Lean is becoming attractive to auto body shops for a few reasons:
Industry consolidation resulting in increased competition. We’re talking about a $30B/year industry that saw revenue increase 10% from 2006-2009 at the same time the number of shops declined about 12%. (See this profile by searching ‘Romans Group LLC,’ at autobodynews.com)
Car owners rarely pay directly for these services. Insurers specify a few shops in small geographic areas where they’ll send their policy holders. If a shop isn’t on one or more of those short lists, they’re in trouble. Auto insurance is pretty much a commodity so drivers are shopping price. Insurers need to work with service providers who can help hold the line on costs.
As a result of items 1 and 2, repair shops are in land grab mode. They’ve got to find ways to differentiate and that requires innovation. They need a new operating model that will be friendlier toward insurers, auto dealers and drivers; hold the line or reduce expenses, both capital and staff; increase productivity; increase quality of work; and, understand how adding value at every customer interaction is the only way to drive trust and social capital.
Here’s a brief case study showing the value customers receive from lean techniques in the auto collision repair industry.
A former colleague of mine—a finance guy—is one of the most customer focused people I’ve ever met. (Yes, you read that right, he’s a finance guy.)
He became a CFO of a small chain of auto body repair shops. Once he better understood the industry and its not so best practices he realized that there was much to be done to improve his customers’ experience with his brand. Over time he was able to make some changes but before long the entrepreneurial bug bit. He and a partner opened a new body shop called Total Care Accident Repair using Lean Production principles at the core of their business strategy. Their shop is at 81 Brookside Circle, Raynham, MA 02767, 508.824.4091
Decrease the amount of time between receiving car keys from a customer and returning them
Don’t have drivable cars sit on their lot waiting for parts
Schedule repair work in the shortest window possible for the customer
Provide owners with insight into repair progress online and also send status updates via text, email or phone
Give the customer a delivery date and then further refine that the day before or morning of with a specific pick-up time
Deliver a repaired and CLEAN car. Vacuum and wash each car as a final step for prior to delivery
Deliver the highest quality work. Engage the work force by giving the responsibility for excellent and efficient work and make them beholden to each other.
Ensure each car is inspected one last time prior to delivery
Create a customer-friendly environment, one that is clean, sunny, in a nice area with plenty of parking and a warm, friendly, professional staff to greet customers and set expectations
The value to the customer here is obvious. There are multiple engaged professionals committed to delivering great work for the customer (and each other) and doing so as efficiently as possible. Is it working? Absolutely.
Bottom line is that from the customer perspective Lean Production is working for Total Care Accident Repair:
99.1% rate of customers that would use the shop again or refer it to a friend.
Courteousness of Staff ... 4.98 out of 5 (excellent)
Explanation of Repair by Staff ... 4.89 out of 5
Quality of Repair ... 4.95 out of 5
Cleanliness of Car After Repair ... 4.92 out of 5
This approach to auto body repair is a triple win:
The shop is financially on very solid ground. They are more efficient, have reduced capital costs, increased employee retention and engagement and a very satisfied customer base.
The customers have a highly valued experience, one that makes the best out of a bad situation. They get their car back ASAP, with the work done properly and don’t get grease on their clothes.
Insurers and car dealerships add value to their customers by partnering with a repair shop that delivers a great customer experience on their behalf.
In addition to customer feedback, like many shops, there are two other KPIs that Total Care Accident Repair uses:
Cycle Time—the amount of time between taking a set of car keys and returning them, and Touch Time—the number of hours in a day that a car is actually being worked on. Industry average is about 2.2 hours/day.
Total Care Accident Repair is on their way to doubling the Touch Time national average. That means Cycle Time shrinks, enabling more flow through production resulting in higher revenue. It also results in happy customers because their car was repaired more quickly. Cycle Time is reduced, especially for cars that are still drivable, because customers keep their cars until the shop knows precisely when they can provide an estimate and the owner brings the car in. Based on that estimate the shop can tell the owner when the work will begin AND end.
Another factor in Cycle Time reduction is that work doesn’t begin on a car until all parts needed are on premises. A car sitting in a parking lot not being worked on or driven is not adding value to the customer or the shop so that must be eliminated.
When repair work is scheduled, Total Care Accident Repair customers are told what day they can expect to pick up their car. They are also told that the day prior to pick-up, they’ll get notified as to the precise time they can pick it up.
Car owners can see photos of their car’s progress through the repair process online. They can also receive status updates via social tools and email.
When a car is hours from completion, the customer is alerted as to the specific time the car will be ready for pick-up. As an added value the cars are vacuumed and washed as a final step for prior to delivery.
The quality of work is phenomenal because lean production puts the responsibility for excellence and efficiency on the team doing the work. Each team member can send a car back to the previous station for work not done properly.
At the final work station where the car is prepared for delivery there is also another quality inspection. If a car is not ready to be delivered to the customer (which seldom if ever happens), the car gets the attention it needs immediately. The value to the customer here is obvious. Multiple sets of eyes ensuring quality work.
Lean techniques also result in lower capital and staff costs, making profitability easier to attain and maintain. Here’s a brief comparison:
All of this is great, but you know what really sold me on Lean Production and how it truly places the customer at the center of auto body repair industry?
Total Care Accident Repair’s facility features a spacious, window-filled store front with comfortable seating, coffee and tea, WiFi and absolutely zero risk of getting a grease stain on your person. No post-apocalyptic movie images anywhere.
Customer Engagement Strategies helps businesses grow through marketing and customer engagement programs that attract new clients retain existing ones and launch new offerings into new and existing markets. This is achieved by listening to the stories both the business and their clients/market are telling, identifying and analyzing the differences and developing offerings, messages and processes that more closely align the value proposition with the target audience.
Copyright 2011 Harry Klein, Customer Engagement Strategies www.customerengagement.com