As everybody is adjusting to the new normal and becoming more efficient in the collision industry's changing environment, personnel expenses need to be reduced. Eliminating positions in a business is never an easy process, even when it's necessary to remain profitable.
The implementation of lean, which promotes efficiency and continual improvement, has already reduced administrative positions throughout our industry. As shops adopt more lean processes, the number of shop floor personnel also can be reduced. One position to look at is the production manager. In most shops this is considered a needed non-production expense. Let's look at the position to see if it is an area where expense can be eliminated.
Repair planning and blueprinting are making the repair process smoother and eliminating the "spot fires" that a production manager would be employed to put out. Depending on where you are in the lean process, this position could be eliminated without affecting workflow. Combining lean processes with effective management system use further justifies eliminating this position. Complete repair planning and efficient scheduling of workflow through a management system will allow an estimator/customer service representative to handle production. Using pull production planning processes ensures that a majority of the "spot fires" are extinguished before repairs begin. Pull production repair planning allows you to calculate repair needs and schedule the job within the shops capabilities.
Calculating the repair needs up front will allow a more fluid repair process eliminating the need for a production manager. As you incorporate this process you will find the production manager would actually get in the way and slow the process. The optimum place for the talents of a production manager would be in blueprinting where they would ensure that a complete repair plan is created. Moving a production manager to the blueprinting phase will save you the non-production expense because blueprinting hours are billable. A portion of the repair hours would be credited to the complete teardown of a vehicle and creating the repair plan. The hours charged would vary for each repair, but a constant percentage would be used to ensure proper compensation.
The proper and complete use of a management system will allow your parts manager position to be reduced to a parts clerk. Many management systems have options available to automatically order parts from your selected vendors, issue purchase orders and prompt you with expected delivery dates. With complete blueprinting and repair planning all the needed parts are identified upfront. The parts can actually be ordered during the blueprint process on the shop floor. Using these systems to automate the work would only require a parts clerk to validate and check in parts when they arrive. When the parts arrive they can be staged using parts carts, matched to the blueprinted repair and the vehicle placed into repair production.
Some personnel reduction decisions can be handled by reassigning employees to other positions within your business, while others would require eliminating positions. A production manager's talents can be utilized in several positions. While I believe moving them to a blueprinting operation where the expense can be billed is a better option, some shops might pursue other opportunities. Reducing a parts manager to a parts clerk would create a drop in pay that an existing parts manager may not want to accept. In this instance the elimination of the position could also mean employee layoffs.
Whenever I talk to shop owners about personnel changes I always advise them to look at every employee and not terminate or layoff an employee just because that particular position is eliminated. While looking at each person in your business, rate their performance in their current job. If you find that you have a person that is performing less than you would expect but they are in a needed position, look at the person whose position is being eliminated to see if they can be retrained for that position. Keeping the most talented and maximum-performing employees should be the goal. You are looking to employ great people, not ones that are performing at minimum standards. Great people are the key to your future. Put them in a position where they can excel and your company will excel.
