Last month, I wrote about cutting inventory costs and discussed eliminating waste as one way to reduce inventory costs. The same theory applies in the mixing room. Waste is the biggest threat to paint profits.
The first step in reducing waste in the mixing room is to develop a paint budget. You will need a little help from your paint jobber on this but it is easy to calculate and monitor. You will need to record the paint hours turned daily on a simple spreadsheet and compare those hours to your paint purchases. A good rule is to keep your paint expense between $10.50 and $11.50 per paint hour, the closer to $10.50 the better. Divide the paint hours into your paint purchases and see where you are in comparison to that rule. If you are over you need to start looking at a couple of variables that could cause your paint expense to grow.
The first variable to consider would be the paint scale report. Were there multiple over pours? Are colors mixed several times to get the right match? A good review of the paint scale report will show whether training is required on mixing or paint matching. How much paint is being mixed for a job? Are your painters using a panel calculator to determine how much paint to mix? Look at the paint cups. How much paint is left after a job is completed? If there is more than enough to cover the bottom of the cup, a serious over mix issue is evident. That extra amount on six to eight paint jobs a day could add up to enough paint for the ninth paint job.
Another variable to look at is redos. Redos will increase your paint expense very quickly. Create a redo list and document why you are redoing a paint job. Is it poor body work, poor color match or numerous imperfections? Use the redo list to isolate problems and institute the necessary corrections to eliminate them.
Another example of waste to consider is purchases. Are you purchasing what you are using or are you purchasing to replace a tint on your paint rack? If you are replacing a tint just because you opened a new one you are creating waste. If you replace a slow moving tint because you just opened your backup you are spending dollars you might not realize a return on for several months.
Inventory your tints and determine which tints are fast moving, medium moving and slow moving. Color code your paint rack, using green for fast moving, yellow for medium, and red for slow. Replenish your tints based on those color codes.
You might reorder a fast moving tint when your open can becomes half empty. At the same time, you would not order a slow moving tint until the open can is almost empty. For this to work effectively you will need to watch your work mix so you do not get caught short-handed. If you see that you have several cars coming in that require a slow moving tint, you will want to ensure you have enough on hand and only reorder that particular tint if you need it to keep your production moving.
I also want to address getting paid for what you are painting. As I review estimates, I continue to see a lot of blend within panel adjustments. Some of you will remember my in-depth discussion concerning this in the January 2010 ABRN article "Blend within panel procedure hurts repairers profitability."
The biggest insurance company argument right now concerns bumpers. "If you are only putting color on one side why do I owe you to color coat the entire bumper?" "I will pay you full clear but you need to take 2/10 or 3/10 off of the refinish time." The best defense against this type of paint reduction is through pictures.
Put a camera in your paint shop and have the painter photograph the paint process, show the primer, the sealer and color coat. Illustrate the processes you use and attach them to the estimate. Then, print out a paint bill that documents the materials that you have used and annotate the difference on your estimate as a supplement line. Make sure to supplement for the 2/10 to 3/10 it took to mix and apply the sealer.
Remember the insurance company told you they were only paying you to color coat and clear the bumper. If you are putting product on a vehicle and not being reimbursed for it that is waste!
