CRA Business Productivity & Profitability Explored
Lead by lean principles effectively means a complete reengineering of how your business function which will transform your business through improved efficiencies and positively impact your profitability.
It started with $800 worth of plastic baggies, and then some sleepless nights.
“Many nights I’d lay in bed and think, ‘I’m destroying a good business,’” says Tony Walker, owner of two Rod’s Custom Collision Repair Centers.
But what Walker thought might destroy his business—a commitment to operating his shop by following lean principles—transformed it, he says. His shops are on pace for $5.4 million in sales for 2021.
“Lean” is likely a concept many in collision repair have heard, and while its definition is fairly discrete, it can be shorthand for any number of methods and strategies.
To that end, one-third of respondents to the 2021 FenderBender Industry Survey said they’d incorporated lean processes into their business to improve efficiency, but Mike Gunnells, senior manager for business solutions with PPG and who coaches lean principles, says such practices could be more widespread than that.
“A lot of shops do a lot of things that fall under the heading of practicing some lean principles, but they don’t really call it that,” Gunnells says.
Truly going lean, he says, is more than a single procedure or process aimed at small efficiency gains—it’s a complete reengineering of how a business functions.
It’s not easy, either, as evidenced by Walker’s experience, though, he’ll be the first to tell you: it’s worth it. Here’s what else you need to know if you are considering going lean.
So what, exactly, does it mean to be work lean?
In the context of collision repair, Gunnells says lean is about eliminating waste and adding value through the development and implementation of processes that allow the vehicle to flow continuously through the repair process.
“What we really should be focusing on is keeping the car moving,” he says, “and keeping the technician’s hands working on the vehicle while it’s in the repair process.”
Before his nearly two decades of working for PPG, Gunnells owned and operated shops in the MSO, independent, and dealership realms, starting in collision repair as a technician more than 40 years ago.
He stresses that nobody in collision repair gets paid unless body and paint techs are producing billable hours. Nothing else happens without those hours, and they’re maximized by avoiding vehicles sitting idle on the shop floor.
But how can shops keep those cars moving? Gunnells breaks down the repair process by steps and uses a supplier/customer analogy for each hand-off transaction, as in each time the vehicle changes hands between repair process steps.
The admin delivers vehicles to repair planning—supplier to customer—with repair planning delivering vehicles to parts and production, and so on. Every step of the way is crucial to keeping the vehicle moving, Gunnells says, but an easy example of how a car can get stuck in the process is moving from repair planning to parts. Repair planning—there’s no “estimating” here—is crucial to making an accurate parts order. It helps avoid time-consuming supplements—or waste—which are impediments to finishing the job.
Error-proofing that supplier/customer process is the goal, Gunnells says, offering up an example of a repair hung up at reassembly for a missing part.
By working backward, he says, you can identify the root cause of that absent part. To begin with, it was ordered the day prior; that’s because it wasn’t in the original parts order; that’s because it was missed on the initial estimate; and that’s because it was missed in repair planning.
Rob Murli, a lean coach with The Murli Group who has 15 years of collision repair experience, says efficiency is a component of lean processes, but there’s more to it—there’s also team-based problem solving.
“It’s everybody, everywhere, at every level coming together to say, ‘How did we do yesterday?’ and ‘How can we do better today?’” he says.
That aspect relies on people and how they are engaged.
More than a ‘philosophy’
Principles, processes, practices—lots of nouns are attached to lean, an operating model developed by Toyota nearly a century ago that can be applied to everything from manufacturing and mining to government and collision repair. Just don’t call it a philosophy.
According to Mike Gunnells, senior manager, business solutions for PPG and a lean coach, lean is a tangible set of principles that gets real world results.
“I’ve never liked ‘philosophy’ because it seems like it’s talking about theories,” he says. “They’re lean practices.”
Begin the ‘Journey’
About Walker and all those baggies: He says that, about seven years ago, his shop was doing well enough, though it was getting hammered by its DRPs for its cycle times.
“They’re slow but they’re really good,” he says of his reputation back then, remembering the state of his shop in the same Huntsville, Ala., building it had been in for a quarter century, in less than charitable terms.
“It was your typical dark, dirty, disorganized, nasty looking shop,” Walker says.
With insurance pressure increasing, he remembers thinking, “There’s got to be a better way.”
His paint rep, Gary Grimes, kept telling him about a Green Belt Training class, focused on lean principles, to which he finally went. Gunnells was the main instructor at what Walker says was a full five-day course.
“I drove back home and I was like, ‘This is what I’m going to do,’” says Walker.
That’s when he dropped all that money on baggies.
Bagging small parts like clips, hardware, etc. to keep track of them during the repair process, and taping them to parts carts, is the lean principle that Walker had grabbed onto. In his telling, the ease of that purchase in no way foreshadowed what was to come in what he calls his “journey.”
Instituting lean principles meant breaking his employees’ longstanding habits and making them work in new ways. Here’s what led to Walker’s sleepless nights.
“I’ve run off good technicians and estimators who hated it,” he says, reckoning he went through seven writers, many of whom had no business interacting with the public, or the will to dig into effective repair planning.
Walker’s staffing issues took a turn for the better when he hired his family’s favorite server at his family’s favorite restaurant as his CSR. Walker describes that now longtime employee, Kane Batt, as “the kind of guy that I want taking care of my customers.”
The turn continued when he landed a former Travelers Insurance adjuster, Tyler Gallagher, as a writer. Walker describes Gallagher as someone who had the attention to detail required to run the Gunnells-taught repair planning process, “X-Ray.”
Walker says Gunnells has a word for the years-long staffing gauntlet through which he went—“Discovery”—which was concurrent with implementing lean principles into his shop.
“[Your people] have to buy into the processes and believe it’s the right thing to do,” Walker says. “And so many people in this industry just don’t want to change.”
Mike Gunnells, senior manager for business solutions with PPG and a lean principles coach, teaches a process called x-ray repair planning.
The goal of x-ray repair planning, Gunnells says, is to perform a 100 percent full diagnosis of a vehicle’s damage, to then complete a 100 percent accurate repair plan, which is also litigation-worthy and profitable.
That accurate repair plan is part of lean principles in that it minimizes waste; which comes in many forms, including supplements.
Tony Walker, who owns two Rod’s Custom Collision Repair Centers, has worked with Gunnells to institute lean principles in his shop and has dialed in his repair planning process to a range of 92 to 95 percent accuracy. He boasts of a $22,000 Mercedes-Benz repair plan that included every part the vehicle needed, save for an ambient temperature sensor.
While repair plan accuracy can’t exactly be compared apples to apples, according to the 2021 FenderBender Industry Survey supplements are very much a normal part of the repair process for many shops, with 37 percent of respondents reporting a supplement ratio of 25 percent or higher.
When it comes to the 33 percent of shops that said they’d incorporated lean processes into their business to improve efficiency, that high-end supplement ratio is still well represented, with 34 percent of shops reporting it.
However, those lean shops report a greater proportion of lower supplement ratios, up to 15 percent. Some 46 percent of shops that have put in place lean principles reported that lower range of supplement ratios, while only 41 percent of shops without lean principles reported the same.
While that difference isn’t eye-popping, it underscores what lean experts say: you need to be working on it daily. Lean doesn’t work when applied piecemeal.
Murli, who joined his family’s lean coaching firm just less than two years ago following his career in collision repair, says team-based problem solving and following lean principles in general requires cultural transformation.
“We really need to engage people, their hearts, and minds into being problem solvers,” he says, adding that while plenty of technical aspects play into it, “Lean is really about the people.”
Noting the technician shortage, which 2021 FenderBender Industry Survey respondents tagged as the biggest challenge faced by collision repair, Murli says “Lean people systems are centred around attracting the right competencies, rather than the right experience.”
Think of Walker’s CSR.
According to Murli, it’s key to find “people who have the right mind to do the things you want them to do.”
Lean principles offer a systematic way to train, grow, and develop employees, Murli says. That’s through a structured career path—where an employee starts and where he or she should be going—and structured training, which coincide with regular one-on-one meetings where employees’ progress can be tracked, and where they can be held accountable for any lack of progress.
That employee growth is evident in Walker’s story. He began with a single location of Rod’s Custom Collision Repair Center that had sales of $2.1 million per year.
Through going lean, and by finding people he could trust, he says he opened his second location, a 6,750-square-foot shop in south Huntsville, peeling off Gallagher to manage it.
This year the small shop is on pace for $1.2 million in sales.
Alongside Walker’s shop expansion, there’s been some contraction when it comes to his staff.
Prior to going lean, he says his shop—still operating as a single location—had nine bodymen and three painters. Now, between the two locations, he has seven bodymen and two painters.
“Our volume is almost double what it was, with less people,” Walker says, noting the two shops for the first half of 2021 averaged a car count of 129 per month. “Their income and their lifestyles have changed dramatically as well.”
One of the lean benefits that Gunnells stresses is touch time, or as he calls it, hours per day. He says many shops he works with start in the range of 1.8 to 2 hours per day, and in just over six months of focused work, can reach the 3 or 3.5 hour range.
He says shops that “are truly doing the measurement across their entire work mix” can see hours as high as 4.5 or 5, though the latter is so high that it raises questions about how it’s being measured.
At his original shop, Walker began at 1.2 hours per day, saying that even with procedures and the right people in place, his touch time and cycle time didn’t magically go up—it took concerted effort. His small shop now clocks 3.5 hours of touch time per day, while the larger shop boasts 3.3 hours. His cycle time, once at 16.5 days, is now under 10 days consistently for both shops, and was 7.8 days at his small shop in May.
There are other time benefits inherent to Walker’s lean journey, he says—he once worked 12- to 14-hour days, and now he’s working half of that.
“It changed our world, it changed our life,” he says. “Not just for me, but our technicians.”
Murli says an important aspect of instituting lean principles is for leadership to move away from a firefighter mentality.
Walker says his once dark and dirty shop is now cleaner, brighter, and more organized—“it makes you feel better working there.”
He says he recently had a shop owner from Arkansas have a look around, remembering what the guy said while standing on his shop floor: “There’s one thing that’s missing.”
“I was ready for some criticism,” says Walker, “and he said: ‘Chaos.’”
Lean principles and touch times
Experts say the KPI where lean principles show up most is in touch time. According to the 2021 FenderBender Industry Survey, 33 percent of shops said they’d incorporated lean processes into their business to improve efficiency.
Compared to the rest of the field, how do those shops fare when it comes to touch time per day?
Shops that have incorporated lean processes
Touch time per day:
Under 2 hours: 3%
2-3 hours: 39%
4-5 hours: 45%
6-7 hours: 8%
8 or more hours: 1%
Don’t track touch time: 4%
Source: 2021 FenderBender Industry Survey
Shops that have not incorporated lean processes
Touch time per day:
Under 2 hours: 5%
2-3 hours: 27%
4-5 hours: 41%
6-7 hours: 8%
8 or more hours: 2%
Don’t track touch time: 17%
Source: 2021 FenderBender Industry Survey
For context, Mike Gunnells, senior manager for business solutions with PPG and a lean principles coach, says putting lean principles in place can get a shop’s touch time, or as he calls it, hours per day, from 1.8 hours into the 3 hours to 3.5 hours range. He also notes that times topping 5 hours per day should raise eyebrows.
It’s also unclear how deep responding shops have gone in implementing lean principles.
Effort and Backsliding
Going lean sounds great, though Walker pumps the brakes when it comes to assessing his five-year search for the right people.
“I don’t want to go through it again, but I’d definitely do it again,” he says.
Beyond the resistance to change Walker faced, Gunnells says shop staffers can get up in arms because they think the word “lean” implies a thinning out of employees. Sheer confusion over the term is a factor too—some shop employees, he says, think it’s about being environmentally friendly.
Beyond that, maintaining procedures and continuous group problem solving takes work, says Murli, pointing out that there’s no way to plateau when it comes to lean.
“One thing that leads people astray is that they think they can just hold the status quo,” he says. “You’re either improving or backsliding, there is no holding pattern.”
That need for improvement, Murli notes, plays well with modern collision repair, with respect to its current state of flux.
“The bar is continuously being raised,” he says, “the industry is constantly changing from many angles.”
One sure-fire way to break through lean maintenance difficulties is through a third party coach who can help shops stay on track and reflect on how they’re doing, says Murli, whose experience includes experimenting with lean principles as an employee of an MSO in Pennsylvania.
“Implementing these things requires a lot of reflection and an unbiased opinion,” he says. “This gets harder before it gets easier; you’re never truly done, and having this mindset that you’re there to change the culture requires a lot of strength.”
From his post with PPG, Gunnells stresses that his team includes former technicians and shop managers, as well as former insurance adjusters.
“I think our team has a more rounded amount of experience, than anyone in the nation,” he says, stressing that he and his colleagues aren’t just coming from on high—their coaching is effectively working in collision repair on a daily basis.
“We’re literally writing repair plans with the shop staff on the shop floor,” he says.
That one-on-one help, shop by shop, is important—the lean principles that will work best are context-dependent.
“I don’t do it 100 percent the way they teach it,” says Walker, noting that he practices team problem solving, keeping lines of communication open with techs so everybody at the shop can come together to work through issues.
“There’s not a two-word answer, it’s a conversation,” says Gunnells, explaining there can be disappointment about how complex succeeding at lean can be, though there might be a single thing that’s key.
“Sustainability really comes down to leadership,” he says. “If someone’s not doing the right things from a leadership standpoint, you can write all the standards and put all the posters on the wall that you want.”
In short, Gunnells says, you can’t “launch and leave.” Keeping lean practices on a solid trajectory requires continuous teaching, leading and guiding.
He offers the example of a missed delivery date, and how leadership must, the very next morning, bring everybody together to keep the lean process going and ask: “What went wrong, and how are we going to solve this problem today?”
Article Credit to Fender Bender.
Have you considered using lean principles in your business to reengineer it to be more efficient? Do you think lean principles can work in your business? Let us know in the comments below. Also, if you found our content informative, do like it and share it with your friends.
Click HERE to join the CRA Industry Newsletter, it’s FREE
CRA is the innovative and trusted source for motoring information and the latest news to help entrepreneurs, business owners, managers and people working in the motor industry to stay informed and change their world. Get the advice your need to start, glow, and lead your business today. Get unlimited access to all articles.