Lean Efficiencies for Tough Times
During abundant times, lots of jobs come in, revenue is good, and not much attention is paid to wasted time and resources. Tough times force shop owners to get serious about operating more efficiently and economically. Today, everyone is looking for ways to cut costs and get more profit out of fewer jobs.
Many shop owners I’ve met started out working with their hands, actually repairing and refinishing vehicles themselves. As their businesses grew they moved from worker to manager and owner and developed simple systems to organize others who now wrote estimates, ordered parts, and performed the repair and refinish operations. These simple systems worked well with a dozen or so people in the shop, but when the operation grew to 20, 30, 40 or more personnel, more and more waste and inefficiency crept in. As long as an abundance of jobs rolled in and profits were good, the waste could be overlooked, but now it is becoming painfully obvious.
INCOMPLETE LEAN PROCEDURES
One way some shop owners are trying to correct this problem is to employ “lean procedures.” On the production side, these work very well and a lot of waste is cut. But in larger shops I still see some managing procedures being used that only work well with a dozen or so people in the shop. One of these is what I would call the “delegating system.” In a small shop, verbal instructions are generally all that is needed to get the job done. But as a staff grows, the probability that verbal instructions will get changed as they’re passed along—or simply forgotten—grows exponentially.
Some professional companies, like those in the fields of accounting, law or insurance, have memo procedures firmly in place. If an executive wants a subordinate to compile a document, he or she generally sends a memo with detailed instructions, including when the document is needed. A body shop is a very different kind of place, with a certain urgency to getting vehicles in, getting claims information processed, and getting vehicles repaired and back to the owner. That urgency can make writing memos seem too slow and cumbersome for the pace of a typical shop. Nevertheless, a failure to put an instruction in writing risks the kind of errors that can cost a shop a significant amount of time and money.
Experts say that the average small business executive spends a combined total of six weeks per year looking for missing information in documents or computer files. I frequently see this in missing invoices when a supplement is being prepared, or information about an ongoing repair when a customer calls for the repair status of his or her car. In many shops I see yellow sticky notes substituting for a formal memo with a copy retained by the sender. While implementing a written memo system may not seem “lean,” the end result will be a far more efficient and profitable method of delegating tasks.
One of the most wasteful practices of owners accustomed to a smaller business is failing to delegate tasks they feel no one can do as well as they can. Brian Gardner at Finandom.com says, “Business owners waste their time on the wrong things. Every day, we only have limited time to run our business. However, if we use it to do something not really helpful to our business, then our business will never grow. Business owners must learn how to pinpoint the nonimportant work and let someone else handle it. You might spend money on this. However, what you earn back is your time, which you can use to make even more money.”
Nevertheless, there can be a downside to delegating wrongly. I like to call it “the camouflaged hole.” This is where a shop owner has delegated a function to someone who is either unable to do it or simply doesn’t have time, with all his or her other responsibilities, to get it done. One example is delegating marketing to an estimator or front desk person. If this person is loaded up with estimating or customer service tasks, very little marketing is likely to be accomplished. This is just a “camouflaged hole.” A far better approach (if the owner has no time to do it) would be to either outsource the function, or hire a part-timer to dedicate a full day or two a week to the job. This may not seem like a “lean” approach either, but trying to cut fat out of a vital function like this will weaken the entire business.
Tom Franklin, author of Strategies for Greater Body Shop Growth, has been a sales and marketing consultant for more than 40 years.