How can a busy MSO, or any shop, do a better job of managing materials? With hundreds of part numbers, varying regulations mandating different products and a plethora of other priorities, how do they cope with material management issues?
There are some great tools provided within the paint manufacturers’ shop level computer software. Most of the major paint manufacturers can help capture usage by repair order (RO), as products are mixed on the scale. While these are great tools, some shops, including several MSOs, are looking for a more robust solution.
Check the scale
The first step to material management is making sure you have good information. The scale reports are a great place to start, if all the information is there. If everything is being mixed on the scale — clears, sealers, primers and color — and RO number, we have a good data foundation. Many shops operate under the belief that everything is being mixed on the scale, but how do we really know? Ask your jobber for help. They should be able to produce a report listing all the liquid volumes purchased over a period of time. Running scale reports can generally provide similar volume reports. Comparing these over an extended period of time should help to determine if all liquids are being mixed via the scale and recorded by RO number. If they are, you have accurate accounting of almost all per job liquid costs. You also have accurate reports for emission and VOC reports, should these be required in your area.
If you don’t find a very close correlation in volume purchased verses volume used, then the scale reports are obviously not an accurate source of data. Be sure to run these reports over a long period of time (I suggest six months) to even out minor fluctuations in inventory and purchases.
Using purchase data
Another approach is to use purchase records. These can usually be obtained from your local jobber or paint distributor. With a little finesse, this data can be converted into valuable information. Several paint distributors across the country have created material reports that help turn lots of data into good information. Some distributors have turned to third-party solutions that give their customer an even higher level or more in-depth material usage analysis.
Lean material management may very well be the next big trend in shop management. It seems like the only significant area not yet subjected to lean methodologies. With leaner material usage, not only are costs maintained, but waste and other handling expenses are also reduced.
Back to our quest for information beyond the scale. We now have a large volume of data from our purchase reports. Data seems like a great thing to have; but can you have too much data? The answer is yes. The data needs to be molded into information. With any modern computer system, you can produce enormous amounts of data, making it easy to suffer from Datum Analysis Paralysis.
What is the key?
What are the key performance indicators (KPIs) with material management? Are there different KPIs depending on your perspective? Balanced score card, dashboards and reports are all great buzzwords. What is more important than what we call this information, is that it is meaningful to the person it is presented to, and the information is actionable. Can you use the data to make improvements and push the needle forward? If not, it’s just data.
Owners and MSO managers can look at a couple pieces of information and get what they need regarding material management. Production, purchasing and parts people may need a more detailed information, perhaps per RO averages in volume and dollar costs. Our technicians also need to see the bigger picture because they have a strong influence over specific material usage for specific procedures.
Breaking material into procedure-based categories can help designate some of the authority and responsibility for material management to the department or technician level. Drilling down to the part number level is probably only helpful for those doing the ordering or purchasing, and those using the materials.
Obviously those doing the masking have a great ability to help control masking material costs. Likewise, the technician holding the spray gun controls the vast majority of paint and materials costs. What most technicians have in common is an understanding of the labor guide posts, or labor units, on a particular vehicle or RO. It doesn’t seem to matter how payroll is calculated, it is still ingrained in most of us, 6.2 on that job or 9.6 in refinish there. So relating material costs to the labor unit seems a natural benchmark.
Material performance numbers
Several calculations can be done with the purchase data and a few basic shop input numbers. From these, we can drive overall numbers relating to the month, quarter and year slightly deeper. We create per RO numbers and per refinish hour numbers. And working with individual techs and departments, we can look at the part number level. Some of the most basic numbers can be huge drivers to change or improve material performance. Some of these may include overall material cost per RO; total P&M cost per refinish hour; and ounces of color, clear and surface preparation materials per refinish hour.
A view for everyone
With liquid being close to 70 percent of the average P&M cost, this is the obvious place to start. Once the big numbers are in line, drilling down deeper can still yield some improvements, such as masking and abrasive costs. A good material report will provide several different KPIs for you to view and compare. A better material management report will give you many to choose from, allowing you, your jobber and staff to pick the measures that work best for you.
Watch the scoreboard
People tend to be competitive, and everyone wants to be a winner. When the underperforming shop sees their counterparts across town hit their goals, the “if they can do it, so can I” attitude comes into play. Posting these benchmarks and talking about them will elevate them in importance with all members of your staff. Think of posting the goals and current levels in large print on a scoreboard. Imagine going to a professional basketball game with no scoreboard. Some might be able to keep score in the head or on a scrap of paper. Most are quickly going to become bored or distracted. Posting your material management performance and goals allows everyone to be an active participant.
Make sure your scoreboard clearly shows your priorities and goals. Use less data and more information to make sure that the information is actionable.
Comparative data
This is where the MSO can have an advantage; they generally have several locations in the same geographic area and can very easily make comparisons across locations. While this is not impossible for the single shop operator, MSO groups have it a bit easier gathering and correlating the data.
If you let your staff be part of the solution, provide them with the goals, put up the scoreboard and discuss the reasons for the goals, most people will strive to meet those goals. For example, hold the maskers responsible for hitting those masking material goals, and reward and praise them when their portion of the goals is met or improved.
Management needs to continue to be involved in material management. Be ready to recognize those areas, people or departments that have made improvements, met or exceeded goals. If you want your staff to keep lean material management a priority, it needs to be seen as important for everyone.
Subscribe to ABRN and receive articles like this every month…absolutely free. Click here
