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Slashing Cycle Time with Lean Principles

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When Mike Cortez meets up with the 100-plus managers from Toyota-certified collision repair centers for regional conferences, it’s not much of a secret who the big guns are. The “A” shops earn $700,000 per month or more, the C shops earn less than $350,000, and the B shops make up the middle. While the managers from the vaunted Group A meet in the fancy hotel ballroom, Group C is usually relegated to more modest digs.

Cortez’s Gullo Toyota Collision Repair Center, with $3.3 million in parts and labor last year, sits squarely in frill-free Group C.
But Cortez isn’t complaining. In fact, he’s thrilled to be seen as an underdog, because his “little shop that could” was just named Toyota Certified Collision Center of the Year for 2009. In the title’s nine-year history, that’s a first for the lowly Group C.
“When the other managers in the C group found out that I won, a lot of them called me. ‘Hey, look, finally a small shop won this award—not another megashop,’” he recalls proudly.

Cortez’s 16,000-square-foot operation might not make millions a month, but it’s not hard to understand why it’s a winner: Gullo Toyota’s collision center has slashed cycle time from 12 days to eight since 2007. Better still, they’re on track to hit six days this year. They’ve kept sales impressively high in spite of Toyota’s recall crises all while maintaining outstanding customer satisfaction rates. Pretty extraordinary, as Toyota noted, for an operation nestled 40 miles north of Houston in the small community of Conroe, Texas.

Fast Cycle

Despite Toyota’s troubled year, Cortez is unwavering in his admiration for the company, crediting their focus on lean operations for much of his shop’s success.

“Toyota’s philosophy is kaizen, which means ‘continuous improvement,’” he says. “They tell us what we need to do is focus on our process. And if you get everybody on the same page, it will lead to major progress.”

The proof can be seen in the significant decrease in Gullo Toyota’s cycle time. In 2007, the shop, which services about 125 cars a month, boasted a 12-day cycle time. In 2008, they got it down to around 10, and by the middle of last year, the number hovered around eight. What changed? Cortez says that one of the most important innovations was asking customers to come in before the work began so the shop could pre-order parts. But it wasn’t an easy decision.

“We thought it was going to be a problem to ask customers to come by so we could write an estimate and order parts ahead of time,” he says. “We thought it would be perceived as an inconvenience.” Turns out, customers were happy to make the trip if it meant their vehicle had a shorter stay at the collision center. “We explained to them that the insurance companies are asking us to bring down the time it takes to repair these cars. It turned out that customers would rather us blueprint the repairs, order the parts and get out in a quicker time.” He admits it doesn’t always work smoothly (“Obviously, there are things you can’t always see until you start the repairs”), but says it’s a perfect example of the kind of time-saving measures Toyota has encouraged.

Streamlining the painting process has also shaved precious days off Gullo Toyota’s cycle time. Cortez has his painters match colors while the vehicle is still in the collision department being repaired. “We make sure we’ve done test panels to get the color long before we take it to the paint shop,” he says. “Being proactive always shortens the timeframe. Even if it’s just two days, that makes a big difference.”

Management’s willingness to invest in new equipment is a big help, too, says Paul Brandt, the shop’s paint manager. The paint department recently acquired two new prep stations at a cost of $85,000. “With two new stations, we’re able to trim in parts quicker and get them back to the bodymen faster so they’re not held up,” he says. “We actually roll our primer in the body shop now. We let the bodymen block it once, and then we prime it a second time before it comes to the paint shop, so that’s eliminated any defects that need to be sent to the bodymen, decreasing the time and boosting the quality of the repair.”

Travis Rice, collision operations manager for Gulf States Toyota, a regional operation that helps determine the criteria for the Collision Center of the Year award, says that Gullo Toyota’s win is a good indicator that the criteria is balanced, giving equal weight to shops of all sizes. “Mike was very focused this year on getting his people certified and that everyone hit the master level where they needed to be,” he says. “We don’t specifically tune in to cycle time, but we’re very heavy into customer satisfaction. We measure four areas of customer satisfaction, and one of them is the promise time. And promise time is a direct result of good cycle time.”

The cycle time improvement can also be attributed to the longevity of the staff, Cortez believes. He’s been with Gullo Toyota for 13 years, and many of his colleagues have similarly long tenures. “We have a good base of men who have worked here a long time,” he says. “We don’t fight against each other, and we really try to see what we can do as a team.” Brandt, who drives 100 miles roundtrip to work at Gullo Toyota, feels the same way. “I don’t think it’s just one thing we changed last year and it all happened. It’s gradually getting better. It’s just a great place to work.”

Data Driven

By Cortez’s count, his shop is down to a cycle time of six days, but due to conflicting claims processes, his insurance partners don’t necessarily agree. “Each insurance company gives me different data,” he says. Some start the cycle time clock the minute a claim is sent to the shop. “That’s not fair,” he protests. “I don’t even have the car yet! I’ve got to get the customer in and order parts.”

Some insurers have advised him to get the claim, have the customer come in, order parts, cancel the claim, and then—when he actually has the customer bring in the car—restart the claim again. Cortez finds that maddening. “They’re telling me my time right now is 10 to 12 days, and that is absolutely wrong. I have data to show that’s not correct.”

Fortunately, Toyota has proven a solid partner in situations like these, providing Cortez (as well as all Toyota certified collision centers) with raw data about shop performance. “I’ve got research, and that’s what really helps me more than anything,” he says. “Toyota supplies me with as much information as I need.” (Toyota partners with Rhode Island-based Summit Consulting, which does most of the number crunching.)

The rich data Toyota provides also keeps Cortez’s job secure: Gullo Toyota’s owner, Tony Gullo, also owns a nearby Ford dealership, and will occasionally inquire why Cortez’s sales don’t match up. “And I can say, ‘Well, sir, they have 30,000 units in the area, and we have 12,000. So if you’re going to compare, I have to obtain other models, other makes, to try to keep up.’ That information is available to me from Toyota, so I’m able to defend where we are.”

Cortez probably doesn’t need to worry: Gullo doesn’t have much to complain about when it comes to sales. The shop was up 15 percent in total sales and gross for 2008–2009. This year, Cortez says the shop is “about even” from last year, but data from Toyota says in 2009 the majority of Toyota shops were down about 2 percent in total sales. “This year, we’re breaking even,” says Cortez. “We have seen a slowdown in customer paid tickets, but we’ve also known claims are down in our area and nationwide, by about 20 percent.”

Tony Gullo Jr., vice president and general manager of the dealership, credits Toyota’s training and ideas for the shop’s success, and says it couldn’t have come at a better time. “When we’ve had a downturn in new car sales, obviously in that period of time you start looking for your fixed operations to step up and carry some of the burden,” he says. “The body shop doing so well has really been timely for us.”

Top Notch

Toyota representatives come into the shop once a year to evaluate the operations, and send the staff regular emails with information on new technology and ideas for keeping operations lean. Cortez admits that initially, he wasn’t a fan. “I’ll be honest,” he says. “We’ve been with them now for eight years, and at the beginning, I said, ‘You guys don’t care about the collision center, all you want us to do is sell parts.’ And they said, ‘Well, okay, that might have been true but we’re trying to change that.’ And they have.”

Now, Cortez says he’s changed his tune on what Toyota brings to the shop. “I promote Toyota any time I can, because they’re actually changing the culture of the industry and the carmaker to better serve the entire dealership.”

It always comes back to the customer experience, says Rice of Gulf States Toyota. “We want top-notch facilities,” he says. “The experience with sales and service should be the same in the body shop. And our better shops got that message. We’ve got some overhauled facilities that are just wonderful. They’re every bit as good as the front end. Toyota owners are going to base their next vehicle purchase on how they’re treated by the back end of the operation.”

And if all back-end operations were run like Gullo Toyota’s collision center, the future of Toyota would look very bright indeed.

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