Your Source for Up-To-Date News and Research on the Collision Repair Industry 

 

click here to subscribe to the FREE INSIGHT Editor's Desk News Alert Email

SUBSCRIBERS-ONLY
Today's News
INSIGHT This Month
INSIGHT Archives
Survey Center
Letter to the Editor

Business Tools
Subscription Information
CSI Reporting
Financial Analysis
IRS Audit Guide

Management/
Technical Info
Market Watch Rates
INSIGHT Inside this month's issue...

Feedback
Letter to the Editor

2003 Ideas: 2004 Realities?

Will the concepts discussed during this past year actually make it to successful implementation in the next?

For entrepreneurial business owners, it's not always the good idea that's lacking; it's the willingness or ability to execute that idea.

That's a problem that the collision industry - like many others - struggles with as a whole. Great ideas are often floated - and follow-through may even be launched - but reaching the point of successful implementation is far less common.

As 2003 draws to an end, INSIGHT has chosen to highlight some of the ideas and plans announced or discussed during the past year. Some of these ideas could be characterized as "great," and others just as "big." But those that do not warrant either of these labels at least seem "promising" or "intriguing."

Many of these ideas have been discussed in INSIGHT over the past 12 months, but the question becomes now: Will there be execution of these ideas in 2004?

Quality measurement

Every shop owner believes his or her facility produces quality repairs. But is there a practical, industry-acceptable way to measure or compare the quality level being produced at one shop versus another? Can "repair quality" be measured as CSI is used to measure "service quality"?

The Fix Auto network of more than 100 independently-owned shops has launched a program that it says can do just that. A Fix Auto quality assurance specialist spends one day a month at each shop participating in the program to score five or more completed vehicles and to discuss the results - and any problems found - with shop technicians and management. And a web-based tracking system enables participants to see how their shop's quality scores compare to other Fix Auto shops.

Under the scoring system, a completed vehicle starts with 100 points. Points are deducted based on the number and severity of deficiencies found. Minor cosmetic problems - such as overspray or compound in a jamb - result in a deduction of one or two points. Moderate cosmetic or functional problems - such as a run in the paint or inconsistent hood-to-fender gaps - cause a loss of three or four points. Major cosmetic, functional or safety problems - such as an airbag system dash light that is on - result in a deduction of five to 10 points based on the severity of the problem.

It remains to be seen how the program will be embraced by the network - and obviously just as important, by the customers and insurers to whom Fix hopes to sell its services. And will others adopt similar programs?

"We're guessing that down the road shops will have a quality rating much like they have a cycle time or CSI rating," Ron Guilliams, director of quality assurance for the Fix network, said.

Theory of constraints

While certainly not a new concept - it sprang from the 1985 book, The Goal, by Eliyahu M. Goldratt - the "theory of constraints" has gotten a fair amount of attention this past year among some of the country's "top shops."

In a nutshell, the theory is essentially this: Businesses - and really all organizations - exist to achieve a goal. A factor that limits a company's ability to achieve its goal is referred to as a "constraint." Identify and manage those "constraints," and the business can more readily meet its goal.

Goldratt uses a chain analogy to help illustrate his theory. A body shop, for example, can be thought of as a series of dependent events that are linked together like a chain. The activities that go on in one "link" are dependent upon the activities that occur in the preceding "link."

The theory of constraints says that management needs to find the weak link in the chain since "a chain is only as strong as its weakest link." Thus, a company should focus on "chain strength" (not link weight) by working to strengthen the weakest link - the constraint.

A number of companies are looking to help the collision industry use the theory of constraints. A handful of multi-million dollar shop operations, for example, are beta testing "EnterpriseDNA," a program that its proponents claim enables shops to pinpoint "constraints" in real time, making the adjustments needed to maximize production.

"The body shop productivity game is like chess," said Dale Opeka of Opeka Auto Repair, a $2.5 million business in the Pittsburgh, Pa., area that is testing the software. "The sequence of events is extremely important if you want to achieve optimum delivery. EnterpriseDNA takes all the variables into account and spits out the best possible way to get there. It's like an automated chess player."

Whether such systems prove workable in this industry will largely determine whether the "theory of constraints" remains part of the discussion in the industry in 2004 and beyond - or if another business theory becomes the latest "buzzword."

Changes in shop scheduling

On a related topic, suggested changes in the time-honored shop scheduling tradition of "bringing them in on Monday, out on Friday" received some attention this past year. (See "Smarter Scheduling" in INSIGHT'S June 2003 issue.)

The problems this type of scheduling causes are well-understood by most shop owners, but shops often face push-back from vehicle-owners and (more frequently) insurers who don't want in-process vehicles sitting idle in a shop over a weekend.

That's why the results of a study announced earlier this year seemed compelling. The study looked at the three shops (with annual sales of $1 million, $2 million and $4 million, respectively) for a 10-month period - five months before and five months after switching away from "in on Monday, out on Friday" scheduling.

"If you can better balance out your schedule, we've seen that cycle times have dropped by an average of two days, with a 31 percent improvement in the hours produced per repair order per day," said Kent Carlson of Collision Resources, Inc., which conducted the study.

The reason for the improved performance is pretty apparent if you look at most shops' parking lots on Mondays and Tuesdays. There are often more vehicles on-site than can immediately move into production, so many of those vehicles sit idle for one, two or even three days before much if any work begins. In addition, the parts for all these vehicles are often on-site, reducing the shop's capacity.

A better alternative, Carlson suggests, is to bring in essentially an equal amount of work each day, so that an equal amount of work is delivered each day. This won't lead to an increase in rental car days for insurers, proponents of the idea insist.

"What we saw from the study was that on average we saved two days," Carlson said. "So the fact that you had some of the vehicles carry over an extra two days is offset by the fact that the average of all the vehicles was a 2-day decrease in cycle time."

The idea is out there. Now it remains to be seen if some shops and insurers will put the theory to a larger test.

Changes for NACE

As it reaches "age 21" this month in Orlando, NACE is beginning to show its age; it's obviously not the rapidly-growing adolescent of the 1990s. As the number of exhibitors and attendees declined in recent years, NACE organizers and the Automotive Service Association (ASA) announced what may have been one of the most-likely-to-succeed ideas of the year: Moving NACE to Automotive Aftermarket Industry Week in November in Las Vegas every year.

Yes, there are some possible downsides to the move. Rotating the show's location allowed an opportunity for those in different parts of the country to attend when NACE was closer to home. Some aspects of the show may be more costly during Industry Week than NACE's traditional week-after-Thanksgiving schedule. And some NACE attendees may instead opt to spend some of their time at the mammoth Specialty Equipment Market Association (SEMA) show and the Automotive Aftermarket Products Expo (AAPEX) show elsewhere in Vegas that will overlap with NACE's schedule to some extent.

But 2004 is likely to show that the upsides to this decision will outstrip these potential concerns. Vegas has always been the location that draws the biggest NACE crowds, and the other shows and activities that week only give more reason for more of the industry to be there. Some vendors will have to staff booths at multiple shows, but most say this is a surmountable problem. And no one is likely to mind having the major time-commitment NACE can be moved out of the late-November and December "holiday season."

SCRS's regulatory guiding principles

In a year that saw the California Bureau of Automotive Repair (BAR) announce that it believes fraud is committed in 42 percent of collision repairs, the idea of some kind of code of conduct for government regulators seemed timely. The Society of Collision Repair Specialists (SCRS) recently adopted a set of "guiding principles" for the many local, state and federal regulatory agencies that oversee collision repair businesses.

The thirteen principles, for example, call on regulators to "be impartial and consistent in application of regulation" and to ensure that any penalties or fines be "consistent with the significance of the violation." Regulators should "embrace industry trade standards that are well-defined, widely-accepted and reasonably achievable," the document states.

SCRS took the added step of stripping its name out of a "generic version" of the principles and successfully seeking the endorsement of Collision Industry Conference (CIC) participants to give the principles the broader impact of coming from the industry as a whole.

While what the document calls for certainly seems sound and reasonable, it will be interesting to see what, if anything, SCRS or other industry groups are able to accomplish with it in 2004 and beyond.

A "new" non-OEM part

INSIGHT has already offered extensive coverage of this fall's latest delegation of U.S. repairers to visit non-OEM parts factories in Taiwan. But it bears repeating that there appeared to be some shift in the long debate over the issue. This delegation, which included representatives of three national repairer groups, seemed to focus not just on what was wrong with the parts, but also what they see as wrong with the messages the Taiwanese parts manufacturers are hearing.

Those manufacturers, the delegation said, need to hear and respond to the needs of collision repairers - not just those of insurers, parts distributors and certifying organizations that might not always know or convey the repairers' needs adequately.

"It's important that you understand who your customer is," former shops owner and industry consultant Lou DiLisio told the manufacturers in Taiwan. "Repairers are the people who purchase your parts. We need to tell you what we need, and you need to deliver to us what we need."

Whether repairers and the non-OEM parts makers are able to work toward resolution of this decades-old issue - including convincing other segments of the industry involved how they can better become "part of the solution" - will be among the challenges in 2004.

Ideas to become concrete realities?

This certainly is not an all-inclusive summary of the industry's "big ideas" to make their way to the surface in 2003. But too often, last year's ideas are forgotten as the "crisis of the moment" attracts the industry's attention.

By focusing on just a few of these ideas, we at INSIGHT hope to spur further discussion and work on them in 2004.

Whether they will prove positive and workable is up for debate; but that can't be determined if there isn't a good-faith effort at execution.   o

Feedback

Have a comment about this article? Send Email to Charles Baker, INSIGHT's Publisher

©2003 Collision Repair Industry INSIGHT
All Rights Reserved

FEATURED
LINKS:

INSIGHT Supports the NABC!
Do You?