One of the universal issues in the collision repair industry and a pain point on every production floor is a lack of in-process quality control, according to Lee Rush, manager of business development for Sherwin-Williams®.
“In-process quality control has eluded this industry for years and continues to do so today,” said Rush. “Not only is it a huge liability risk, but it can cost every collision shop profit and sales.”
During a virtual presentation given as part of the Society of Collision Repair Specialists (SCRS) Repairer Driven Education (RDE) Series, Rush discussed the importance of validating in-process quality and explained how it differs from quality control (QC), typically done in many shops across the country today.
Whereas quality control occurs at the end of the repair cycle when the vehicle is inspected before being returned to the customer, Rush said in-process quality validation is live on the production floor, where adjustments can be made throughout the repair cycle.
Rush used the analogy of a sports team where the coach gives an overview of the game and what went wrong.
“A review at the end of the game doesn’t do anything to improve performance,” he explained.
Rush has spent more than 20 years managing collision centers and MSOs and has extensive experience in business center expansion using lean and process-driven operations.
Lee Rush
Over his career, he has found shops lacked the technology to measure the dollar value of in-process defects, comebacks, poor quality and missed opportunities. With the introduction of new technology, that is starting to change.
In his presentation, he shared insight about the benefits of using quality technology to help identify and correct issues throughout the repair process---long before the final inspection.
Those who don’t incorporate in-process quality validation can suffer greatly, said Rush. This could mean poor Yelp reviews, restrictions put into place by insurance programs, an impact on the quality of employees hired and increased liability for not performing a proper repair.
“Quality has a broad impact and many ramifications on your business,” said Rush. “By providing a process in which a repaired vehicle is returned to the customer free of defects, safe and the overall crashworthiness is restored, it allows us to reduce and eliminate in-process quality delays.”
Rush said it also increases the number of quality inspectors.
“Instead of one or two people in the business being responsible for inspecting vehicles, everyone in the business becomes a quality inspector,” he said. “This can greatly reduce the amount of time management spends addressing and readdressing quality delays.”
The key, said Rush, is to incorporate digital tools that help achieve these goals.
This means moving away from paper checklists and “check the box” procedures, as well as electronic standard checklists that do not relate to the repair.
Rush said quality technology can help identify and correct issues throughout the repair process—long before the final inspection.
Shop owners and managers who do incorporate technology to validate in-process quality typically experience numerous benefits. These could include cost reductions, more consistent repair quality, reduced vehicle comebacks, improved cycle time, reduced liability and overall customer and employee satisfaction.
Rush shared 10 best practices when implementing quality validation technology. The technology should:
- Electronically verify, validate and measure quality from any device.
- Offer digital features that can be implemented at a low cost.
- Have high mobility and be simple to use so every employee can easily adopt.
- Communicate to all employees in real-time to help them stay on task.
- Have the capability to increase the number of quality inspectors in the business.
- Provide a quality check and validation for each phase of the repair process prior to final inspection.
- Have robust reporting features that track performance so all failures can be resolved quickly, minimizing delays and improving on-time delivery.
- Focus on eliminating the major reasons for production delays including parts mistakes, supplements and in-process delays due to errors and defects.
- Electronically document the repair for all stakeholders, including the vehicle owner, insurance company, certified repair program, etc.
- Capture photos and allow for an audit of the shop’s standard operating procedures (SOPs).
“We’re going to find that many of the OEM certification programs are going to be gravitating toward these expectations,” said Rush.
Up until recently, Rush wasn’t aware of a method that was available to consistently and predictively measure the impact of in-process quality failures and dollarize them.
The failures may be related to paint, body work, mechanical, parts defects or detail and delivery.
“These are real issues that cause you profitability and impact your ability to produce additional revenue every day, every week and every month,” said Rush. “We’ve become desensitized to them; we accept them and tolerate them, saying that it’s just how we do business. However, it costs us profitability and additional revenues.”
Today, it is estimated failures such as starts and stops, reworks, comebacks, reversals in production, etc., may represent a potential revenue constraint of 20% of a shop’s monthly revenue.
“We know time is money, especially on the production floor,” said Rush. “Every minute of every day, we produce a product, or we don’t.”
He stressed the importance of using quality technology to help reduce and eliminate in-process quality-related delays and defects.
To help measure a shop’s success, Rush said the industry is now using a new key performance indicator (KPI)--sales per labor hour sold. This is the total sales divided by the total labor hours sold.
For example: $2.5 million in total sales, divided by 16,000 total labor hours sold equals $156.25.
Once the impact and cost of in-process quality are understood, Rush said shops can then work toward eliminating waste and improving profitability.
Rush highly recommends focusing a shop’s quality program on labor optimization to help dollarize the cost of failures and improve quality and outcomes for all parties involved in the claim.
“Up until the early 2000s, we thought about quality as right or wrong---it looks good or doesn’t, it functions or doesn’t function,” said Rush. “Now, we look at quality from the perspective of labor optimization.”
Rush used the example of a shop bringing in $250,000 in monthly revenue. If there are 1.5 failures per day per technician, and the shop has eight technicians, that equates to 12 failures per day. If you multiply that number by an average of 45 minutes per failure, it equals 540 minutes---or nine hours----of unproductive time per day.
At $160 sales per labor hour, multiplied by nine hours, that is $1,440 in lost revenue per day at 100% technician efficiency.
$1,440 in lost revenue per day multiplied by 12 working days equals $30,240 per month in missed revenue---$362,800 annually.
“Based on your labor efficiency, every dollar spent on in-process failures is a labor hour not spent generating new revenue,” he said. “You can begin to calculate what the cost is to your business due to in-process failures because they can be measured.”
Rush advises shop management to implement a well-defined set of individual or departmental responsibilities for each step of the repair process and then ensure employees know exactly what is expected of them.
“This is revolutionary for our industry,” said Rush. “This type of quality validation tech is a win for everyone, improving production and labor effectiveness, customer and employee satisfaction, profitability, cycle time and reducing liability.”
For more information, email Leroy.v.rush@sherwin.com.
The presentation is part of the curriculum from Sherwin-Williams’s A-Plus™ University, which focuses on education and the ability to deliver it when and where it is needed. The courses and workshops are designed around the company’s core ethos: “labor optimization and connecting metrics for demonstratable improvement.”
Visit ecoleanuniversity.com.
Stacey Phillips Ronak