Throughout history, the world of science has witnessed numerous significant discoveries and inventions. One that quickly comes to mind is from the great scientist Thomas Edison, with his creation of the incandescent light bulb. Most are aware that Edison had multiple failures until he finally found that a carbonized cotton thread would burn for up to 13 hours. This opened the door to finding much longer-lasting filaments. History states he had thousands of failed attempts. Edison was asked why he didn’t become depressed after each failure. He stated, “Each failure was a success, because I knew what wouldn’t work!” With Edison’s great fortitude and tenacity, he went on to create many amazing inventions for mankind in his era.
For shop owners or managers, I think we need to be more like Edison to try to discover new things. Scientists usually work in some type of laboratory, do research, create a hypothesis (educated guess), and then try an experiment to see if it works.
In a collision shop, we need to look at our shop as more of a laboratory than just a place where wrecked cars get fixed. Take, for example, our profit and loss statement. I have written before about how every month we need to review our P&L for areas of trouble and ways to improve them. We’re monitoring all the different gross profits for technician labor, paint & materials, OEM parts, LKQ parts, and stock parts. Then we have GPs for towing, ADAS, window tint, bedliner, striping, detailing, total losses, etc. Otherwise, we’re just studying historical data. This time is well spent IF this is all we’re doing. What if we find, say, our P&M GP is below our desired 50%? How about we go beat up our painter -- or maybe even the estimator while we’re at it? Then, let’s call up our paint jobber, threaten to jump ship to a new paint manufacturer unless we get a deeper discount. How about OEM parts? What if our parts GP was down by 5% and then we swapped out a couple of old dealers for new ones with better discounts? The trouble is that the new dealer’s service and inventories are worse than the old dealer’s. Who cares? Our parts GP just got better. WRONG!! Whether we switch paint lines for better P&M GP and then have color match issues or swap good parts vendors for bad ones, this is called classic suboptimization. Some owners even suboptimize by demanding that their paint booths can only be run with a minimum of refinish hours and ROs. Otherwise, we optimize one portion of our business while the rest of the business (departments and customers) suffer the consequences!
I think Albert Einstein summed it up the best. “Everything should be made as simple as possible, but no simpler.” Years back, one of my great mentors had five shops at the time, and with UNHEARD-OF net profits. We started discussing our industry’s KPIs for gross profits. Being the smart guy I thought I was, I asked him what his P&M GP was. He sharply replied, “I have no idea and don’t care!” I then replied, “Well, what DO you watch??’ He held up one finger and said, “One number!” I thought to myself, this cannot be true. He went on to explain that the only focus was throughput per day or how much profitable work was coming in, traveling through the system, and leaving with quality each day. To him, chasing KPIs was like chasing after the wind.
