Chapter 12
Gus's Garage

By Jake Snyder

Last month we calculated takt-times (the rhythm of customers’ needs and demands) for Gus’s three job category types. The three production target rates (13 hrs/car; 5.5 hrs/car; 2.6 hrs/car) for "heavy, medium, and lite" hits will be used to understand how often customers demand Gus’s services for each of his three product categories.

Gus anticipated where I was going last month when I told him that his shop has to always be trying to operate at the same rhythm or takt-time that is demanded by his customers. He was ready for a debate when I suggested this month that his shop has to be loaded at the same pace at which it is expected to produce. When I brought up scheduling jobs-in evenly throughout the workweek, Gus quickly engaged the topic to do battle.

His first point was how impractical it is to try and schedule-in small jobs at the end of the workweek because customers and insurers would not pay for weekend rental cars. He then deftly moved to his next argument and how the paint shop depends on the smaller jobs to keep the paint department busy on Mondays and Tuesdays until the bigger jobs are ready for paint towards the end of the week. Gus was getting more animated and confident in his arguments as he continued with his complete collection of excuses why shops have to schedule work in on Mondays and Tuesdays and push the work out at the end of the week. He touched on part ordering, supplements and reinspections, the employees, and finally I had to stop him. I spent the next couple of hours explaining that he had plenty of "excuses", but not one solid reason to justify why he couldn’t schedule-in work evenly throughout the week.

Out of the numerous excuses, the weekend rental argument is always the most lame. My response is with questions: How many two-day jobs do you actually get out in two days, or is it really three days, or how often is it actually four days, and sometimes five days? How many small jobs were still in your shop last weekend? How many rental car days would you save if all jobs were delivered on time? How many rental car days would be saved if the jobs were delivered not only on-time, but with shorter on-site times?

I really got charged up at this point in my comments and started asking Gus about how much time, money, and customer satisfaction would be saved if all jobs were completed on time and with practically zero defects. I then added a layer of lecture noting how much better customers would be treated if his employees did not have to be pushed and stressed to their limits by the high volumes of drop-offs and the high volumes of deliveries that were constantly being compressed into too few days and too few hours.

Scheduling-in evenly on a daily basis is always the very first step for a shop to take in changing operations towards an even daily output. Although, there are many processing changes in between the drop-off and delivery steps that have to be addressed, I told Gus that he must start by gaining better control of loading and unloading his shop on a daily basis. The staff will need to go through an internal struggle of learning the deficiencies in their current routines in order to discover or positively respond to new process improvement strategies. I advised Gus we would eventually get to these new strategies, but that his staff has to first break from routine and habit.

To be "lean", the workloads have to be leveled. Both the volume of work and the mix of work must be leveled to meet the demands of the customer and to match the capacity of the shop. In Gus’s Garage, everyone has become familiar with doing work or jobs in "batches". Meaning that his operating system forces tasks to be bunched-up into large piles of inventory and then everyone has to "expedite" the process to meet the demands of the customer. In this sense, the customer can be viewed not only as the vehicle owner, but also as the next department or repair step needed to advance the overall repair of the vehicle towards final completion.

For example, the majority of initial part orders for the following week’s jobs are performed on Wednesdays or Thursdays. In addition, the majority of supplement part orders are being performed on Mondays and Tuesdays after the jobs are dropped off. Furthermore, the bulk of the insurance authorizations and reprioritizing of jobs are conducted on Wednesdays and Thursdays. Subsequently, basically all operations (i.e. drop-offs, reconciling files, data entry, customer status updates, billing and deliveries) are following a batching process with piles of inventory that must be subsequently expedited. As we noted last month, it is this batching of routines and the constant reprioritizing of job tasks that cause operations to be stressful and result in cost and customer service issues.

For Gus we established a weekly "load-leveling" table (management report) to track the incoming jobs and outgoing jobs daily. Each job is to be categorized as light, medium, or heavy. The "Scheduled-in" book was also revised to illustrate load-leveling targets. Each page was designated by weekday, and includes the weekly scheduled-in targeted vehicle units and job-category types.

Gus brought up the point that practically all jobs had a supplement and that more labor time (capacity) would be needed than were on the initial estimates. I agreed with Gus, but I explained that for now we had to stick to a single type of demand unit, the vehicle. We are trying to use job categories to segment labor requirements.

Since this device is being used to level production by monitoring vehicles entering work-in- process (WIP), Gus, as the production manager, was assigned to make the WIP scheduled-in entries for the tow-in jobs that were already in the yard. To determine what jobs were to come first, he will use a simple first-in, first-up priority method. For driveable vehicles, dropped off by customers, we considered the day of drop-off as the WIP entry/loading day.

The primary advantages of leveling production volume and job mix are:

• Efficient distribution of resources;
• Simplify information flow (not so many specialized communications to adjust to shifting priorities);
• Reduce expediting (having to shift resources as a response to shifting priorities);
• Operations are more responsive to changes in customer demand (there are not all these batches or bunches of work that are overextending resources).

I also emphasized to Gus that he has to monitor and record order inventory levels (number of jobs out on the street with an appointment, and number of tow-ins in the yard with a WIP schedule-in date). The idea is to dispatch into WIP the same number of driveable and tow-in jobs weekly and to let the order inventory level vary. I explained to Gus that we would develop an order inventory strategy and then manage it after he understands "leveled" production strategies. To see if we are estimating correctly the weekly production targets, I also asked Gus to keep track of weekly overtime hours (excess over 40 hours per man by department).

As part of this month’s assignment, Gus and I were going to look at a dealership autobody operation. He has been considering opening up another store and he felt that leasing this dealership operation might be a good opportunity. Fred, the owner of Hometown Chrysler and a long time acquaintance of Gus’s, approached him with the possibility of taking over his autobody facility. Fred had told Gus that he had grown frustrated with the operation that he began 12 years ago. He felt that the bodyshop was causing more headaches than it was worth. He was constantly dealing with staffing problems and profitability was marginal at best. Fred didn’t feel the store should be closed, and he thought Gus might be interested in taking it over.

When Gus described to me Fred’s reasoning for approaching him, I added that Fred’s offer might also be a reaction to Allstate, which recently purchased an autobody consolidator with a store located not too far from the dealership. Gus agreed with this possibility, since he also knew that Hometown Chrysler’s operation received a large DRP referral volume from Allstate, based on both parts and labor discounts.

As we arrived at the dealership to meet Fred and inspect the bodyshop operations, we were both impressed by the location, size and overall presentation of the dealership. Before going in to see Fred, we drove around to the rear of the property to look at the bodyshop. As Gus had warned me, the autobody facility did not have the same appearance and presentation as the main dealership operation. I told Gus that this dealership is not alone in dramatic disparities between the bodyshop and primary dealership operations.

The dealership is 20 miles from Gus’s Garage, so Gus did not have much prior knowledge of the operation. But the reputation of the dealership as a market leader was well known to both us. We knew it to be a high volume business with a significant share of the local market’s new car sales. I was very enthusiastic at the prospect of Gus having a dealership bodyshop operation. Referrals from both insurers and new car dealers can be a powerful marketing tool.

I could see, though, that Gus and I will have to perform a careful assessment of this operation and the implications of trying to attract multi-brand car types or customers when the business is closely associated with a single car brand.

This assessment will begin in next month’s episode.

Jake Snyder, creator of the popular Gus’s Garage series, is interested in hearing from shop owners with real-life questions.
E-mail JJ the Remote Pro, Gus’s intrepid consultant.