A proven process from the banking industry can be a huge asset for collision repairers.
Over the last decade, the collision repair industry has put more attention than ever before on a key component to business management—work-in-process (WIP).
There are many management software applications that will help collision repairers with “when to and how to” schedule a vehicle or move a vehicle through the process.
Predictable and controlled
The problem with that is, collision repairers are not providing a predictable and controlled processes for their inventory to be produced in; as a result, no software or human capital will be able to outperform a flawed process. There are many ways that we can look to reduce WIP in our businesses, however, today I will discuss my preferred and most cost-effective way to control WIP; through managing Suppliers-Inputs-Process-Outputs-Clients (SIPOC).
The SIPOC is a tool that has been used since 1845 by the banking industry to manually maintain a consistent flow for all transactions. However, this methodology was brought to the forefront in the 1980s by Lean Six Sigma practitioners.
This tool is exactly what collision repairers are missing today when looking to control WIP, as we often focus on when cars arrive, when they leave, how many hours, and days per repair order. Although these are all valid, we continue to overlook the remainder of the “vehicle’s journey” throughout the repair process. There is a lot to un-package here so bear with me as we go through this together.
The (S) in SIPOC stands for suppliers. When looking to identify the number of cars to repair on any given work day, we need to ensure we have the parts and materials before we begin the process, or it will result in the delay, not only in a stall or department, but the entire repair process.
Back-ordered parts can be a massive problem for collision repairers today (pandemic notwithstanding); however, communicating to your vendors that you would like one fulfilled parts order per repair is a definite way of ensuring that a collision centre will have the right product, for the right car, at the right time. This methodology will not only boost performance, but will improve the shops profitability, by ensuring that the collision centre is only paying for parts and labour that are billable immediately after delivery.
The (I) represents Inputs. Simply put, inputs are any tools, equipment, or vehicles that a shop would need to convert and estimate into an invoice. By ensuring that all the inputs are outlined in a repair order and are available before a repair starts, this will help improve a collision centre’s KPIs.
This might seem obvious, but you would be surprised at how many KPIs are impaired by having too much or not enough tools, equipment, or vehicles at the time of the repair. The inputs are vital to WIP control as vehicles that can not start repairs immediately become “unbillable inventory” and will eventually cripple KPIs and increase costs.
The (P) represents Process. This step is the most difficult to achieve and as a result, success is not easy to obtain. When considering a process improvement initiative, you must look at what the collision centre’s goals are. Sales, desired Cycle Time and Paint Booth Cycles per day are just some of the metrics that need to be considered when identifying a collision centre’s optimal WIP. There are three recommendations that I would make to any collision centre when looking to travel down the “process improvement journey.”
Firstly, itemize where your greatest opportunities for improvement are, what is the 20% of the business that will improve the other 80%? When this is identified and shared with staff, you will be pleasantly surprised at the advice and perspective that you can get.
Secondly, monitor “Global Efficiency” (the number of billable hours produced in the available time) of the collision centre, not just the output or performance of a technician or a stall. Global Efficiency is key because once we identify what our overall labour efficiency is, we can then identify how many hours the collision centre can manage per day, week, quarter etc.
Thirdly, try to compress time frames, decrease the steps or time taken from department to department. The faster that the collision centre can produce the inventory, the faster that the collision centre can schedule new inventory.
The (O) represents Output. This is where the collision centre will start using their deliverables to look for opportunities in improving their WIP. Some examples of deliverables could be sales per certain time frame, Cycle Time performance, Sales Days Outstanding (SDO) and Global Efficiency. If a collision centre is focusing on the SIPOC as a WIP improvement tool; the collision centre can garner an abundance of improved operational and financial performance.
Last, but certainly not least, (C) represents Client/Customer. This final stage integrates all the hard work that was done throughout the repair process; usually, the outcome would be a great customer satisfaction rating, improved marketplace reputation and decreased costs for the collision centre and affiliated partners. A key component to pleasing the client is “over communicating”, that is right! There is never enough information regarding the repairs and timelines when updating the client
The SIPOC is a tool that has been used by Lean Six Sigma practitioners for decades. It is a proven process improvement tool that requires little financial resources to deploy and it will also help identify gaps in the current process. Due to the variability in collision repair (never is one repair order the same as another) implementing a SIPOC in your collision centre will give your collision centre the process predictability that is required to better control WIP.
Domenic Prochilo is Vice President at Simplicity Car Care. You can reach him at firstname.lastname@example.org.