Why – and how – shops are finding ways to do more with less
If you haven't heard about the concept of "going lean" or "lean processing" sweeping the collision repair industry in recent years, you haven't been paying close attention. Virtually all of the major paint manufacturers have launched training or other programs to help shops understand and implement the concepts associated with "lean." At the International Autobody Congress and Exposition (NACE) last November in Las Vegas, one of the general session events and at least four conference sessions were focused on the topic.
The reasons behind lean becoming such a key topic in the industry are two-fold. First, proponents of the concept — including some collision shop owners who are successfully implementing it in their businesses — said it offers significant benefits they believe will help shops survive and thrive in a challenging, changing market. Second, forces outside the collision industry are providing impetus for shops to identify and eliminate wasted time and effort.
"Some insurers, State Farm being one of them, are pushing very heavily on lean manufacturing as being something the industry needs to adopt," says Dan Risley, executive director of the Society of Collision Repair Specialists (SCRS). "They are looking to push some of that down. State Farm is actually trying to find out where its role is in helping the repairers implement lean manufacturing. That was one of the questions they asked their advisory council."For an example of what lean production can do for a company, repairers need not look far. Toyota Motor Company has kept on track to becoming the largest automaker in the world by adopting "lean production" methods.
But does such a concept, clearly successful in the production world of manufacturing, have an equal place in the every-job-is-different, service-rather-than-manufacturing world of collision repair? Steven Feltovich, for one, believes it does — if "lean production" is understood and implemented at its core level.Feltovich conducts estimating and other training as the manager of business consulting services for Sherwin-Williams Automotive Finishes Corp., and is no stranger with Toyota's efforts to implement lean production concepts in its dealership collision repair facilities. But Feltovich believes too many shop owners are looking for "lean-in-a-box" or a quick and simple way to get "lean" implemented within their business in a few weeks or months.
"Lean is a journey that never ends," Feltovich says. "It takes a long time and a lot of effort. But is it worth it? You bet."
A simple concept
"Lean production" is based on W. Edwards Deming's principles for "achieving maximum productivity with the least amount of effort or expense." Deming was the American business consultant whose concepts Toyota has successfully implemented during the past 50 years.Deming's views of lean production can be summarized as such. Lean production is a chain reaction that begins with improving quality. That quality results in lower costs and higher productivity because it eliminates the time and expense involved with quality issues: rework, mistakes and delays, and inefficient use of equipment and materials. The improved quality and its lower costs then allow a company to capture more market share and grow.
Going lean entails creating "a process that delivers quality the first time because it's cheaper than defects and errors," Feltovich says. "Some programs out there suggest dealing with bottlenecks, delays and snags by throwing more people, equipment, or materials at the problem, or by building a bigger building. Deming is quite the opposite of that. In lean manufacturing, you need fewer people, less space and equipment. Toyota's output, for example, is four times as productive as some of our domestic (automotive manufacturing) systems."That doesn't mean, however, the key to becoming lean is just shedding employees or other "visible" costs, Feltovich said, because such ruthless cutting often results in "hidden costs." Instead, he said, it involves seeking out waste and anything that negatively impacts quality.
"For body shops, you're stripping out redundancies and rework, the time and effort for example, involved in multiple supplements and parts orders," Feltovich says.
Key elements
Although lean production is more of an ongoing improvement process than specific actions, there are elements of shop operations that can be targeted for going lean. They include:
• Blueprinting. Frame racks or paint booths becoming "expensive parking spaces" due to delays and in-process cars sitting untouched for days waiting for parts both are signs of a process that needs to be improved to eliminate waste, Feltovich said. Lean production calls for adequate damage assessment up front, with a necessary teardown determining all necessary parts (one parts order should be the norm and goal). All insurer approvals should be obtained before the vehicle moves into non-stop production.Mike Quinn, co-owner of the seven-location 911 Collision Centers in Arizona, said a committee of the Collision Industry Conference (CIC) estimates that every time the need for a supplement is eliminated, the shop saves about $240 in hard costs. Those savings can include time not spent on having the estimator review the vehicle at the technician's stall; preparing the supplement and contacting the insurer; making a subsequent parts order and reconciling the second invoice; additional communication with the customer; and lost production time for the technician.
There are challenges to shifting to this type of leaner system, Quinn admits. Some state laws require customers be provided with a preliminary estimate. The change also requires convincing insurers to try something that, for now, is still out of the ordinary.Quinn, who said lean production is being used for about half of the business at his shops, suggests working first with just one insurer, explaining how the process will reduce supplements, improve cycle time and save the insurer added expenses that processing supplements costs (which the CIC committee pegged at more than $700). Once you have one insurer on board and work out the system within your shop, Quinn said, you can show other insurers how the system works.
• Equipment in use. Feltovich said that during two consecutive days he spent consulting in one shop, two of four frame racks sat unused. Shops that go lean, Feltovich said, often find they can sell such excess equipment without any loss in productivity and throughput. In the past, he said, bottlenecks often were solved with the purchase of more equipment when current equipment still isn't being used to its full capacity.
• Quality induced in-process, not just at final inspections. You can't inspect quality into a job, Feltovich said. It has to already be there. Many shops perform a final inspection immediately before the customer arrives. By then it is too late to avoid the expense of fixing any problems that turn up. Shops must communicate expectations for quality so such problems don't occur or at worse are caught and corrected before the vehicle has moved forward in the process.
• A facility and employee headcount that are in line. If a technician is not likely to see any delays with a vehicle that has been put in process, Feltovich asks, "How many vehicles and stalls does he need at any one time?" If your shop has more than two stalls per technician, look at improving your processes before adding more space (and the overhead expense that accompanies it), he suggests.
• General cleanliness. Improving quality to reduce costs doesn't mean polishing vehicles more. It means reducing the need to polish. That may mean understanding that good housekeeping in a shop is a lean-style investment in improving quality and reducing rework and wasted time and materials.
Going lean often starts with a "housecleaning" known as the Five S's: sort, set in order, sweep (or shine), standardize and sustain. Michael Giarrizzo, CEO of DCR Systems Accident Repair Centers, said his company's model for dealership collision repair shops establishes defined places for tool storage and elimination of clutter, such as collections of "nuts and bolts you're sure you'll need someday".
Ken Friesen, owner of Concours Collision Centers in Alberta, Canada, said his company practiced the Five S's before he'd even heard of the term. A "visual file rack system," for example, helps the shop's office staff quickly see at a glance where all necessary paperwork is stored and where in production every vehicle is.
• Training. Quality isn't about sanding a panel more or grinding a weld smoother, Feltovich said. It's about knowing how to use the right sanding technique and materials the first time. It's about welding more effectively so grinding isn't necessary. Lean shops have well-trained employees, Feltovich said.
Lean isn't mandated, but...
Feltovich and others touting lean production generally don't go so far as to say it is necessary for survival in the collision repair industry. They do, however, point out that you likely will be competing against some repair businesses that have moved to get lean.
"You can dig your heels in deep and hard and say, 'I'm not changing. I've been at this 35 or 40 years, and this is the same way we've always done it and I'm not going to change.'" Feltovich says. "But guess what? I can tell you your future then is getting dim."
