Build a sustainable enterprise with continual improvement

It is vital that collision repair shops accept the challenge of transforming their operational processes in order to find more customers and continue to experience profitable sales in our changing industry. In today’s extremely competitive business environment, it is paramount that collision repair shops deliver the highest quality at the lowest possible cost and in the least amount of time, while providing an outstanding customer service experience. Customers continually expect faster and faster service in this technology age, and many will not only equate this with higher value of the repair, but will be dissatisfied with anything less.

Collision repair shops that can respond to customers’ needs more quickly than their competitors will ultimately survive and prosper. The shops that cannot will eventually fail to meet customers’ and insurance companies’ requirements altogether. The majority of shops today are struggling with low or no growth, which many attribute simply to a declining industry. However, over capacity in collision repair facilities is uncontrolled, and virtually all service offerings have become commodities.

So, what can a collision repair shop do in order to gain a real edge in the marketplace and begin to thrive? Body shop owners and managers must strongly consider the advantages of applying lean principles and processes to their business. Lean is a management philosophy that can be implemented at every level of the business. It exploits a process of continual improvement that can significantly impact the organization's health, wealth and competitiveness. If applied appropriately and as an indefinite sustaining force behind the business, lean is the most powerful management movement that can revitalize the business model for optimal efficiency. In the world of lean, a collision repair shop is classified as a job shop environment — meaning it produces low volume with high variability, which impacts the operations with frequent and radical unevenness. With this said, is lean applicable to the collision repair industry? The answer is absolutely!

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Lean is all about minimizing the variation within the process. Lean is applicable to any business, because it constantly seeks out the ideal state; although this will never be attained, the idea is that continuous improvement will become embedded in the minds of every employee and manager. Because lean is about searching for new ways to improve the processes and the entire system on a continual basis, the business reaps countless benefits from decreasing operational variation. The collision repair shop that pursues lean must keep in mind the differences between their type of business and a manufacturer; therefore, they must be extremely flexible due to the amount of inherent variation in the job shop environment.

For most collision repair operations, only a small fraction of the total time and effort that employees spend at work actually adds value for the customer. According to Toyota Motor Corporation, 90 percent of a business’s activities do not add value for the customer (time-consuming wasted efforts); the remaining 10 percent are value added activities — delivering customer value. A walk through the typical body shop reveals a plethora of waste — dead vehicles everywhere, just sitting there waiting for the correct parts and technicians; time consumed waiting for approvals and pertinent information; wrong or defective replacement parts; broken equipment that needs to be repaired or replaced, etc. Once we establish a level of top-of-mind awareness about waste in our shop’s operations, we will very quickly understand that our processes must be transformed and redesigned.

The only product or service a customer is willing to pay for is one that they determine to be valuable and important. Keep in mind that the customer of the 21^st century is conditioned by our digital age of obtaining information in a millisecond. As a result, they are knowledgeable, empowered and impatient. Our customers readily observe business inefficiencies, sloppiness and waste in the processes, and are not willing to do business with organizations that remain complacent in their current outdated business practices.

Waste in a collision repair shop can be identified in so many areas once you are learned in lean principles. The following short list (the long list would fill the entire article) identifies a few critical areas of waste:

Writing visible damage estimates
Processing supplements
Placing multiple parts orders
Finding hidden damage while vehicles are in the repair process
Rework
Waiting for information
Locating missing parts
Repairing broken equipment
Finding tools
Checking inventory levels
Waiting for job assignments
Re-evaluating situations due to lack of communication

After reviewing this list, it is evident that there are plenty of activities driving waste in a collision repair (job shop) environment. Developing lean thinking competencies is essential before you attempt to implement lean processes. Lean thinking progresses as you begin to learn about and see waste in every aspect of the business. Waste can also be found in several major forms such as redundancies, space, time, costs and excess. The first four areas of waste on our short list above can be addressed by mere operational improvement in the area of estimating.

Traditional visible damage estimating is obsolete; complete damage analysis and “blueprinting” is being pursued and utilized by most progressive collision repairers in our industry. The complete damage analysis process begins by finding all the damage and accurately documenting it on the estimate. Additionally, the OEM repair standards and requirements must be followed in order to repair to a crashworthy condition (i.e., if the vehicle is involved in a subsequent accident, it will respond exactly as it was originally engineered). This means that an agreement must be reached on the parts, labor and materials necessary to repair the vehicle to a crashworthy condition. Once this is completed, then an accurate parts order (100 percent) can be placed the first time, rather than supplemental parts orders being placed throughout the repair process. This is all preliminary work that must be done before the vehicle is ever placed into the workshop’s production area. Keep in mind that even small specialty clips and fasteners can stall a job for days. The goal is to enable the technicians to start and complete repairs without any interruptions in the process.

The lean collision repair shop’s performance accelerates by continuously eliminating a lot of wasted time, space, costs and redundant activities for the staff and business. Lean is about operational improvement in every area of the business. The comprehensive damage analysis process described is one the most important areas to focus on in the collision repair industry, because the estimating process directly and indirectly impacts every facet of the collision repair business. Front-line estimators must be highly trained through formalized estimating classroom workshops. Learning lean, thinking lean and then applying lean provides many competitive advantages; some of the benefits gained through a lean job shop are as follows:

Higher quality produced at lower overall costs
Increased productivity
Reduced cycle times
Greater efficiency in time and resource management
Lower inventory levels
Improved equipment utilization
Enhanced employee satisfaction
Enhanced customer satisfaction

Another area in our industry that contributes to waste and underutilization can be found in our poor facility layout and design characteristics. A primary reason for this is that buildings previously designed for another type of business are often retrofitted to function as collision repair facilities. Multiple buildings, excess space, inability to create a continuous workshop flow due to building structural constraints and many other facility design problems add to inefficiency and ultimately waste in processes. The lean body shop of the future will establish its process first and then design the building functionality to fulfill the needs of the optimum repair process.

Lean production on the shop floor is about making every move count, paying attention to the smallest details and getting it right the first time, every time. Implementation of this process on the production floor will result in an exceptional customer value business model. The continuous improvement philosophy, which is the underpinning of lean, is to identify problems within the process and drill down on them until you find their root causes. Eliminate the root causes permanently through improvement breakthroughs by team participation.

The lean enterprise requires involvement from everyone. All are responsible for the outcomes. The traditional body shop environment consists of a group of entrepreneurs and/or subcontractors contained within a facility. Everyone tends to work for themselves and their own objectives; this must be radically changed in order to harness everyone’s energy and focus it on one common goal — creating value for the customer. Lean methodology requires all employees to be held responsible and accountable for delivering value-creating actions. In order to accomplish this, the leaders will need to establish a culture in which workers share the challenges and satisfactions of the business.

When shops get lean right, everyone on the team has a common goal and purpose at the forefront of their daily work objectives. The shop of the future equipped with lean principles will be an extremely powerful force in the marketplace — and will soar ahead of all the naysayers who do not believe lean is for the collision repair industry. This belief only exists because owners and managers have not gained enough theory and knowledge about lean principles in order to fully understand the application of lean and its benefits to the organization. Lean is for the organization that wants to move forward and upward at such a pace that it would be difficult to even try to slow it down once it’s on that trajectory.