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Big Business in a Small Town

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Sometimes, it’s better to just give up.

As painful as that reality check might feel, it can also spark creative new strategies and directions that present short-term challenges with potential long-term paybacks.

A particularly stunning example of this occurred in mid-2007 at the enormous Dave Smith Motors Corp. in Kellogg, Idaho. As the nation’s top Dodge-Chrysler-Jeep dealership, the showrooms are always a frenzy of activity. Buyers from other states check the dealer’s Web site for price quotes. Some make a long trek to purchase a new car or to get a great deal on a used one.

The booming success has much to do with Dave Smith’s no-haggle, no-hassle style, which created a reputation that vaulted the dealer into the top spot.

But that success was increasingly threatened over the years, in large part because the dealership didn’t do its own body work. Long delays in revamping used cars, improper collision repair and high costs for body shop work were taking their toll, despite several local shops being kept busy with work from the dealership. The frustrations began to mount, says Eric Schmidt, the dealership’s general manager.

“We just couldn’t control the quality that we were receiving from the shops, and that was affecting customer satisfaction,” he says. “And, because those shops were often late or took a long time with jobs, we weren’t able to keep our promises for turnaround. Quality and time were our biggest issues.”

"Recognizing that time spent inquiring about a part meant time away from working on a vehicle, the dealership set up CollisionLink software for internal use."

The answer was to give up on the existing relationships the dealership had created with local shops, and instead build an on-site body shop that could do fast turnaround, at a price that didn’t make the owner and managers flinch.

Forging a Connection

Unlike some body shops that open their garage and office doors and hope for the best, the Dave Smith Motors shop had a distinct advantage from the start. Even in a less-than-thrilling economy, the dealership is a case study in adept management and revenue generation. With 17 lots located throughout Kellogg, the dealer does a brisk business and has thousands of vehicles at the ready for buyers.

And many of those buyers have trade-ins that need work, either in collision repair, general maintenance or both. The body shop, therefore, started with a leg up: Work was waiting the moment prep stations and paint booths were ready.

But beyond drawing on the success of the dealership, a major part of the potential for the body shop was exactly the thing that had created a booming dealership in the first place: the Smith family, and particularly Ken Smith, the dealership’s owner.

Parts manager Crete Colby notes that as the dealership thrives, the collision repair aspect does as well, but it’s more than one successful business helping another; the larger business philosophies that have resonated with customers and salespeople also help the body shop to stay focused.

Strategies include being selective in hiring good employees, giving customers precisely what they need and opting for customer satisfaction over possible cost savings if necessary.

For instance, the parts department matches prices on all parts, Colby points out, so that when insurance companies request the use of aftermarket parts in order to save money, the body shop can instead use whatever parts it deems best for the job.

“You lose a little bit of money on the front end,” he says. “But you make up for it in labor costs because the technician doesn’t have to tweak the part to make it fit. Quality replacement parts is a big thing, and we’d rather fix it right the first time by using the most appropriate parts than save a little money by using an aftermarket part that has to be shoved into place and doesn’t work as well.”

Particularly effective as a larger strategy, Colby notes, is the atmosphere of openness when it comes to new ideas. Having the support of the owner is huge, he adds, because it lets managers feel like they can be creative in solving challenges or presenting fresh strategies.

“He completely listens to the professionals he has in place, and he respects the fact that not just anybody can do these jobs,” Colby says. “It gives people confidence, and makes them feel comfortable in bouncing ideas off one another.”

Communication Station

In terms of specific strategies that have allowed the body shop to start with momentum, it’s helped to have cutting-edge equipment like UV primers that allow the paint on a vehicle to dry much faster.

But equipment only takes a shop so far—it’s the ability to get vehicles cycled in quickly, fixed skillfully and back to customers that really makes the difference and builds a reputation. And for that, a shop needs crackerjack communication.

At Dave Smith Motors, a meeting is held every Tuesday with department heads from the body shop, sales, financing and other areas so the entire company can operate as a team, rather than as a collection of components housed under the same roof, notes Schmidt.

“If there’s a particular problem that needs to be resolved, we’ll have another mini-meeting with relevant people, but in general, we use the weekly meetings to talk about how to make everything better,” he says.

In addition to weekly meetings, technicians and those in the parts department keep in constant contact. But that doesn’t mean the phone is ringing off the hook. Recognizing that time spent inquiring about a part meant time away from working on a vehicle, the dealership set up CollisionLink software for internal use. A program that’s used by some collision shops and dealerships for parts orders, CollisionLink allows staff to exchange photos and messages about the cars in the works. Contained on one computer screen is a host of information like order status and vehicle identification number details, as well as paint and trim codes.

Rather than ask about a certain part, for example, and describe the car or try to find an order number, a technician or someone else in the body shop can just zip a photo to a parts manager to show what needs replacement. With just a quick glance, the parts manager can recognize what’s needed and respond with a message like “in stock” or “can get in 2 days.”

That cuts significantly on time, Colby says, because not only does it create a digital trail that can be accessed in the system, it also minimizes the kind of polite chit-chat that usually accompanies a phone call.

“Phones are outdated; they are the opposite of a productive tool,” he says. Since installing CollisionLink in February, the body shop and the parts department have already noticed that communication on quick questions like a part’s availability has been streamlined. Says Colby, “You really want to keep people off the phone, and that’s what we’re doing. The longer we use the software, the less often people call each other.”

 

Overcoming Challenges

Getting the new shop up and running wasn’t particularly problematic, although it did require an outlay of funding to make sure the technology was the best possible. In addition to the UV primers, the shop set up new prep stations that allowed for fast turnaround time, and set up a system that turbo-lined many tasks, so that dry-time is only about 8 to 15 seconds.

But staffing those stations and filling technician positions did prove tricky, says Dave Brown, the body shop manager. Because the shop is dealer-based, technicians had to be Chrysler- and GM-certified, which involved factory training.

Although the promise of the training was a draw, it took some time to get the word out about the new jobs, Brown says. “Most of the technicians in this area were already at other shops working, and it was hard to get new people to move here.”

Another issue was that experienced technicians didn’t want to leave shops that were well-established for one that was so new. Brown recalls how some waited to see if the shop would make it past a few months before they considered being recruited.

To meet the hiring challenge, Brown looked for technicians who had less experience, so they could be trained. “That way, I can train them the way I want them to repair stuff,” he says, “as opposed to someone who’s picked up bad habits.”

The necessity of factory training gives the shop an advantage, Brown adds, because it allows the technicians to know the vehicles better than an independent shop would. Recently, the shop embarked on I-CAR training as well, to boost its expertise.

Pricing cropped up as another early challenge, Schmidt adds, because the dealership hadn’t been involved with insurance companies. But Brown had experience in running a body shop, so once he was brought on, his knowledge helped to iron out many of the kinks.

Results Driven

Although the collision repair shop is fairly new, there have been great strides already in showing how a dealership and a body shop can forge a strong partnership.

Schmidt notes that the turnaround time has been the most striking—vehicles that used to take about 10 days for repair are now done in several days or less. Considering the importance of getting used cars fixed up and on the lot for sale in a timely fashion, stepping up repair times by a week is a big deal, he says.

“The longer a vehicle is waiting for repair, the more money it’s costing the dealership because of depreciation,” he says. “A week may not seem like much when you’re talking about one car, but when you’re talking about our volume of repairs, it becomes very important.”

Based on Brown’s estimate, the shop repairs about 140 vehicles per month—and that number is climbing. And now that the initial challenges are squarely in the rearview mirror, the body shop team can think about the future. In addition to continually bolstering its communication with the dealership, the shop staff is trying to get more DRP programs (Progressive has already signed on). Discussions with insurance companies are helped by the presence of the dealership, Brown notes, especially the dealership’s shining reputation.

Another future plan is going after more business, in addition to just what’s done in connection with the dealership. The shop intends to begin marketing to the public, while still keeping the dealer as its primary customer.

In the coming months, the shop will likely put in an after-hours phone service, for example, so customers can call any time. “At this point, we’re just making sure that we’re well-staffed and we continue with ongoing training for people in the body shop,” Schmidt says.

It’s likely that the dealership is going to keep its existing body shop strategy for quite some time, since there’s no frustration on either side. But the next challenge might simply be  keeping up with all the work—and as any body shop manager knows, that’s the best problem to have.

“I like the fact that every day is different,” Brown says. “Sometimes, we get a vehicle that has to be ready to go within two hours, or there’s some lot damage to a group of cars that needs to be repaired. It’s very challenging, but in a fun way.”

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