While some key performance indicators (KPIs) are outdated there are several that are still effective in maintaining paint profits. Refinish flag hours per repair order (RO), average paint and material sales per refinish flag hour, paint materials costs per refinish flag hour, and dollar per mix average are a few of the KPIs that will help you increase paint profits.
To increase paint profits, first, I look at the number of refinish hours per RO. I like to see around 9.0 hours per RO as an average. With direct repair program (DRP) restraints, basecoat reduction and blend within panel issues this can be difficult to achieve. Using the 9.0 hours per RO average as a target, review your current estimates and see where you can increase your number through small increments.
Review the P-pages to see what is included, and start looking at estimates. Have estimators look at each other's estimates and challenge them to find areas to increase hours. I can usually find two-tenths to an hour per estimate by reviewing repair lines. I check for fuel filler doors, moldings, sail panels and the inside of rear body panels. After I check estimates I walk through the shop and look at the repair in progress. Many times I see fuel filler doors and moldings being painted as part of the quarter panel or a molding being painted as part of a door even though they are not on the estimate.
Using $25 as a target for paint material sales per refinish flag hour will keep your paint profits at a peak. Dividing paint material sold by actual paint hours sold on the RO will give you this number. If you calculate this on each RO you will identify discrepancies caused by paint thresholds and caps. Creating paint invoices and supplementing for the actual materials used will help you achieve this KPI.
Controlling paint and material costs per refinish flag hour is accomplished through eliminating waste. Keeping the costs below $19.50 per refinish flag hour will move you closer to achieving optimum paint profits. Controlling your material costs is not as hard as many people think. Simply put, you must get paid for every ounce of material you use in a repair.
Using your mixing scale report locate a specific RO, find the cost of materials spent on the job and divide it by the number of refinish hours sold. Any calculation over the target should be investigated to determine the cause. Blend within panel and basecoat reductions challenge this KPI because shops are doing the work actually required and not getting reimbursed for it. Identify the tasks performed and compare to those you are getting paid for as the first step to reach this target.
The final KPI is dollar per mix average. Waste is the culprit in this area. Depending on your paint product, whether you are using waterborne or solvent you should be able to maintain a target between $14 and $18 in liquid per mix.
Check how many times the paint was mixed to achieve the correct color. Did the painter use all tools to identify the correct alternate before the paint mix was started? Was a separate mix created for cut-in as the mix for the remainder of the job?
Each mix creates opportunity for increased cost and waste. Make every effort to mix paint only one time, mixing enough to do the entire repair. With different underhood colors this is not always possible. By developing the habit to calculate the amount of paint needed to complete a job and only mixing that amount is a positive step toward achieving the target.
After learning the four KPIs measure yourself against the target for each and see where you stand. Once you have your measurements pick one KPI to work on. I recommend looking at estimates first but how you measure up to the targets identified for each KPI should determine where you look first.
As you look at the different KPIs it will also become apparent that they relate to each other and correcting one will help correct another. Remember that you will not correct any of these overnight. Some KPI targets will be easier to achieve then others. Use a methodical process and look for incremental corrections as you progress toward achieving higher paint profits.
