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Body Shop Owner/Manager
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99.9% of Auto Body Shops in North America Operate their Repair Processes at Less Than a 50% Efficiency Rate!!!
It is my belief that 99.9% of collision repair businesses operate at LESS THAN 50% efficiency!!!! If you don't believe me here is a simple formula to see if your collision repair business DOES operate at a better than 50% efficiency.
HOW EFFICIENT IS YOUR COLLISION REPAIR BUSINESS?
Process Cycle Efficiency: PCE measures how efficient a shop’s overall business processes are.
The goal of any business is to operate at 65% or higher for all repair orders.
There are two calculations for PCE. One is an Average and the other is Actual.
Average PCE = RO Hours/Keys to Keys Hours (Example: If an RO has 40 hours on it and the keys to keys cycle time is 10 days and your shop is open 10 hours per day the calculation would be 40/100)
Actual PCE = Actual clocked Technician Hours /Keys to Keys Hours. Hours (Example: If an RO has 40 hours on it BUT the technicians ONLY logged 24 ACTUAL hours and the keys to keys cycle time is 10 days and your shop is open 10 hours per day the calculation would be 24/100)
I dare all repairers to calculate how efficient their busienss processes are!!!!!
HOW EFFICIENT IS YOUR COLLISION REPAIR BUSINESS?
Process Cycle Efficiency: PCE measures how efficient a shop’s overall business processes are.
The goal of any business is to operate at 65% or higher for all repair orders.
There are two calculations for PCE. One is an Average and the other is Actual.
Average PCE = RO Hours/Keys to Keys Hours (Example: If an RO has 40 hours on it and the keys to keys cycle time is 10 days and your shop is open 10 hours per day the calculation would be 40/100)
Actual PCE = Actual clocked Technician Hours /Keys to Keys Hours. Hours (Example: If an RO has 40 hours on it BUT the technicians ONLY logged 24 ACTUAL hours and the keys to keys cycle time is 10 days and your shop is open 10 hours per day the calculation would be 24/100)
I dare all repairers to calculate how efficient their busienss processes are!!!!!
Views: 110
Replies to This Discussion
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Permalink Reply by Bill Fowler on -
Do you factor in delays waiting for usable parts, delays in getting estimates from an insurance company, correcting the ones you do manage to get, and the time devoted to matching colors from hell?
Of the 40 hours on the R.O., does it include ALL operations that have to be performed and account for the time necessary to address them, or is there actually 60 hours of repair work and only 40 are acknowledged?Efficiency in throughput can only be measured when these factors are included in the calculation.
Often, a vehicle can be repaired faster than an insurance company can develop a reasonably accurate estimate or issue a payment. If we want to measure industry efficiency, let's start by measuring the efficiency of those who insist on running the show and the outside forces over which the shop has no control. Don't operate under the premise that the shop has total control of the process; nothing could be further from the truth.
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Permalink Reply by Frank Terlep on -
Bill,
Thanks for the reply. PCE measures the ENTIRE process, including all of the "stuff" you mention above. As I mentioned a business' process cannot ever be 100% efficient but the goal should be 65%. A lot of what a shop does is "Non-Value Add", which means the shop cannot put it on an invoice and charge for it. The idea in a lean environment is to elimiate or automate as many "Non-Value Add" processes to improve the overall PCE of the business. For example, if a shop puts a vehicle into production without all the parts and the repairs need to stop and wait for a part that is Process Cycle INEFFICIENCY.
I do agree wth you when you say a shop does not have total control over all aspects of the CLAIMS process but they should have complete conrol over all the processes that exist in THEIR business.
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Permalink Reply by Matt Dewalt on -
I guess everyone is to embarassed to post. My average is 31.3% for the last month. I'll justify it somewhat by stating that my average RO is $5140.33 working on Domestic and Asian cars and trucks. In my experience, the higher the RO, the lower the productivity.
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Permalink Reply by Mike Ross on -
Hi Matt,
I would challenge you to measure the higher RO's for PCE and then ask yourself why (5) times. What you will find is that all the damage was not discovered at the begining. Or maybe the parts took a long time to get in (but why?). What we have found in our facility is that if all the parts are in on (1) order, and that we have discovered all the damage on the first inspection (after tear down, pre-alignment, pre-frame alignment etc..) that the vehicle repairs FLY though the shop. In fact the hardest jobs to get high hours per day production on are smaller jobs. You can make up for alot of the lost time waiting if you process the job with as many resources that are avail. You will be surprised to find that the solution to the problem is actually reletively simple. If you build a process to process as many hours per day, you can elimintate the non-value added steps from even occuring in the first place. We are not perfect, but we have been diving into this issue for well over two years. What we found was a great start is by working on each step in the process and changing it back to eliminate non-value added steps in your entire process from keys to keys or even first contact made with the customer. Frank is 100% correct! And his digi-lean system is a great starting point.
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Permalink Reply by Matt Dewalt on
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I agree with you 100%. I fully understand why our cycle time is poor. We just haven't taken the initiative to do anything about it. Now you said that the big jobs fly through the shop, which I imagine they would. But if you measure keys to keys cycle time, doesn't the up-front processes (blueprinting, parts ordering, parts delays, etc.) add additional time to cycle time? I believe there would be a huge improvement in cycle time, but I would still think the larger the job, the longer the cycle time.
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