Impact of Process

Featured on ABRN - September 2021

Impact of Process | Ted Williams, Global Director of Business Services, Sherwin-Williams®

Labor. It’s the biggest issue we face, yet it’s the least discussed. Not to mention, labor is the single most profitable center in the shop and it directly leads to parts and material sales. And, many shops spend more time focused on material management than labor optimization even though labor contributes five times more profit.

Bottom line – shops waste labor because it’s viewed as something intangible, something you can’t control. But, you can. It’s all about “process”.

In this industry, we’re in a labor drought, yet we continue to operate as if it was unlimited in supply. If you consider industry KPIs, touch times are anywhere from 2 to 4 hours per day and compared to the actual hours worked, you quickly realize that 50 to 60% of our available labor each day is wasted.

We defend this by saying, my techs are 200% efficient, while not considering that efficiency came from building a flag sheet, not the actual goal of getting paid to deliver completed cars. That waste creates a stream of unhappiness—unhappy customers, unhappy work providers and unhappy employees.

No matter the cost, the outcome in labor improvement justifies most investment. Let’s do some simple math around touch time.

Divide your monthly sales by the number of total labor hours sold.

Example: $200,000 in sales / 1000 hours = $200 an hour

This is your average sale per hour. Now, consider if that 200% efficient tech through better process were able to have just 1 more hour of touch time a day – 200% efficiency would mean 2 additional labor hours produced per day per tech.

Take those 2 hours, multiply that by number of techs, multiply by the number of monthly working days and then, multiply by the sales per hour number in the previous formula.

Example: 2 new hours x 6 technicians x 21 working days x $200 an hour in sales = $50,400

That’s a 25% increase in sales by simply correcting touch time.

Here’s how to implement this in your shop:

• Scheduling to production capacity rather than grabbing the keys
• Assessing damage before production rather than a tear down in production
• Verifying critical parts are on hand before the vehicle enters production rather than starting on it and having to stop
• Verifying and validating quality electronically during the repair phases to eliminate redos rather than a post repair inspection
• Reducing wasted movement by having materials readily available at the vehicle rather than centralized supply cabinets
• Electronic production communication to maintain focus on task rather than chasing people and parts around the shop

Labor optimization is critical to the survival of the industry and ultimately, to the survival of your business.

As a part of our A-Plus™ University program, we provide shops with ongoing critical training covering everything from labor optimization (connected to paint performance) to in-process quality (control). Our curriculum is supported by well-known industry experts, including Mike Anderson from Collision Advice.

Live and pre-recorded “virtual” courses are offered monthly, and many qualify for I-CAR Alliance credit with the completion of a post class assessment.

For a complete listing of educational programming available by Sherwin-Williams, visit sherwin-automotive.com/aplusuniversity.