Creating a Better Parts Management System
According to Scott Wheeler, the single largest expense in most collision repair centers is parts. But inefficient and ineffective organization of a shop’s parts management process can cause interruptions in the workflow, driving up costs and cycle time. As west region service manager for AkzoNobel, Wheeler regularly helps shops implement strategies to better manage the parts ordering, storing, and return process. Wheeler recently sat down with FenderBender to discuss how shops can better manage this process.
Can you define what a parts management process is?
A parts control process is a way of managing the parts process to ensure continuous flow throughout the shop. It’s like having an assembly line. The goal of the assembly line is to keep the assembly line moving, but if your parts make you stop that assembly line, it doesn’t make sense. If we can cut all the delays and waste out of the process, we can produce more vehicles in the same period of time.
Everybody wants to be profitable on parts; it’s the second biggest contributor to profit in a collision center. Administratively, you want processes in place that ensure you have your best opportunity to be profitable. With the onset of DRPs 20 years ago, the insurance industry shifted a lot of the administrative work onto the front end of the shop. In collision management today, having the front office of the shop doing the majority of the administrative work, I believe we have an unsustainable model.
We have to look for ways to be more efficient and more productive because our offices are so stressed. What that means is, from a profitability and administrative side of parts, we need to make sure we have standard operating procedures (SOPs) in place that produce a predictable result. You do it the same way every time because you know you’ll be more efficient and you’ll get your best opportunity for profitability. The onset of management systems helps us create those SOPs and be more efficient.
The fastest way to do something is to do it one time. If a part comes in and it’s not checked for accuracy and it gets to the technician and he checks it and it’s not accurate, you just killed yourself on time and flow. You need to do it right the first time.
What is the biggest reason that the parts management process becomes disorganized?
I would say that, first, they don’t give enough responsibility or tasks to the parts people. They overwhelm the front office. Number two, the biggest reason a process fails is because somebody chooses not to follow the process. Once you put together a plan, if an exception comes up, people want to variate from the plan. You’ve got to stay on the plan. You build your process to the norm and you deal with the exceptions.
What is the impact of an organized parts management system?
If you support the parts process the correct way, it’s not unusual to see an increase in productivity or output of 10–15 percent. If you really incorporate blueprinting and other things, it can get even higher.
What are the overall steps involved in parts management?
The first thing is, shops need a parts policy—which identifies the best vendors to deal with—so everybody understands who we should be ordering parts from and why. Part of that parts policy details what the vendor needs to provide when they deliver the parts. You then need to engage the parts person in the repair planning process, which starts with verifying the accuracy of parts before they are ordered.
—Scott Wheeler, west region services manager, AkzoNobel Automotive and Aerospace Coatings
The next step after that is a process for ordering parts. After that, you need a receiving process that includes mirror matching to support the continuous flow. Along with receiving, you need an invoicing process that ensures profitability. When I get to receiving parts, I also need to make sure I have a stock or alternative parts process, meaning you have a process in place to look for usability of alternative parts prior to sending them to production.
The next big part is how I stage parts, which generally means parts carts and making sure your parts carts have a flow to them. Parts carts are about having the parts where I need them, when I need them. You need to make sure you consider that in your process. With that comes delivery of the parts to the vehicle.
Where is the biggest hangup for shops?
The biggest hangup probably has to do with the productivity of the shop. On the productivity side, there are too many parts people that say, “I check parts in, so if there’s 10 parts on the invoice, I check 10 parts and give those parts to the technician.”
I believe we need to re-engage parts people on the continuous flow or productivity side of things. A parts person should be engaging before the car goes through the repair planning or blueprinting process. If the vehicle comes in with a bumper missing, did they identify and create a list of what those missing parts were before an estimate was written? Do they help identify parts up front? Do they verify that the parts you’ve written are accurate? Not only do they help identify that you’re writing accurate parts, maybe they’re pulling the clips and fasteners during that time, so when the vehicle goes into production, all those things have been replenished for the technician.
Technicians do not make any money when they’re not in their stall. If they have to leave their stall to go change parts or find somebody for a supplement, what they’ve done is hurt themselves.
Part of our parts thought process is, “How do we engage the parts person to be doing the steps that are important for continuous flow throughout the shop?” Parts are such a big part of getting it right in this business and we leave the responsibility to the front office, when in essence, most of us should have a parts person who needs to be engaged in the process to help continuous flow.
How can shops improve on engaging their parts person?
A parts person has two responsibilities: They need to identify the missing parts when a vehicle comes in, and then once parts are ordered, they need to be involved in receiving the parts, not only from an administrative function, but also mirror-matching parts. Mirror-matching means, I’m not just going to take the part that says headlight on it and accept it for a headlight. I actually take the old headlight and mirror-match it to make sure I have the right part. Many people will just take the parts out and leave it to the technician. But then when is the technician going to do it? He’s going to do it when he’s fixing the car, which is three days down the road.
You need to verify the accuracy of parts in two stages. The first one is when you’re writing the estimate, the parts person should take the estimate and review it with the parts schematic to make sure it’s accurate. That’s to make sure we’re ordering the right parts. The next part is, once we receive the parts, they should be comparing the parts against the damaged part to make sure it’s accurate. If they cannot tell at that point, they should take both parts to the technician to verify it.
When parts are coming in, the parts person should also be able to identify when all the critical parts, or the necessary parts to move the vehicle to the next downstream operation, have arrived. A parts person should know when all the critical parts are there so he can make the technician visually aware that he can start working on the car. He’s engaging a whole bunch of different things there.
We always do a watch-and-learn with the parts people that talks about what the biggest obstacles are and how to remove them. My biggest tip is, if you keep hitting something that causes pain in your process, get the people together and talk about how to catch this stuff earlier in the process. The activity is really consensus building. It’s about involving them to figure out an improvement plan to solve these issues.