Today’s collision repair facility is vastly different from the one I grew up in, and unless you’re under 20 years old, the one you grew up in too. The industry has grown dramatically in the last decade, thanks in no small part, to the advent of large shop operators-often with multiple locations.
These large shop operators brought with them investors and their grand growth plans, their business know-how, and the need for the technological advances that benefit all of us today. They introduced us to the business of running a professional collision repair center, with all the benchmarks and measurements that go along with that process. Until this movement, most shop owners were running production and their offices by the seat of their pants. They made financial decisions based on the checkbook balance, not the balance sheet. Not many shop owner/operators knew what EBITDA was—most thought you could cure it with penicillin.
I remember the first computer-estimating program I used. I thought to myself, this would never catch on, give me a pen and a book any time. Boy, was I wrong.
The reality is that technological advances have become part of our daily life in the collision repair industry. In order to grow with this movement you should consider jumping on the high-tech bandwagon. The question is what system(s) do you need, and what should you buy?
Before we begin describing the types of systems available today, however, we must look at what they measure.
Performance measurements
There are many types of tools and programs to help you get control of your daily production. All of these tools are information providers that help you gauge performance based on benchmarks and goals. They are known as KPIs or key performance indicators. To really streamline your operation, you have to break the whole into components that are more manageable. The performance of each component can then be gauged by some form of measurement. Once performance is measured, it can be compared to an established benchmark and decisions can be made to enhance performance.
Without some form of measurement, your operation will never improve.
All of the following examples need to be measured, and the KPIs in each area understood and mastered. This is just a sample—there are many more.
Close ratio (batting average): How many estimates do you write versus how many you sell? Are you in the repair business or the estimating business? Do you know what the average should be?
Estimate count: How many estimates per day are too many for one person? How many do you write daily? Are they accurate?
Technician efficiency: Do you need more techs, or faster ones?
Break-even calculations (and sales vs. goal): At what point do you start to make money?
Cycle time: The industry buzzword. What is your average repair time per vehicle?
Average repair order dollar: How much is your average repair?
Job source information: Where is your work coming from? If you have a sales force, are they effective?
Gross profit: Are you making enough on each job before bills?
EBITDA: Earnings before interest, taxes and depreciation.
Sales mix: How much body labor do you sell? Frame labor? Mechanical? Could you make a greater profit if you sold more frame labor? What type of vehicles? On which type do you make the best gross profit?
The need for up-to-the minute information is obvious. All of the current management systems can measure this type of information and provide you with the answers you need to expand your company.
System Types
Production/Management systems: Many production/management systems today can really help streamline the repair process by saving you time and forcing specific behavior to get a desired result. To maximize your shop’s performance, there are industry recognized “best practices” that must be developed and put in place. Today’s systems will help force this process by mandating the collection of certain information and requiring a certain order be followed when maneuvering vehicles through the system.
These systems will help control your work in process and produce reports detailing what your weekly sales are expected to be. They will track your daily deliveries and show you what jobs are late compared to a pre-set completion date. They will print detailed work orders in every imaginable way to give to shop personnel. Many even have a time-clock feature built in for shop and office personnel. Today’s systems will track parts purchase and vendor information and produce reports on parts profit. They track job source information and produce reports that detail the return on your investment in sales and advertising. They can produce cycle time reports using almost any criteria, over any given date range. Many are portable, and have handheld units using wireless technology. With this type of unit, you can update vehicle progress through the shop—right at the vehicle—and synchronize it with the main system back at the office. It will then automatically update the vehicle status in every computer in the shop.
Some systems have a very visual production screen. One in particular has a picture of the actual damaged vehicle, which you move through the repair stages. As the car moves through these stages, the system will automatically e-mail the owner of the vehicle, and let him or her know the vehicle status. Then, as the car passes through each production department, the system automatically flags the technician the appropriate labor time allocated to that operation. When the car is moved all the way through production, a payroll report is generated and the tech is paid automatically.
Some of the more sophisticated systems have remote capability and can be viewed from a remote location, “live.”
Almost all systems will download estimates from the major estimating program providers into their systems. These systems will track payments made to a repair order and will break down and track all of your receivables. Most systems will import information into your accounting system.
Many will allow you to generate all of the authorization forms guarantees, load-leveling and inspection forms needed at vehicle drop-off time. This is a great feature, and it will save much of the cost of printing, purchasing, or copying all your forms. The system will populate the header with the customer name and vehicle information, and add a professional look to your forms.
As for the KPIs mentioned earlier, most production/management systems will track them all and generate reports in every conceivable way. Some will format the reports into graphs or charts for easy visualization. Once you have set your benchmarks, which will vary by the particulars of your shop, you can use the management reporting capability to hone in on problem areas and determine methods to improve them.
Another great feature of a modern management system is the ability to communicate with your staff. Most systems work with an intranet internal e-mail system and have the capacity to connect to the Internet through regular e-mail. With this feature, communication is greatly improved making sure all of your staff is kept informed of every thing going on in the shop. Not much can be forgotten or slip through the cracks with this type of open communication.
Each keystroke by any of your staff is documented and time and date stamped. This can prove beneficial when verifying and zeroing in on potential breakdowns in the system. It will also come in handy to document files regarding vehicle delivery. Many systems even have a separate re-do, or comeback tracking capability, and can generate a second work order, attached to the original, for this contingency. This feature will allow you to track comebacks, and issue work orders on them. The comeback costs are automatically added into the financial reporting numbers for dissemination at month’s end.
Estimating systems and audits: Estimating systems are improving daily also. Not only from a data accuracy standpoint, but from a performance standpoint as well. Several offer technology that will allow management systems to talk back and forth through the estimating system. This feature enables additional parts added into a management system to flow back into the estimating system and automatically generate a supplement in the estimating system, keeping both systems mutually accurate. New technology also allows a multiple shop operation to receive all of its DRP assignments at one location and then distribute them by production demand to any of its locations seamlessly. The assignment is sent electronically to the shop most able to handle the volume. The multi-shop owner can view from a “dashboard” each store’s available capacity and appointment schedule, and choose the facility best suited to get the work. This really helps keep cycle time low.
Also keep an eye on estimate auditing systems available from estimating system suppliers and third-party providers. These systems typically work off of rules you establish to ensure that common items are charged for properly in the estimates you write. These systems also have the ability to establish profiles based upon the different insurance company and other types of referral relationships you may have at your store. The estimate auditing system checks the estimates based upon these rules to make sure the proper labor amounts and additional operations are included accurately based upon the rates and allowances you have negotiated. As your shop grows and you have multiple estimators or referral relationships, estimate auditing software can help improve the accuracy of your estimates and speed payments by reducing errors discovered after the fact.
Status Web sites and digital photography: It seems old hat to some of us, but digital photography is only in its infancy regarding applications in the collision repair industry. There are programs available today that use a digital image of a customer’s vehicle, taken daily, throughout the repair process, to provide status updates to a customer. Vehicle owners are given a code number and a Web address when they drop their vehicle off for repairs. The customer can then visit the Web site, and view the status of his or her vehicle anytime throughout the process. This helps cut down on time devoted to incoming status update calls. There is even a service provider currently working on a “virtual estimator” program, using digital photography to write a complete estimate, from a remote location, without actually seeing the car. Detailed photos are examined through an Internet connection, and an estimate sheet is generated from those photos. Initial tests have proven the system can work and is accurate.
Digital photography is also a great tool when ordering parts from a vendor. There are management systems today that will generate a parts order and attach a photo of the vehicle with it. This will allow the vendor to ensure a correct part is delivered, keeping efficiency high.
The Basics
When considering a management/production system, purchase buy the best one with the most features you can possibly afford. Once purchased, learn and use all of its features.
The following is a list of some of the features that you should look for when shopping for a system:
Mandatory data input requirements: Your system reports will only be as good as the data input. Look for a system that mandates certain information be entered to ensure accurate reporting. There are several systems available today with this feature.
Remote data access: Several systems allow the user to log on to the shop system remotely and view the status of daily operations, even when physically not at the shop.
Internal notes available: Even more advanced, some systems date and time stamp actions automatically. This feature allows you to prove when parts were ordered and calls were made to customers and vendors.
Ease of use: If the program is difficult to use and train in, it will not get used.
Adaptable to your future growth: If you plan on having multiple shops, buy a system that can accommodate that growth.
Support: Make certain any production/management system you purchase is adequately supported by the manufacturer/jobber.
Cost: Although certainly a factor, consider the gains in efficiency and profitability you will realize through the use of a high quality system.
Operating system requirements: Some systems require T-1 lines or specific hardware, in order to function properly. Look at all the cost and/or availability of the service, involved with these requirements.
Compatibility with your current estimating and accounting software: If your system of choice communicates with your current systems, it will be easier to implement.
Reporting capability: What information can you get back out of the system?
At what cost?
Some of today’s systems cost tens of thousands of dollars—others are available for considerably less. It’s no different than the frame rack, spray booths and prep stations you have in the shop. In order to grow in the modern world of collision repair, its important to have the right tools. Without them, you will be left behind by those that do
