Difficult times require focusing on the fundamentals.
There’s no question, Spring 2020 has been one of the most disruptive seasons on record. Not only due to the community spread of the novel coronavirus and the resulting COVID-19 disease it causes, but also the economic impact as a result of provincially mandated government shutdowns.
When these were first announced in March, many industries, including collision repair faced an uncertain future and while in most cases, shops and their stakeholders were deemed essential services and able to remain open, it required a massive re-alignment in business strategy and processes, including how to manage with reducing workload in many cases, how to ensure staff and customers remained safe during the pandemic as well as trying to move forward and into a new, post COVID-19 environment.
The Canadian Collision Industry Forum (CCIF), recognized as the voice of the business in this country, asked repairers and stakeholders from across Canada to submit questions for a series of webinars that were held in May.
These two information sessions focused on two critical topics to consider as we navigate through this crisis. These were:
- Managing Your Supply Chain
- How to Build a Business Continuity Plan
When times are good, we’re often focused on business operations, how many vehicles we’re processing, how to look for continued efficiencies in the repair process and ensuring we are living up to the expectations of our customers as well as other key stakeholders.
Yet when times are good, we often tend to lose track of the various pieces in the supply chain that allows us to operate.
And when something like COVID-19 hits, it often has a tendency to not only put our own shop operations into perspective but also the impact it has on all those other businesses that are connected through the supply chain, including vendors, OEMs, dealers, insurers and other parts suppliers.
In the first of the CCIF May webinars, Chairman Paul Prochilo moderated a virtual panel discussion that included Mike Kaplaniak, Vice President, Uniparts O.E.M. Canada; Koos Reineking, Performance Manager, Lift Auto Group and Tifarah Senkow, Canadian Vice President of Sales, Advantage Parts Solutions.
The webinar discussion looked at five key points:
- Why are there so many changes to my credit accounts during COVID-19?
- How do I respond to these changes as a collision repair centre?
- Managing changes from a supplier perspective
- What are my alternatives in managing change?
- What’s next? What are we going to be looking at in a post COVID economy?
With the onset of the pandemic and the incredible uncertainty that resulted, many businesses started reviewing every aspect of their operations and for the collision repair industry that meant that parts suppliers, were starting to implement cash on delivery requirements for collision shops.
Understandably, this was of great concern for the industry, but from the supplier’s perspective (such as a dealership) the logic was, to focus on having as much cash and liquidity on hand as possible while mitigating risks on receivables.
Yet such a strategy can cause significant friction and disruption in collision operations since if collision centres aren’t able to pay cash for parts because they can’t receive payment from insurers until the work is completed, it can create a vicious cycle where the whole supply chain and industry econ-system starts to fragment.
Decisions at the highest level
Tifarah Senkow noted that it was important for shops to consider that these decisions are often being made at the highest echelons of company management and not by the parts managers that shops deal with on a regular basis.
Mike Kaplaniak concurred, adding that there is a concern on the dealer side, that some businesses might not make it through the pandemic, adding further fuel to the concept of COD parts orders for collision centres.
Koos Reineking said it was important to note in this whole situation, that collision shops aren’t able to use COD strategies when working with their insurance partners—and that it was important for parts suppliers, repairers, insurers and other key stakeholders to recognize that everybody is in the same boat.
Both moderator Prochilo and the panelists concurred that it was important to keep lines of communication open and for parts suppliers, shops and insurers to come to an understanding by being able to identify the situation facing each business and develop a plan that allows the supply chain to continue moving as best as possible during very uncertain times.
From a shop perspective, Koos Reineking said that it was important to call your parts broker and supplier and to understand and recognize the situation they are facing. “It is a good time to say—let’s talk it over,” he remarked.
Paul Prochilo noted that assessing the business relationship and track record of the collision centre would also allow the shop to assess whether it was possible to put a plan in place to help benefit both parties, or if that wasn’t possible, should it be the time to perhaps consider using a different supplier?
Koos Reineking added that it was important for shops to look at their processes and try to ensure that not only were accounts up-to-date, but that repair plans were complete and thorough, minimizing the risk of supplements and consequently multiple orders or requests for the same parts which can prove time-consuming for the shop and infuriating for the supplier.
Mike Kaplaniak noted that it was important for collision shops to not get emotional and react if their supplier was proposing COD. “If you have a good history with them and have paid on time, chances are they are probably willing to be flexible.” Kaplaniak said it was important for shops to make commitments to their suppliers where possible as well as sharing expectations.
Tifarah Senkow reiterated Kaplaniak’s comments and said that because the situation regarding COVID-19 is unknown territory for everybody and every organization has been handling it differently, the need to have an open, honest phone or video conversation is key and each situation needs to be handled on a case-by-case basis.
Senkow also outlined that it was important for a shop to consider—whether they wanted to stick with their existing parts supplier or change to another one—that assessing specific areas such as payment terms between the shop and supplier; sales volumes during a time of economic crisis as well as service levels (including what suppliers are able to offer and if incentives are available, how to base those around shop volume, payment and returns), was critical.
“I think one of the key points is what can a supplier return and what is the expectation for doing that?” I think meeting those expectations and being on the same page as your supplier will help you find what you are looking for,” said Senkow.
Moving onto life post-COVID-19, the panelists all concurred that nobody knows how things will exactly play out and that it’s important to stay connected, communicate regularly with customers and suppliers and to understand each other’s needs.
A willingness to provide support and step up to help each other in testing times will lead to significant benefits for both suppliers and collision centres long-term.
In the second of CCIF’s webinars in the month of May, How to Build a Business Continuity Plan, Paul Prochilo welcomed Colin Asselstine, Director, Claims Vendor Management, Subrogation & Salvage, RSA Canada, along with Tony De Santis, Vice President of Sales, Fix Network and Murphy Tarves, General Manager, Operations, Craftsman Group of Companies to the table for another panel discussion.
When times a good, it can be tempting to not think about a thorough Business Continuity Plan (BCP), but when things get rough, having a solid plan in place can be the difference between navigating through the situation or having to close your doors for good.
In kicking off, Paul Prochilo highlighted four key points in building an effective BCP, provided by Ernst & Young:
- Put People Safety First
- Communicate with shareholders
- Reshape strategy for Maintaining Business Continuity
- Build Resilience and Prepare for Recovery
Murphy Tarves noted that not only was it important to ensure the safety of your staff during times like the COVID-19 pandemic—such as establishing safe working environments and personal protective equipment—it was also important to focus on transparent communication and keeping not only your staff informed of the latest government news and developments but continuing to reassure the organization’s commitment to keeping staff safe, healthy and productive.
Shareholder communication during times of crisis is also key, and Tony De Santis noted that clear, transparent communication was essential with all stakeholders.
“The more communication the better,” he said, noting that with the COVID-19 pandemic it was important to consider that nobody has been through this before and in such cases, there are often more questions than answers, not only among collision shops but other stakeholders.
De Santis stressed it was important to have both written and verbal communication and a continuous process put in place to ensure all stakeholders remain current with the situation.
Adapting to change
When it comes to reshaping strategy to maintaining business continuity, Colin Asselstine said that based on RSA’s own experiences during the early stages of COVID-19, the need to adapt to the weekly changes happening in the marketplace was critical, as well as process those changes and being able to pivot quickly and make different decisions where needed.
Short term liquidity was a key focus point for many businesses going into the crisis, so being able to capitalize on cash opportunities was also essential. Difficult times also reinforce the need for diversification, so as Asselstine pointed out it was an important point to consider.
“Often we are getting economies of scale by going with a single supplier,” he said, “but you might put yourself in a situation that could be detrimental to your business if you don’t have different options.”
Asselstine also pointed to the fact that when going through times of crisis, it can often be the ideal opportunity to reconsider your processes and what you can do with the resources at your disposal. “Can you do more repairs versus replace? Are there other profit centres that maybe didn’t make sense before but do now that you’ve had to adapt and change your operations?”
In terms of building resiliency and preparing for recovery, not only is it important to have a BCP but also having key checkpoints and identifying where the opportunities for improvement are.
Paul Prochilo noted it was important for the industry and collision repair centres to look ahead and not just create their BCPs around COVID-19.
“Make no mistake, there will be a recovery, so let’s not have every business decision determine everything related to COVID-19 or any other type of disruption you may have to your business,” he said.
To help understand what a solid Business Contingency Plan requires, CCIF created a downloadable template for the community on its website that is designed to create solid foundations in each departmental function of the business to ensure that if a problem does develop, it can be quickly and efficiently tackled, including contingencies for that when a key department head or manager is not able to carry out their duties, qualified replacements are available to continue on with the tasks at hand.
Including staff and stakeholders
The panelists delved into some questions submitted by members of the CCIF Community.
Tony De Santis said that when it comes to building out a BCP, it was important to include staff members that are expected to carry out the plan as well as key suppliers or vendors to the business so they understand what your strategy is and are able to have their own plans in place to support you.
De Santis noted it was important to have the BCP as a written document and that it is shared with every member of the team, from the receptionist to the general manager/owner.
Having a 360-degree perspective is also critical when developing Business Continuity Plans. Sometimes, ideas may come from the most unexpected places, which was why De Santis stressed it was important to have the communication piece and actively encourage both shop staff and key stakeholders to engage.
“That is a huge step in your planning,” he said, “because other people may see things that you might not.”
Colin Asselstine also added that when it comes to having a Business Contingency Plan and an actual document, making sure that it becomes an integrated part of your overall business strategy, both in good times and bad is key.
“You want to make sure it is communicated both internally and externally on a frequent enough basis that it does not become stale-dated,” he said.
Murphy Tarves noted that a successful Business Contingency Plan should be broken down into individual business units and by taking an assessment of operations at the beginning, an organization can help identify and mitigate the risks in front of it.
“Organizations should have a diverse set of strategic objectives,” said Tarves, “and these objectives are interdependent of your operational objectives, so they include revenue growth, operational efficiencies, market leadership and customer/employee satisfaction.”
In summary, it was agreed that when it comes to Business Continuity Planning, starting with a blank canvas and identifying what the potential disruptions to the business are and working with shop staff and others in the supply chain are critical to navigating crises and thriving in the environment beyond them.
Paul Prochilo concluded: “We need to focus on what is within our own four walls and within our own collision centers. We create our own certainty and our own commitment to our customers our suppliers our employees. Their safety and well-being is your guiding moral compass—both in good times and bad.”