Cropper: Plan Ahead For Overcapacity
In my 20-plus years in the auto body industry, I can’t recall having so many daily conversations with shop owners who are struggling with what normally would be a good problem: overcapacity. With the continued nationwide labor shortage and more drivers hitting the road after the COVID lockdown, shops are wrestling with overcrowded lots, stressed employees and outdated SOPs. With overcapacity, during most of my career I’d think, “Wow, what an awesome thing, we have more work than we know what to do with.” Now, I’m really seeing the negative effects it has on morale, a shop’s culture and the daily lives of the employees, especially the admin staff. Many in the industry saw the overcapacity problem coming nearly 2 years ago. I’d be in meetings and guys like Mike Anderson told us to get ready because when these lockdowns stop, people who haven’t driven in months are getting back into their cars, and we’re feeling the effect of that now.
Combating the problem
First you have to work on the cultural side of your business. Not only do you not want the business taking over your life, but you need to figure out how to look at the bigger picture. And it’s affecting more than the car with the back ordered part, because the more vehicles you have on-site, the more there are that have to be moved daily. It takes its toll on everyone in your shop and leads to vehicles not being fixed as fast.
It’s also more important now than ever to create a teamwork culture that tackles the problem together so all the weight isn’t falling on an estimator or a CSR, but the shop as a whole does what it takes to make it work. And it’s important to teach them to enjoy these times, because those who have had longer careers in the industry remember when we were fighting every day for another DRP or tow truck.
Owners need to focus on their SOPs on how they do business. In the past, the second you got approval on a job you might have ordered all the parts and had them delivered. Now, you might need to identify only parts that are available. And if they aren’t available, you need to have a plan on how your shop is going to handle the job. I may change my stance to one of my parts vendors that they can’t deliver the parts until all of them are ready. And that opens up cash flow, space and more time for your employees so they aren’t doing partial orders.
I think the 10-year-old SOPs truly need to be updated, and they need to be done as a team so that the employees who are feeling the stress are part of the solution. They might be the ones who know best, and as leaders we need to involve them so when we change the SOP and the way we’re handling the work, we’re doing it with the involvement of the people it will affect.
Another important part of this process is to properly educate and communicate with your customers. Most Americans know we’re struggling with supply chain issues, and they know it’s not just our industry.
But in the auto body world, we generally don’t do a good job of taking the time to sit with the customer in the beginning and explain to them what to expect as far as potential hurdles getting parts, etc., and then truly communicating with them throughout the process. And a lot of customers will do their own research and figure out the problem themselves if they aren’t kept in the loop on their car’s repair. If you tell the customer that a bumper is back ordered, it really better be back ordered because it’s easy for them to do a quick online search and find where one is available.
I know of a shop in Nevada where they are literally choosing what insurance companies they deal with and what kind of cars they work on because they are so far over capacity that they won’t work with certain brands. The problem with that is the admin staff often feel very guilty about that, because it’s a complete change from the way they’re used to doing business. The bottom line is that each shop needs to sit down and have those hard conversations and reality checks about how much business they can actually handle. And they need to make these decisions ahead of time, and not when the car shows up.