As the Operations Leader for Simplicity Car Care, I have the opportunity to engage with collision repair owners and industry partners across the country, in those conversations opportunities and threats are always a topic of focus. Opportunities such as participating in “grassroots” development of future staff, the ability to leverage OEM Certifications and industry-leading client advocacy scores (NPS and CSI). However, the threats seem to be more concerning now than ever for many, threats such as rising costs of equipment, staff and materials, and evolving vehicle technology, all of which are placing pressure on gross margins and net profit. The collision repair space has so much variation from the make and model of each vehicle to the variation of compliance from work providers to the shrinking workforce in the back of the shop to the front office. In today’s article, we will focus on how to maximize opportunities to improve profitability, and how to create a People Development plan for your business.

Strategies to Improve Profitability in Collision Repair

Improving the profitability of a collision centre, needs to start with a “sense of urgency for accuracy”, and this needs to start from the leadership in the front office. A mentor of mine once told me, “that a technician can never outperform a flawed system”. He was correct. As long as the front line staff and leadership will allow for variation in their process, they will always need to “buffer” inefficiencies with additional inventory. This traditional process in a collision centre decreases efficiency, and creates more bottlenecks in the process, which compromises profitability. So how does a collision centre correct this issue? 

Optimize Workflow and processes

 Efficiency is the cornerstone of profitability. Streamlining processes reduces cycle time, minimizes waste, and ensures maximum productivity. Implementing Lean Principles that focus on eliminating bottlenecks and non-value-added tasks; and techniques like 5S (Sort, Set in Order, Shine, Standardize, Sustain) help improve the organization and reduce wasted time. By using Lean Principles in your collision repair centre, it can help with reducing expenses such as additional rental costs, decrease the costs of material and equipment maintenance expenses. In an organized collision repair centre, a shop can segment repairs by stall, this will help you schedule vehicles based on the capacity and capability of each technician

 Standard Operating Procedures (SOPs)

Creating SOPs in the frontline of the repair process, can help improve the efficiency in the back end of the shop. Two areas of the repair process that can improve profitability and efficiency of the entire collision centre are the discovery and estimating process. By developing a standard procedure for how every vehicle’s damage is discovered and is then communicated onto the estimate. Adding new processes in the front of the repair process can take time and patience to implement, a recommendation that I would suggest, is to identify how to improve the discovery and estimating processes. Here are some process improvement practices:

1. Identify the processes that you want to improve
2. Outline all the steps in that process
3. Remove any repetitive steps, or find ways to reduce current steps
4. Streamline the process that you are happy with
5. Test and adjust any new steps in the process, identify if changes add value
6. Adjust and pivot as needed
7. Standardize the agreed-upon new process

Measurements Matter

You can’t fix what you don’t measure, however in today’s Performance Based Agreement (PBA) environment there are no shortage of measurements to analyze. Are you reacting to your measurements (a scorecard reviews monthly/quarterly) or are you responding to the numbers by tracking and monitoring daily/weekly? Finding a technology partner to help you and your teams keep your finger on the pulse as a daily initiative is very easy to do. This can be done through estimating software firms, a management system or an industry data aggregator that can pull data from numerous sources and present the analysis in a daily dashboarding format. The information that can be pulled are not limited to operational and financial metrics and can provide great insights to help enhance decision-making opportunities.

Invest in Digital Management Systems: Modern estimating, customer management, and workflow tracking tools improve communication, reduce delays, and provide data insights to enhance decision-making.

Building Effective People Development Plans

Developing employees is critical to improving productivity, reducing turnover, and fostering long-term success in the collision repair industry. To achieve this, I believe we need to take inventory of “who we have, what we need, and is everyone working where they are satisfied?” The best way to take action and create a People Development Plan is by having individual quarterly calibration meetings with your staff. In these meetings, you want to discuss what their personal and professional goals are, and create a plan for the new entrant to participate in all functions of the business, from parts management to detailing and repair planning. This will give the employee an idea as to whether or not they want to pursue, a career in refinishing, outer panel repair or in the office as management; and maintain the quarterly calibrations to give feedback to the employee, answer questions that they may have and take the time to map out what next steps are in their career development plan. Not only does this strategy develop the people you have hired, but it also acts as a strong retention tool to ensure they don’t leave you. Other tools that can be used to reinforce the career development plan are skill-based pay increases, as the employee meets new milestones, they are incentivized with higher pay; peer-to-peer mentorship is also a great way to support the development path of new or long-time employees.

Identify Leadership Potential

Identifying who in your collision repair shop can participate in what I call the “replacement game” (supporting the promotion and responsibility of others in your business) can create a winning energy in your industry. When looking to identify leaders that can grow in your business, I would recommend looking for the following traits:

• Punctuation, those that show up when they are asked to, and show up to get the job done.
• Look for people that are open to risk, people that are willing to lead or be involved in new projects, implement new systems or processes.
• Look for People that truly want to be of service to others at any capacity, whether it be helping a client or coworker, or someone that wants to oversee the entire business
• Look for People that have empathy and compassion for others, at the end of the day, we are People dealing with People.

In conclusion, Improving profitability in the collision repair industry requires a dual focus on operational efficiency and employee growth. By optimizing processes, controlling costs, and investing in skill development, repair shops can achieve stronger margins while fostering a motivated, loyal workforce. A collision repair centre that excels at both will stand out in a competitive market, ensuring long-term success and customer satisfaction.