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Managing Costs in Uncertain Times

Autosphere » Collision » Managing Costs in Uncertain Times
Correct mixing is just one factor in effectively monitoring paint and material costs. Photo Huw Evans

Paint and material expenses can add up very quickly if not properly addressed.

Paint material efficiency is one of the biggest factors that impact the refinish department of a collision centre. Today, the issue has become even more acute due to inflation and the rising costs of materials. This means that in many cases, collision centres are having to review existing refinish practices, as well as material purchases, including paint supplies to ensure they can operate profitably.

“Optimizing paint material efficiency is key to getting the most utilization of paint which is supply and demand constrained,” explains Corey Munn; Global Paint Applications Segment Director for 3M’s Automotive Aftermarket Division. “Since the price of paint has increased an average of 30% over the last two years, reducing 10% of wasted paint throughout the process can have a big impact on the paint department margin.” 

Not always visible

One significant way of doing this (as we cover in more detail in a separate article in this issue), is effective spray gun maintenance practices. The trouble is, the impact of this issue isn’t often visible to the shop, “unless they are regularly monitoring their liquid paint use per refinish hour,” says Munn.

At Fix Network World, Technical Trainer Stu Klein notes there are several steps collision centres can take to help effectively manage paint material costs.

These include:

  • Establishing and following Standard Operating Procedures (SOPs) coupled with ongoing training are the first steps in controlling cost and quality.
  • Following SOPs that not only focus on preparation and application practices but also on other factors such as inventory control, as well as decisions on maintenance schedules, booth loading, blending and correct mixing of materials are also critical. 

Another, very significant factor is ensuring that the collision centre is getting paid the right amount and it can only do that by ensuring that all required and approved refinish operations are accurately captured in the estimate at the very beginning of the repair process. This is particularly important since shops generally get paid for material usage based on how much time it takes to complete the work. 

Therefore, accurate estimates are a key part of making it work. Supplier relationships are also essential. In times of economic uncertainty and price pressures (like the industry is currently facing), it can seem that going for the cheapest option makes the most sense. In reality, however, that approach rarely works.

Costly result

As John Turner, General Manager for SATA in Canada explains, the ‘trying to squeeze every cent’ mindset can be very tempting when times are tough, but the perceived 60% savings on the front end can translate to a 300% loss down the road. A good example he says is paint cups. “If I’m paying 50 cents for a low-priced cup, I’m likely wasting $15 per ounce of material—and that’s expensive.”  

On top of that, if you’re using a poor quality or poorly maintained gun, with low-priced cups and you haven’t invested in or hired the right painter, you could be facing a redo of the work, which could cost $3,000 on top of what you’ve already spent. As Turner notes, those expenses can add up very, very quickly, particularly if you’re a high-volume shop.

He also explains that some collision centres might look at it and say, “well even if I have a $3000 redo, my supplier will still provide me with $6000 worth of sanding materials.” When it gets to that point, he says, it can become a dangerous shell game, and in today’s environment, where margins are already thin, collision centres simply cannot afford to be penny wise and pound foolish. 

This also applies to supplier relationships. “Don’t just shop for a cheaper paint invoice,” states Stu Klein, but instead, “choose a supplier that has programs and training to help you improve efficiency and productivity, reduce re-work and improve your overall business.”

Open, trusting relationship

John Turner concurs, noting that when it comes to refinish suppliers, it’s essential to have an open, trusting relationship and for the shop and its staff to follow procedures as provided by the paint supplier, instead of blaming them when something goes wrong [often as a result of not following those procedures correctly, to begin with]. Ultimately, he says, “you, as a business are only as good as the people you surround yourself with.” In an era of paint colour, material, and labour shortages, this becomes even more apparent. “You need to be a manager that can sustain the business, while at the same time instilling confidence in the people that work for you, so that [whether employee or vendor partner or stakeholder] they feel that your collision centre is the best place for them to be.” 

 

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