Going Lean in a Small Shop

June 1, 2010
Your shop doesn’t have to be huge to make lean principles work.

Admit it: If your collision repair shop isn’t already lean, you’ve probably thought about making the leap. After all, lean is now an established business practice, and plenty of shops both large and small—including, perhaps, some of your competitors—have started implementing it. Why? “Going lean is a competitive advantage today,” says Amjad Farah, manager of business development for BASF Automotive Refinish in Southfield, Mich. Operating lean can help a shop of any size improve the metrics that insurance companies care about, such as low cycle times and high touch times (the total time that a car is actually being worked on), as well as offer peace of mind, Farah says.

But if you think that lean, with its necessary investment in time, tools and training, is best left to the big guys, think again. Small shops may have an advantage when it comes to going lean, according to Farah, because changing the culture of a collision repair shop is one of the biggest challenges in implementing lean principles, and it’s easier to change the culture of a small shop than a large one. (The reason? There are fewer people to change.)

Lean can also make life better for small shop owners and managers who feel chained to their business. “When you’re always worried, fighting fires, and having to work late and constantly be on top of everything, that’s wearing, and that’s wasteful,” Farah says. “You’re doing that because you have problems in your business that you haven’t addressed. A lean shop doesn’t have those worries. In a lean shop, life is good. [Owners of lean shops are] looking for improvements, as opposed to reacting to problems.”

For the following small-to-medium-sized shops, the lean life is indeed good. Here’s why—and how—they made the lean leap.

Change From the Top Down

Nolan’s Body Shop, Pasco, Wash.
Implemented Lean In: 2008
Key Results: More profits in less time

Going lean means getting employees on board. But Eric Nolan, manager of Nolan’s Body Shop in Pasco, Wash., first had to sell someone else on the idea. His dad, shop president Don Nolan, initially didn’t buy into the need for lean. But when Eric joined the shop in 2007, the business felt inefficient to him. Vehicles were moved too much, billing was slow, touch time was low. “It seemed to me there had to be a better way to do things,” he says.

In February 2008, Eric Nolan attended a seminar on professional estimating run by the shop’s paint supplier. The speaker talked about the lean process, and Nolan began to implement the suggestions. Then, he convinced his dad to join him for another seminar on lean. “They were showing pictures of [disorganized] shops and saying, ‘If this is the way your shop looks, you have a problem.’ And that’s what our shop looked like. That helped [my dad] realize that what I was saying was important.”

Since then, Nolan has worked with his eight employees to explain the benefits of lean and get them on board. He holds regular Monday morning meetings to discuss the previous week’s performance and to create a plan of attack for the coming week. He also holds a monthly meeting to discuss “our philosophy as a shop, what we need to do to improve and what changes may be coming to make the shop more efficient.” It’s a chance for employees to contribute their own ideas.

Other improvements included the purchase of Mitchell ABS Enterprise (he recently upgraded to Mitchell RepairCenter); eliminating over-inventory; and dedicating one of the shop’s two buildings to body work, leaving the other building solely for painting, priming, put-together, and detailing. (Previously, techs worked in whichever building they preferred.)

Nolan’s make-lean-work advice: Get educated about what lean is and how it can work for you, invest in technology, and communicate. His efforts have paid off. In the first six months after implementing lean changes, the shop, which had $976,000 in annual revenues last year, brought in profits equal to that of the previous three years combined.

A New Attitude

Body Beautiful Collision Repair, Aurora, Colo.
Implemented Lean In: 2006
Key Results: An 11 percent profit margin increase in the first three months of implementing lean.

Four years ago, Janine Little and her husband, Joe, were trying to enjoy a nice evening out. Instead, they found themselves complaining about their Aurora, Colo.–based business, Body Beautiful Collision Repair. “The biggest issue was the frustration,” Little says. “Why was it so hard to do this work and get cars out?”

Less than a week later, PPG approached the couple to take its MVP Green Belt training. “We had to try something,” Little says. “And in the first 10 minutes, what they were talking about had us awestruck.”

The couple came back ready to make changes. The shop was emptied out, tool carts replaced toolboxes, and everything was labeled. X-Ray Repair Planning (a process of identifying all damage and repair needs and eliminating interruption in the flow) was put in place. But the couple met with resistance from employees, and several quit.

Nine months later, the couple attended another PPG class on leadership (something Little now wishes they’d done immediately after the Green Belt training) and learned how to be more effective communicators. PowerPoint presentations with the shop’s goals and reasons for implementing lean helped get the shop staff on board, as did inviting input from their 15 employees. (For more ideas on how to do this, see our Human Resources Strategy article "Listen Up.") Little also put pedometers on employees for a week and monitored their foot traffic. “We reduced the back-and-forth in the shop by 75 percent just by putting tools in the right area,” she says.

The shop, which had gross sales of $1.8 million last year, recorded an 11 percent profit margin increase in the first three months of implementing lean. And the couple recently opened a second shop location. “It’s completely changed our lives,” Janine says. “I don’t think we’d still be in business if we hadn’t done this.”

A Lean Design

Babb’s Body Shop, Chatsworth, Ga.
Implemented Lean In: 2004
Key Results: Revenue increased 43 percent in the first year of operating in a new shop with lean processes.

Babb’s Body Shop in Chatsworth, Ga., was built to be lean. In 2004, when Babb’s was constructing a new facility, executives from Sherwin-Williams Automotive Finishes helped Jason Babb and his father design the floor plan to maximize workflow. They also took the duo around to other shops in the Atlanta area so they could cherry-pick the best processes and design ideas.

That led to big change. Previously, the shop operated out of two buildings, with paint across the street from body. Moving everything under one roof and keeping cars moving in the same direction helped eliminate unnecessary vehicle movement. Other improvements included disposing of old, unused parts and equipment in order to make the most of the 21,000-square-foot space; lining off the floor and creating spots for each car; and using parts carts religiously. “We generally have two parts carts per car—one with old parts that we take off, and one with new,” Babb says. “In the past we were running into situations where the new parts were getting lost or damaged [by being] in with the old.”

Babb also attended Sherwin-Williams’ lean training program, A-Plus University, and invested in technology. Mitchell ABS Enterprise helps keep “everything as standardized as possible,” he says.

In the first full year in the new shop, total revenue was up 43 percent, and Babb attributes half of that gain to the lean process. Revenues have been “pretty flat” ever since, he admits, and were about $2 million last year. “But in these economic times, I’m starting to see that when you get to the end of the month, if you hit your averages from the previous year or two, that’s pretty good.”

Making the Business Fun Again

Beal’s Auto Body, Prescott, Ariz.
Implemented Lean In: 2008
Key results: A slimmed-down staff and 6 percent profit increase.

Tim Beal, owner of Beal’s Auto Body, began implementing lean principles in his Prescott, Ariz., shop two years ago to improve efficiency and cycle times, and increase dollars per day. “We just had to come up with a way to fix more cars with the same amount of personnel,” he says. Through the years, Beal had added more stalls and more techs—and still saw his net profits shrink. “We just could not continue to do business the way we had in the past,” he says.

Investing in a management system from Summit Software Solutions helped him get lean. “They have user meetings all year round: You start sharing information [with other software users], and that really was the initial kick-off for us to go down this lean path—the information and customers we met through Summit,” he says. He also built a new 12,000-square-foot production facility and hired an outside company to help him convert his shop floor. Today, the shop has implemented all of the 5S lean principles (sorting through everything in the shop, straightening it all up, systematic cleaning, standardizing procedures and sustaining the changes), with everything in its place.

But for Beal, getting his administrative staff lean was the top priority: “Lean starts in the office,” he says. The most important thing is to get your office efficient and to write really good estimates.” Before implementing lean, nearly 80 percent of his shop’s estimates required supplements. But thanks to a new blueprinting process, today 80 percent of those supplements have been eliminated. “You have to get everything 5S, but your administrative staff has to have the space, tools, time and equipment they need to write good estimates and do ready work,” he says. For Beal’s, that means software as well as a quiet space for estimators to work and their own dedicated bay with lift and tram gauges.

Going lean “has made the business fun again,” Beal says. It’s also allowed him to eliminate five employees (he currently has 12) and increase his net profit by 6 percent, although he admits that revenues, which were $2.2 million last year, are down from two years ago, when the economy was stronger.

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