Four Steps to Improve Your Front Office Operations
When it comes to efficiency, the industry tends to focus on shop floor innovations like technical training, integrating a lean system or using waterborne paints. But inefficiencies may be coming from your front office management, too. Administrative waste can slow a shop significantly. Luckily, there are ways to fix that.
FenderBender talked with Ron Kuehn, founder of Collision Business Solutions Inc. in Minneapolis, about the front office trouble spot. Kuehn consults with businesses across the country on how to improve business practices, and he offers advice on how to increase revenue by streamlining front office operations.
It’s fairly easy to identify efficiency problems on the repair side of things especially for visual learners. However, we really don’t pay much attention to the redundancy on the administrative side. Our research has shown that the cost of administrative inefficiency is extremely high in customer and employee satisfaction. The negative financial impact on your business is substantial. Luckily, there are specific things you can do to help this situation.
1. Set up a nonvehicle database structure in your estimating systems. You may be typing in manual lines for estimating, which is an extra step. You probably don’t have set pricing or structured pricing, so you’re not consistent from repair to repair. It’s easier to click a line and automatically get your pricing and get the replacement in your estimate than it is to type the line and the price.
2. Set up a complete disassembly standard. Use that consistent standard to write a complete blueprinted estimate and create a final bill before you start repairing the vehicle. When I’m in a shop, one of the first things I do is ask technicians to define what 100 percent disassembly means. And very seldom do I get the same answer from every technician. I’ll ask the same thing of front office staff, and those definitions won’t match up either. This is inefficient. If you have consistency, or if you remove most of the variability of any of the processes you perform, you have a more reliable outcome and a more consistent timeframe.
3. Reduce the number of prewritten estimates and preordering of parts. We complain about the fact that after we write estimates, we disassemble the car and we discover all this extra damage. What we discover when we disassemble is it’s our lack of thoroughness that creates a tremendous amount of additional administrative waste. We create the habit of not being thorough enough. If you have a disassembly standard before estimating, you create efficiency.
4. Measure how many OE invoices, including returns, your shop has per repair order. The reason I like to measure that is that most vehicles have an OE part. I won’t get into aftermarket or LKQ invoices because there are a lot more variables to consider, and all vehicles will have an OE part.
The average shop spends over an hour of administrative time from the time the part is ordered until the time the check is written for that part and reimbursement is sent to the vendor. There’s a tremendous amount involved in getting that done: making copies, transporting the part, calling about availability, getting it out of the box, moving it across the shop, et cetera. So the number of invoices is high.
Insurance companies slow you down because they add administrative requirements to your current paperwork. You have to do these things, and your admin costs and burden is killing you and your people. The companies are adding extra admin burdens on something that is very inefficient to begin with and it’s just compounding it. DRP shops that have to follow requirements from insurance companies will frequently try to set up and memorize each individual insurance program. Usually this job belongs to one employee because there are many things they have to remember. But this is inefficient.
A shop should create one way to write an estimate that incorporates a majority of the insurance companies’ requirements. This creates a standard for the shop. From there, the estimate can be adjusted to meet the specific needs of each insurance company. So you have one estimating process that gets slightly revised for each company rather than memorizing and writing individual estimate requirements for each company.
Ultimately, if you create a final bill and a final parts order before the vehicle is repaired, the vehicle, for all intents and purposes, flies through the shop. It’s typically not about how fast our technicians can repair the work, it’s about how thoroughly we’ve prepared. This includes not only the information about what needs to be done, but it also means that parts, supplies and tools are available so that once the techs start on those vehicles, they don’t have to stop for any reason. The management side of the business can have a lot more adverse effects on production than the speed at which the technician repairs the vehicle.