Adapting to Change
In the Questions section of the April issue of FenderBender, Berkey discusses industry consolidation, cycle time, and the new paradigm shop operators must adapt to in order to survive. Here we publish more of Berkey’s thoughts on the massive changes going on in the collision repair industry—and how shop operators must adapt their thinking to these changes.
Describe how shop operators have to change their thinking in order to thrive going forward.
Part of it is based on first changing our mind-set, and this comes from understanding the changing requirements and what it takes to meet them. Shops first of all have to get over the hurdle of understanding [how to think about] this big sea of cars sitting in their parking lot: It may make you feel better, but customers have to wait longer. You have to work on cars more continuously. You can’t use extra cars to protect yourself. You have to build a new process.
We ask shop operators some key questions. The first one: What’s your goal? “To make money.” The second question: Would it bother you if there’s something you were doing that made money today, and would make you lose money in the future? They say, “Yeah that would bother me.”
So how does cycle time play into this?
All shop owners and operators want to make money today. A part of keeping work flowing today is to keep our technicians busy and efficient. We want to keep our techs efficient and keep cars moving even while we have problems in our process. We have hidden damage, we sometimes order the wrong parts, we sometimes order the right parts and get in the wrong parts, we have all sorts of issues that cause us to stop working on a vehicle. So we buffer our process by bringing in extra cars so that we always have another car to turn to.
In the future we also need to make money. And a part of making money in the future is being competitive with lower cycle time. As we learned by looking at Little’s Law, our average cycle time is longer when there are more cars in the process at any one time. So the very thing that is helping our process today is hurting us in the future.
What’s the first step for shops in making a change?
We have to take some time and take a step back with our technicians, and we’ve got to build a better process to fix cars. We have to build a process that is not dependent upon having many extra “just in case” cars to turn to when we have process problems. We have to build a process that allows us to work more continuously on fewer cars at a time.
The collision process is full of variation. We all know that. There are differences the volume and mix of work. There are differences in DRP requirements. There is variation in parts availability, delivery and quality. There are differences in technical ability. Every single thing we do has a lot of variation and all of those sources of variation can cause delay. All of that variation can be a reason for us to bring in another car in order to stay busy. Lean is about eliminating delays. It hates variation. So first, we have to learn how to recognize variation and then learn to reduce or eliminate it.
Isn’t the biggest source of variation how fast a technician can work?
This industry has been somewhat infatuated with efficiencies of individual technicians. People think if their technicians would double their speed that would solve the problem. But really the issue with cycle time isn’t working faster; it’s just learning to work on the car more continuously. We need to understand why there are so many cars in our process not being touched. And that means simply asking, “Why am I not touching the car? What would I have to do to work more continuously and keep my hands on the car?”
Give me an example of how this less-is-more philosophy works.
A one-booth shop would do about seven jobs per working day, or five jobs per calendar day. The industry average keys-to-keys cycle time is about 10 days. When we work the math backwards this means the number of cars in process for this size shop, on average, is 50. Now think about how many technicians you would need for a shop this size. The answer we get is anywhere from six to nine. If it’s six, the ratio of cars to techs is about eight cars per tech. If a tech can touch only one car at a time, seven cars are sitting for every car getting worked on.
In order to make the keys-to-keys cycle time five days for this same shop, the work in process has to be reduced to 25 cars. The big step is getting owners’ and managers’ heads around that. It means you’ll have fewer cars sitting around waiting to get fixed.
The higher number of cars, the more waste. This is why pit crews work the way they work. There you have six techs on each car. Work on it, move it on. In the collision repair industry, we will never reach a point where we work on just one car at a time. That’s just philosophical thinking. But we need to get closer to it. We need to reduce the number of idle cars in the system.
Talk about some of the other variables that go into this.
Shops deal with a lot of variation. The issues that impact cycle time the most seem to be the inability to discover all of the damage to a vehicle up front, and the variations in the volume and mix that hits the shop.
Okay, let’s start with hidden damage. Why is this a problem, and how do we solve it?
The No. 1 cause we find for idle cars in the collision process is hidden damage. Up front we must disassemble the car sufficiently to expose all the damage. We must order all of the right parts, receive all of the right parts and validate that we have all the right parts, everything we need to work continuously on the car. In the past, many shops were not as good as they wanted to be at finding all hidden damage in an initial estimate. And sometimes not even in subsequent estimates. This resulted in the technicians reaching a point where they could no longer work on a specific vehicle. So they’d leave that car and move to another. This can happen over and over again to the point where one technician may work on up to five or eight cars simultaneously. This is a good strategy to keep technician efficiency high, but it does not allow the same shop to reduce cycle time. They’re just buffering, or protecting, themselves. The car will come out eventually, but to improve their cycle time, they have to resolve the issues that caused them to have to stop working on a car.
Talk about scheduling. You can’t schedule car accidents, so how do you schedule repairs?
Processes all perform best when we feed them steady work. In collision there’s the saying: “They don’t wreck ’em as I need ’em, so I take ’em as they wreck ’em.” Actually if we repaired them as they were wrecked, there would be a fairly even volume each day of the week. In collision there’s a tendency to bring too much of the work in on Monday and try to get it done on Friday. Some of this is due to the weekend but some work actually gets moved from Thursday and Friday to Monday. Well, it doesn’t really matter what type of work you are doing, it’s hard to shove it all through starting on Monday and get it out by Friday. You get a big glob of cars sitting on Monday while the refinish technicians are relatively idle. Some repairers will say, “Well I can’t influence that.” Now the shop is faced with getting 40 to 50 percent of the work in one day, and it tends to sit.
What some shops will do, to the extent they can, is work with customers or insurance companies to try to influence when work comes in without making it a negative experience for the customer or policy-holder. Think about it: If you want to get a haircut or go to the dentist, for most everything that’s service-oriented, there has to be some degree of anticipating and scheduling. To the degree we can take these surges out, we can make cars flow more evenly.
This all sounds good in theory, but does it work in practice?
As people work on their processes, they’ll often call back and say to us, “It looks like we don’t have work, but we are getting more cars through the shop than ever before!” The exciting thing is that shops all over the country are getting it. For many in the industry, this paradigm shift is going to mean extraordinary opportunity. The same change that creates opportunities for some is devastating for other shops that can’t react, or don’t want to believe it’s happening. Our job is to make it possible and make it easier for our shops to win in this new game.