A Better Parts Process
When Curtis Nixon made a sweeping overhaul of his auto body shop to improve cycle time a year and a half ago, he quickly realized his parts department was a problem. The technicians at Fix Auto-“L” Monty Body Shop in El Monte, Calif.—which spans 20,000 square feet and tops $4.5 million in annual revenue—were spending a lot of time doing, well, nothing. Turns out they were waiting around for parts to arrive before they could finish repairing vehicles. Nixon says that accepting partial orders from his parts vendors contributed to the standstill. “We quickly realized taking partial orders was very inefficient. They’d deliver 80 percent and we’d be constantly chasing the other 20 percent.”
Unwilling to waste any more time, Nixon announced that the shop would no longer accept partial parts orders—a decision that initially prompted resistance from both his parts vendors and his technicians. But once the new process was underway, the numbers spoke for themselves: The shop’s parts completion time dropped from 3.8 days to 1.4 days, and overall production increased by 40 percent. Even more impressive, “L” Monty’s parts return ratio fell from 20 percent to a nearly immeasurable 0.2 percent. “It has changed the whole dynamic of our business,” Nixon says.
—Steve Villanueva, senior consultant, Cal Collision Consultants
THE PARTS PROBLEM
Steve Villanueva, a senior consultant for Cal Collision Consultants in Hacienda Heights, Calif., says shops have long struggled with running a smooth parts process. “It’s an age-old problem that’s plagued our industry,” he says. “If you can resolve the parts issue, 70 to 80 percent of your problems are eliminated up front.” Receiving broken parts, old parts or incomplete orders all contribute to the problem, Villanueva says, adding that most shops understand the importance of addressing parts problems, but they often fail to realize that a small yet significant change can make all the difference. He likens the situation to track-and-field sprinters aspiring to become part of the Olympic team: “[A difference of] 1 second doesn’t get you in the stadium. Two-tenths of a second gets you the gold medal. You can make [your parts process] so much better with just the smallest change.” Villanueva says that simply choosing to accept only complete parts orders—as Nixon did—is one way to solve the parts problem. Another is to commit to hitting cut-off times for your parts orders, an effort that can make a 24-hour difference in cycle time.
VENDOR AND STAFF SUPPORT
Nixon first realized the lack of efficiency in his parts department after purchasing SmartDraw, a flow chart program (smartdraw.com). “We flow-charted the shop and measured the bottlenecks in our flow,” he says. “We identified points of disruption, and the parts department happened to be one of those areas.”
When Nixon announced he would accept only complete parts orders, his vendors weren’t thrilled. “The parts managers gave pushback, because they’re paid on commission,” Nixon says. “They’d have $4,000 worth of parts, and it was sitting on their inventory, not ours. They’d call and say, ‘We’ve got all these parts. We need to get them to you.’ I’d say, ‘Find that last part and bring them over.’”
His employees were also wary of the new process. “Many of them said it couldn’t be done that way, that it would take too long and kill our cycle time,” Nixon says. “Changing the culture … was challenging.”
While Nixon worked to develop shop support, he took the direct route with vendors. He scheduled a meeting with each of his current vendors, each of their direct competitors and each of his insurance carriers. The insurers vouched for Nixon’s new process, saying that if it caused his cycle time to decrease, they’d send him more business—which meant more business for the shop’s parts vendors. Nixon, who didn’t tell his current vendors that their competitors would be present, put his plan on the line: “We said, ‘This is what we need from you. [If] you feel like you can’t comply, they will,’” referring to the competitors. The ultimatum worked. All but one of his vendors complied.
—Curtis Nixon, owner, Fix Auto-“L” Monty Body Shop
As the shop’s numbers began to improve, so did support. “[Vendors and technicians] had to see it to believe it,” Nixon says. “Posting cycle time numbers was important.” And the numbers were huge. “The techs own the car 40 to 60 percent less time,” he says. “In the past, we’d get a car, tear it down, get the estimate and assign it to a technician without the parts. The parts would trickle in. A tech might have that car a total of five days. In this new environment, we don’t give the technician the car until all parts are in. Now, they own the car from just 1.5 to 2 days. We only give them what they can complete so they’re not stopping and starting.”
Parts completion time also dropped significantly. “When we started measuring, it was 3.8 days from when we’d order the parts and get the complete order. Currently, we’re averaging 1.4 days,” Nixon says. His goal is to improve on that number, and he knows it’s possible. At one point, completion time was 0.9 days, but with the economic troubles, vendors aren’t keeping as much stock on hand, which slows the completion process a bit. Still, now that Nixon’s vendors are more likely to search for parts at local dealerships rather than ordering them through the manufacturer—which typically requires a 2-day turnaround—completion times are shrinking.
Most impressive, however, is the shop’s 0.2-percent return ratio. Nixon achieved this by changing how his parts deliveries are handled. “When the complete order comes in, our parts receiver and distributor call up the old parts from the disassembly department,” he explains. “They have to [match] and label the new parts so we can address the wrong parts at that time. The process takes 15 minutes, but it’s accurate. We lose a little time up front, but we save a ton of time on returning parts. That [also] motivated vendors and parts drivers to be more attentive when loading the parts on the car.”
—Flavio Jaen, owner, Diamond Valley Honda
Armando Gonzales, parts manager at Ford of Montebello in Montebello, Calif., admits he was frustrated with Nixon’s new policy at first. For him, space was an issue. The possibility of having parts damaged while waiting for the order to be completed did not make him happy. “We’re so restricted with space,” he says. “The longer [parts] sit here, the more chances someone will knock over a hood or a fender.” Gonzales resolved to find a solution—such as chasing down parts at local dealerships to get orders out in time. Now, he appreciates Nixon’s new parts process. “When you send out a complete order, there are no questions. It’s cut and dry. You can’t hide behind the process. All my guys know he doesn’t get partial orders.”
Flavio Jaen, owner of Diamond Valley Honda in Hemet, Calif., says delivering complete parts orders is the most viable way for him to do business. “It became a natural process. I don’t even think about it. They place the order; we deliver it. It’s a no-brainer. The market just doesn’t allow for multiple trips,” he says, explaining that additional trips contribute to unnecessary wear and tear on his vehicles. “The profit margin is so small [for parts vendors] that we have to be perfect. Delivering complete orders is a given for us to be profitable.”
SUCCESS AT LAST
A year-and-a-half after its inception, Nixon’s new parts process has improved shop operations all around. “Production [has] increased by 40 percent,” he says. “L” Monty has also gained new direct repair program contracts as a result of its decrease in cycle time.
While Villanueva says Nixon’s feat is impressive, it’s not impossible. Committing to the process and realizing change takes time are two important things to keep in mind when trying to implement a parts completion process like this one. “One of the things I’ve learned in this business is that nothing happens overnight. It’s almost impossible to make a rapid, dramatic change,” he says. “Put a plan together. You can’t just come in and change everyone’s philosophy and mindset. [Realize that] this is the ultimate goal. Take what you can grasp and implement it.”
The effort required to establish a smooth parts process is worth it, Villanueva says. “Production is up, insurance companies are happy, employee morale is up, profit margins are up, technicians flag more hours, [and] customers are getting their cars back on time.” And it’s hard to argue with that.