Wednesday, 31 October 2001 17:00

The Importance of Benchmarking (or Who Cares How I Did Yesterday !)

Written by Tim Ronak

Bench-mark n. surveyor's mark at point in line of levels; standard or point of reference. 

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It'is Friday at 6 'oclock, you check the doors to ensure they are locked, especially those garage doors, switch out the lights and head home. While you drive the day runs through your mind ..... cars that left, cars that didn't, cars that are coming in, deposits made for the week, deposits that should have been ..... Darn !!, if only the techs could have finished those other two jobs. You are a reasonable man and you understand that people can only do so much and after all they were there until well after 5:30. You say to yourself "Monday is another day, I hope things get better !" and resign yourself to the idea that there is little you can do now.

I Disagree! There is a lot you can do!" You need to find out why this is happening. Unless you take a pro-active approach nothing will change. The key is to better understand what your organization and people are capable of, as well as how the operation performs through day-to-day comparisons. One of the most significant tools for this comparison is Benchmarking. As the definition indicates, it is a standard or point of reference. This however, does not mean you need to do an exhaustive study compiling mountains of statistical analysis and national body shop surveys.

Unless data is purified so everyone measures the same things in exactly the same fashion, comparison with others can for the most part be of little value apart from interesting but meaningless conversation. The shortcoming of inter-firm comparison is that not all measurements measure the same thing or are relevant as each person competes in his own unique environment complete with their own set of guidelines, rules and laws. Of course some outside data could be helpful to help identify which things are the most significant to track. (Akzo Nobel's Consultive Services has the necessary information available for you.) The only relevant comparison for the average shop owner (aside from our Acoat® selected program which regularly purifies and compares stats) is to measure and track their own performance trends and base decisions on this data directly.

The importance of tracking performance
 

"I can not stress enough how important it is to track performance regularly!" There is no better way for you to evaluate whether changes you make are effective, or not. In today's increasingly competitive market for the ever decreasing number of collision repair dollars, the old shot in the dark method of shop management is ineffective and foolish.

When I first learned to drive a car I can remember how excited I was. Every time I was permitted to pilot the car with my father, I can remember clearly how every thing was so deliberate. Every action from finding the keys to the car, unlocking the door, inserting the key, starting the car, placing my foot on the brake, putting into gear or backing out of the driveway required planning and forethought since to me everything was new.
 
I remember one instance traveling to the corner store less than 3 blocks away. The entire trip took 36 minutes, much to the chagrin of my father. I could have walked faster ! All of us should recognize that our driving now is, by far, more efficient than walking but at some point we have to learn how.
 
"The sometimes painful process of learning is the investment you make to realize the long term benefits of the learned process or skill itself."
 

 

Through the use of computers the insurance industry is monitoring repair costs across the nation to lower the costs of claims and premiums, of course. In many areas the concept of Capitation is being discussed to "manage" the average cost of repairs. This translates into less and less fat (Profit) occurring in the average repair. With these decreasing margins the shop owner must become more efficient and profitable at everything they do just to maintain their present level of profitability.
 

If you are still with me, the idea is to determine where you are. If you want to improve something, First you have to measure it !! This process of measuring is benchmarking and the first time you do it you will probably say to yourself, "That was interesting but it sure was a lot of effort !". The tracking of performance is like any other new skill the first time you do it. As you are learning how to track your business, you think about how to do it at every step, sometimes completing calculations then realizing mistakes.....one , two or three times realizing mistakes until finally you get it right !

Once you complete the initial round of measurements you will have completed the first step in evaluating your performance, "You have successfully Benchmarked your business !" Just the initial process itself may identify opportunities for you to improve in areas of efficiency, profitability or CSI.

Now you have a point of reference from which to move from, allowing you to identify an area of your business to improve. You also have the opportunity to evaluate the effectiveness of your strategies by comparing the historical benchmark to the results from your next measurement. Of course like anything, you get out what you put in. Unless you are committed to a meaningful ongoing evaluation of your business the effort spent in benchmarking your operation will have been wasted.

Avoid the disappointments and less than spectacular performance, be clear in what you can expect from your organization. Take the first step towards identifying new opportunities. Benchmark your business today to understand how you performed yesterday, to take control and decide what is needed to improve tomorrow. For assistance in identifying some of the relevant areas to measure or for further information about Benchmarking please contact an Akzo Nobel Business Development Manager!

Tim Ronak works with Akzo Nobel Coatings in the Acoat® selected division as a Business Development Manager. He holds a degree in Economics and Management, and has worked within the Collision Repair Industry for over 27 years. Akzo Nobel has been providing Consultive Services to the collision repair industry internationally for over twenty years.

 

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