repair vs. replace the illusion. many years ago … in a lost land cycle time was king of the magic...
TRANSCRIPT
Repair vs. ReplaceRepair vs. Replace
The Illusion The Illusion The Illusion The Illusion
Many Years Ago … In a Lost LandMany Years Ago … In a Lost Land
Cycle TimeCycle TimeWas King of the Magic WorldWas King of the Magic World
Cycle TimeCycle TimeWas King of the Magic WorldWas King of the Magic World
Kingdom ConditionsKingdom Conditions
High Volume of SupplyHigh Volume of Supply Scarcity of Quality TechniciansScarcity of Quality Technicians Supply Chain StrongSupply Chain Strong
High Volume of SupplyHigh Volume of Supply Scarcity of Quality TechniciansScarcity of Quality Technicians Supply Chain StrongSupply Chain Strong
Many Magicians ThoughtMany Magicians Thought
Higher Labor Gross Profits MeantHigher Labor Gross Profits Meant Higher Total Gross ProfitsHigher Total Gross Profits Higher ProductivityHigher Productivity
Higher Labor Gross Profits MeantHigher Labor Gross Profits Meant Higher Total Gross ProfitsHigher Total Gross Profits Higher ProductivityHigher Productivity
Younger Magicians ThoughtYounger Magicians Thought
Cycle Time Could Be Reduced if …Cycle Time Could Be Reduced if … More Parts ReplacedMore Parts Replaced
Gross Profit Per Hour IncreasesGross Profit Per Hour Increases
Gross Profit % DecreasesGross Profit % Decreases Throughput IncreasesThroughput Increases
Cycle Time Could Be Reduced if …Cycle Time Could Be Reduced if … More Parts ReplacedMore Parts Replaced
Gross Profit Per Hour IncreasesGross Profit Per Hour Increases
Gross Profit % DecreasesGross Profit % Decreases Throughput IncreasesThroughput Increases
1.51.5UndersideUnderside
3.13.11.31.3486.90486.90HoodHood
160.00160.00PaintPaintMaterialsMaterials
1.81.8Clear CoatClear Coat
MUParts PU Other
The Magic of Replacement
2004 Buick LeSabre
Unit Rate Example $40.00
Paint and Materials Example $25.00/PU
1.51.5UndersideUnderside
3.13.11.31.3486.90486.90HoodHood
160.00160.00PaintPaintMaterialsMaterials
1.81.8Clear CoatClear Coat
MUParts PU Other
Magical Analysis of Replacement
486.90 52.00 256.00 160.00
Total Cost - 954.90
Repair vs. Replace - 63% Replace vs. Repair - 158%
Cycle Time Analysis of Replacement
Gross Profit % Gross Profit $
Parts $486.90 30.00% $146.07
Metal Labor $52.00 60.00% $31.20
Paint Labor $256.00 60.00% $153.60
Materials $160.00 25.00% $40.00
$370.87
38.84 %
Metal Labor Efficiency 150% = .87
Paint Labor Efficiency 200% = 3.2
Materials Only Paint Related
$370.87 ÷ 4.07 (.87 + 3.2) = $91.12 Per Hour
Replace over RepairReplace over Repair
Lower Cycle TimesLower Cycle Times Lower Skill LevelLower Skill Level Lower Material CostsLower Material Costs Less FailuresLess Failures Increase SalesIncrease Sales Better DiscountsBetter Discounts Increase ThroughputIncrease Throughput
Lower Cycle TimesLower Cycle Times Lower Skill LevelLower Skill Level Lower Material CostsLower Material Costs Less FailuresLess Failures Increase SalesIncrease Sales Better DiscountsBetter Discounts Increase ThroughputIncrease Throughput
Higher TicketHigher Ticket Lower GP %Lower GP % Planning IssuesPlanning Issues Staffing NeedsStaffing Needs Supplier IssuesSupplier Issues
DeliveriesDeliveries Unpredictable LKQUnpredictable LKQ Unpredictable AftmktUnpredictable Aftmkt
Higher TicketHigher Ticket Lower GP %Lower GP % Planning IssuesPlanning Issues Staffing NeedsStaffing Needs Supplier IssuesSupplier Issues
DeliveriesDeliveries Unpredictable LKQUnpredictable LKQ Unpredictable AftmktUnpredictable Aftmkt
Advantages Disadvantages
Management Magical Improvements
Gross Profit % Gross Profit $
Parts $486.90 35.00% $170.42
Metal Labor $52.00 65.00% $33.80
Paint Labor $256.00 60.00% $153.60
Materials $160.00 40.00% $64.00
$421.82
44.17 %
Metal Labor Efficiency 150% = .87
Paint Labor Efficiency 200% = 3.2
Materials Only Paint Related
$421.82 ÷ 4.07 (.87 + 3.2) = $103.64 Per Hour
Times ChangedTimes Changed
Frequency DecreasedFrequency DecreasedWork Volume DecreasedWork Volume Decreased
KPI’s ChangedKPI’s Changed
Frequency DecreasedFrequency DecreasedWork Volume DecreasedWork Volume Decreased
KPI’s ChangedKPI’s Changed
1.01.0UndersideUnderside
3.13.18.08.0HoodHood
147.50147.50PaintPaintMaterialsMaterials
1.81.8Clear CoatClear Coat
MUParts PU Other
The Illusion of Repair
2004 Buick LeSabre
Unit Rate Example $40.00
Paint and Materials Example $25.00/PU
1.01.0UndersideUnderside
3.13.18.08.0HoodHood
147.50147.50PaintPaintMaterialsMaterials
1.81.8Clear CoatClear Coat
MUParts PU Other
Basic Analysis of Repair
320.00 236.00 147.50
Total Cost – 703.50
Repair vs. Replace - 136% Replace vs. Repair - 74%
Cycle Time Analysis of Repair
Gross Profit % Gross Profit $
Parts
Metal Labor $320.00 60.00% $192.00
Paint Labor $236.00 60.00% $141.60
Materials $147.50 25.00% $36.88
$370.48
52.66 %
Metal Labor Efficiency 200% = 4.00
Paint Labor Efficiency 150% = 3.93
Materials More Materials Consumed
$370.48 ÷ 7.93 (4.00 + 3.93) = $46.72 Per Hour
Repair over ReplaceRepair over Replace
Maximize GP %Maximize GP % Lowers Ticket CostLowers Ticket Cost Scorecard PointsScorecard Points
Maximize GP %Maximize GP % Lowers Ticket CostLowers Ticket Cost Scorecard PointsScorecard Points
Increased CostsIncreased Costs Defects - WarrantiesDefects - Warranties Skill Level IssuesSkill Level Issues Staffing IssuesStaffing Issues Less ThroughputLess Throughput Creates BottlenecksCreates Bottlenecks
Paint DepartmentPaint Department
Increased CostsIncreased Costs Defects - WarrantiesDefects - Warranties Skill Level IssuesSkill Level Issues Staffing IssuesStaffing Issues Less ThroughputLess Throughput Creates BottlenecksCreates Bottlenecks
Paint DepartmentPaint Department
Advantages Disadvantages
Are We to Work Together ?Are We to Work Together ?
Common Areas to Common Areas to
Work TogetherWork TogetherCommon Areas to Common Areas to
Work TogetherWork Together
Common GoalCommon Goal
Vehicle Owner FocusedVehicle Owner Focused Restore Vehicle Back to Pre-Accident ConditionRestore Vehicle Back to Pre-Accident Condition
Work to Keep Costs in ControlWork to Keep Costs in Control Allow For Necessary OperationsAllow For Necessary Operations Perform Necessary OperationsPerform Necessary Operations Use Common SenseUse Common Sense
Vehicle Owner FocusedVehicle Owner Focused Restore Vehicle Back to Pre-Accident ConditionRestore Vehicle Back to Pre-Accident Condition
Work to Keep Costs in ControlWork to Keep Costs in Control Allow For Necessary OperationsAllow For Necessary Operations Perform Necessary OperationsPerform Necessary Operations Use Common SenseUse Common Sense
Common UnderstandingCommon Understanding
Take a Holistic Approach to KPI’sTake a Holistic Approach to KPI’s Not Focusing Only with Blinders OnNot Focusing Only with Blinders On
Consistency of Performance TargetsConsistency of Performance Targets
Lack of Understanding and Consistency …Lack of Understanding and Consistency …
Leads to Nothing But Bad Things …Leads to Nothing But Bad Things …
Take a Holistic Approach to KPI’sTake a Holistic Approach to KPI’s Not Focusing Only with Blinders OnNot Focusing Only with Blinders On
Consistency of Performance TargetsConsistency of Performance Targets
Lack of Understanding and Consistency …Lack of Understanding and Consistency …
Leads to Nothing But Bad Things …Leads to Nothing But Bad Things …
Replacement Percentage
Labor IndirectDirect
Labor Skill Level
Paint Department Efficiency
PaintMaterials
Costs
CycleTime
GrossProfit
Per Hour
Hydraulics of the Magical KPI’s
Every Action Causes an Equal and Opposite Reaction
Common GroundsCommon Grounds
Fraud DefinitionFraud Definition Abide by State LawsAbide by State Laws
Incorporate CIC GuidelinesIncorporate CIC Guidelines Write it RightWrite it Right
Work Together on Definitions Solutions
Fraud DefinitionFraud Definition Abide by State LawsAbide by State Laws
Incorporate CIC GuidelinesIncorporate CIC Guidelines Write it RightWrite it Right
Work Together on Definitions Solutions
Definitions to DefineDefinitions to Define
Metal Labor Repair UnitsMetal Labor Repair Units To 180 Grit …To 180 Grit … Not New Undamaged Panel ConditionNot New Undamaged Panel Condition
Additional Materials RequiredAdditional Materials Required Not Paint and Materials … Body MaterialsNot Paint and Materials … Body Materials
Information SystemsInformation Systems Allow More Repair Than Part CostAllow More Repair Than Part Cost
Metal Labor Repair UnitsMetal Labor Repair Units To 180 Grit …To 180 Grit … Not New Undamaged Panel ConditionNot New Undamaged Panel Condition
Additional Materials RequiredAdditional Materials Required Not Paint and Materials … Body MaterialsNot Paint and Materials … Body Materials
Information SystemsInformation Systems Allow More Repair Than Part CostAllow More Repair Than Part Cost
Definitions to DefineDefinitions to Define
Paint Labor UnitsPaint Labor Units New Panels = New Panel UnitsNew Panels = New Panel Units
New Undamaged Panel ConditionNew Undamaged Panel Condition
Paint Labor UnitsPaint Labor Units Repair Panels Repair Panels
Need Additional OperationsNeed Additional Operations
Paint Labor UnitsPaint Labor Units New Panels = New Panel UnitsNew Panels = New Panel Units
New Undamaged Panel ConditionNew Undamaged Panel Condition
Paint Labor UnitsPaint Labor Units Repair Panels Repair Panels
Need Additional OperationsNeed Additional Operations
Definitions to DefineDefinitions to Define
Blending Base Within a PanelBlending Base Within a Panel Paint Labor Units Paint Labor Units
Repair Panels Repair Panels • Need Additional OperationsNeed Additional Operations• Affects Paint MaterialsAffects Paint Materials
Blending Base Within a PanelBlending Base Within a Panel Paint Labor Units Paint Labor Units
Repair Panels Repair Panels • Need Additional OperationsNeed Additional Operations• Affects Paint MaterialsAffects Paint Materials
Directions Not to TakeDirections Not to Take
Repair Operation Cost ShiftingRepair Operation Cost Shifting Bundle R&I to Improve RatioBundle R&I to Improve Ratio
Front Bumper CoverFront Bumper Cover Add Hours to Include Part CostsAdd Hours to Include Part Costs
Door SkinDoor Skin Hood (Used)Hood (Used)
Repair Operation Cost ShiftingRepair Operation Cost Shifting Bundle R&I to Improve RatioBundle R&I to Improve Ratio
Front Bumper CoverFront Bumper Cover Add Hours to Include Part CostsAdd Hours to Include Part Costs
Door SkinDoor Skin Hood (Used)Hood (Used)
Directions to TakeDirections to Take
Work TogetherWork Together Improve TrainingImprove Training
Repair is a Lost ArtRepair is a Lost Art Smart RepairsSmart Repairs
Work TogetherWork Together Improve TrainingImprove Training
Repair is a Lost ArtRepair is a Lost Art Smart RepairsSmart Repairs
Understand the Hydraulics of KPI’s
