the shop can cycle vehicles through the shop quicker and spend less time waiting for an outside insurance adjuster to come and inspect hidden damage not in the original estimate.

The shop’s improvements in lean production led to a new location that will break ground in spring.

 

The Takeaway

“Lean is very dependent on your shop culture and if you can get a buy-in from people that have done the same method of repairs for twenty plus years,” Razenberg says.

He says he can’t say there was 100 percent buy-in from his team but there was a significant increase in team efficiency. It was about educating the team on waste and also looking to outside help if the team did not buy in to going lean.

The team had to hire a production manager to manage the new processes and make sure SOPs were followed.

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