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Is it time for advanced inventory systems in your collision repair shop?

Wednesday, August 1, 2018 - 07:00
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There’s an App for that. It seems that for just about every aspect of our lives there is an app to make it simpler or better. Our industry is no different. Is it time to consider one of the several body shop inventory control programs?

There are several good apps or programs to aid in managing materials, including Nuventory, PMCLogic and Leantec, all three of these top companies have good programs and can be a benefit for many shops. Several of the paint manufacturers have programs included with their color tool offerings. There are also a few distributors/jobbers that have apps/programs to help shops better manage materials. There are far too many independent programs or apps to cover them all individually here, so for now we will cover some general concepts.

Before choosing a program to work with there are a few key questions to ask yourself:

What aspect of my shop’s paint and materials (P&M) margins has the most opportunity for improvement?

Is P&M management a priority for my shop (at this time)? Is it worth the added time to improve this area of my business? With P&M making up a potential 10 percent of the shop’s overall revenue, there is surely some benefits to working to make this segment of your shops sales mix profitable.

How will this impact my shop’s workflow and culture? Does this fit?

Am I and my staff willing to devote some amount of time to best utilize one of these programs?

Do I really need a program? And if so which program is best for my shop?

What aspect of my shop’s P&M margins has the most opportunity for improvement? Is there more opportunity to enhance sales of P&M or to reduce costs? (Obviously doing both will have a positive impact on margins).

A good rule of thumb would be to take a look a couple key performance indicators of overall P&M sales and P&M costs. If P&M costs and sales are substantially “off” industry standards or averages, that would be a good indicator of where to start.

For example if P&M sales are less than 10 percent of gross sales there is probably a sales opportunity.  There are plenty of sources for benchmarking, including Mitchell, CCC, ABRN and other trade magazines, and 20 groups. This is generally a fairy easy method to determine if P&M sales are lackluster.

The other side of the coin is P&M costs these same benchmarking sources suggest that P&M costs above 6 percent indicate a high P&M CGS (Cost of Goods Sold). We do need to validate what is included in the P&M CGS and be sure it only includes the actual costs of materials sold, not necessarily all purchases from jobbers/distributors. These purchases almost always include other items that are not part of P&M CGS, such as safety supplies, shop maintenance or other billable items (not included items).

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