Under one roof

Ron Nagy remembers when he and his management team finally decided they needed to consolidate. The company was about to add its fifth location (Nagy's Collision Center now has eight shops in Ohio), and the leadership was spread across multiple sites.

"There are just too many times you have to talk face to face with people, even with e-mail and all the technology we have now," says Nagy, president and co-owner of the company. Nagy's centralized its corporate offices at a central site in Orrville to house marketing, bookkeeping, accounting, finance and other functions.

"We centralize anything we can to save money," Nagy says.

For owners who are expanding from one or two locations to multiple sites, there always comes a point at which certain functions like purchasing, accounts payable, human resources, payroll or IT support have to be consolidated. Doing so requires a balancing of responsibilities among the central office staff and the location managers, and instituting consistent procedures and processes to help make sure that documents and data flow seamlessly between the field and upper management.

Caliber Collision, which operations hundreds of shops in multiple states, has a multi-tiered management structure. Location managers report to regional/state-level managers, who in turn report to corporate headquarters. Human resources functions are spread through each state, although the department is centrally managed from the Louisville, Texas headquarters. Employee benefits and payroll processing are centralized there, as well.

The key to keeping everything in sync is to recognize the role of the centralized functions. "From my perspective, we understand very clearly that we're a support organization for the field," says Bob Kliewe, chief financial officer at Caliber. "The field team is working with our customers to restore their vehicles. Our goal is to maintain stability and support the field in any way we possibly can."

Sharing responsibility
Some functions have to be split between the individual stores and the central office, and purchasing is a good example. Purchasing can be handled a variety of ways, but the MSOs contacted for this story typically bulk purchased consumables (like paper towels, coffee cups, etc.) and relied on leveraging corporate relationships with suppliers and jobbers for paint, materials and parts. Each store handled its own paint, parts and materials orders using a standard product list.

That's the approach Nagy's has taken, buying bulk items centrally and setting up each location with approved product lists. All billing is central. "Most vendors would rather have it that way," Nagy says. "They prefer one central billing location, with multiple delivery addresses. It saves paper and time."

Nagy says the company did attempt to centralize all purchasing at one point, but the processes became to complicated. Caliber, likewise, has a vice president of procurement, and does business with a select group of preferred vendors; shop managers are supposed to order from those preferred vendors.

initially moved from more than 700 SKUs down to 300," says COO Mike LeVasseur. "Three months after we started, I called the jobber and asked if we had any rogue products out there. We had about 20 or so, and we wound up back at about 450 SKUs eventually."

The reason for the SKU creep? "A combination of new hires and old habits," LeVasseur says. "Off-list ordering got out of hand. That's all being remedied now, but it can get away from you quickly."

At Nagy's, the controller runs regular reports to identify how shops are using materials. "We send out a scorecard each month to show the comparisons between stores," Nagy says. "We can score them against each other. We know they are using the same products, so we can compare shop to shop how they are performing."

Human resources is another area that, while centralized, can be shared with shop managers, at least when it comes to hiring staff. At Nagy's, advertising for new hires and initial interviews are handled at the corporate office. If a potential hire is brought in for a second interview, they meet with the location manager.

According to Nagy's vice president Dan Nagy, there are a few HR activities that haven't been centralized. "We found it doesn't work to do employee reviews from this office," he says. "We're present, and we know what's going on, but we let the location manager handle those reviews. They work with the guys every day."

At Caliber, most hiring and recruitment is done at the local level. "We believe our center management team understands what their needs are," says Greg Nichols, chief administration officer and general counsel at Caliber. "We do have a performance evaluation system in place for all centers and all employees."

At Keenan, though, LeVasseur has continued to run the orientation for every new hire at every location in order to help sustain the type of culture that the company aims for. "We talk about the business, where we were and where we're going, the policies, incentive programs, etc.," LeVasseur says. "It's important that everybody from the managers down are dedicated to having that same type of culture."

Technology aids centralization
Technology is playing a larger role in helping MSOs manage their shops consistently, which is why deploying the same shop management system across locations is so important. Thanks to cloud computing technology, it's also possible to reduce technology costs by deploying some software solutions centrally, and providing Web-based access at the shops, rather than installing software at every location.

Caliber moved from a proprietary software application to CCC-ONE. "That has reduced complexity," Kliewe says. "The proprietary system was difficult to train people on, and difficult to maintain." IT help desk support is managed through the Louisville office; when issues have to be escalated, the software vendors are involved.

At Nagy's, the company has also taken advantage of some of the functionality of CCC-ONE to help enable its centralized processes like billing. The company can transfer all estimate files from one location to another. In addition, the QuickBooks cloud-based solution allows the team to access the accounting solution from any location. Right now, the company is considering centralizing its servers in one location to reduce overhead.

Nagy's also has a proprietary software program called Ultimate Customer Experience (UCE) that they use to manage policies, documents and insurance profiles. "We have it installed at every location," Nagy says. "That's the biggest tool we have in keeping our shops uniform. If we need to make a change, whether it be on an insurance profile, a personal HR policy, we can dial it and change every location instantly."

"I think having a strong base for IT data information flow is important, so that the operating team can see the results of what the centers are doing on a timely basis, and having that information be accurate," Kliewe adds.

Consistency is key
Once an MSO has consolidated critical business functions, it's important to make sure each store is aligned with the overall company culture and its goals. It's also important to establish processes for making sure invoices and other types of information and data flow smoothly back to that central location, and that communication from the head office is consistent and clear.

The biggest challenge to consolidating operations across multiple stores, according to LeVasseur, is maintaining uniformity across the business, even with centralized management. "Sustaining that is difficult," he says. "We use a combination of shop audits and CSI to keep an eye on things."

Keenan blueprints every car and maintains a 20 Group within the company for blueprinters, so that they can meet with the operations manager once per month.

Nagy agrees that keeping the stores in sync is the biggest challenge he faces. "Everybody is different, every office manager is different," Nagy says. "We have very strong standard operating procedures. Consistency is a challenge."

It's also important to plan ahead for growth, and make sure that the centralized management structure you develop has enough capacity. "I had an idea of how fast we were going to grow," LeVasseur says. "I built an infrastructure to handle 15 stores, but I did that back when we only had six stores. That added cost up front, but as we added locations we were able to keep up with the growth. You have to have a clear path toward that growth."

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