Posted by Mike Gilliland on Wed, Jul 28, 2010 @ 09:18 AM
Lately I’ve been having more conversations with repairers about productivity because some believe they have made gigantic leaps forward in making their businesses more productive. The increased focus on the production floor, triggered by the industry’s adoption of lean methodologies, no doubt has had an influence, or has it? I decided to take a quick look into our data to see if I could spot any trends.
How do you best measure productivity? I’ve used our units per day metric, or touch time as it is also known. In this scenario, productivity measures how many hours on average are spent working on each repair, everyday it is on site (Total Hrs / number of days = Units / Day). I choose this measurement for two reasons:
- in order to increase your units per day performance, you must also improve a lot of other shop processes that impact this productivity KPI such as estimating, parts management and scheduling, and,
- there is an increased focus by insurers to monitor units per day performance.
As discussed in a prior article, I believe this is one of the KPI’s a shop should track for its own business. If insurance partners are also tracking the KPI, it just means that you should be able to be proactive rather than reactive with those conversations.
The data we collected includes both customer and insurance pay repairs, and is provided only to see if the trend line has moved. In future reports, we may dig deeper and get the statistical validation required to make a definitive statement. During a three year period, this is what we found:
From what we see, there is support for the assumption that productivity has improved, but what are the factors that contributed to those gains? I’ll take a stab and make some assumptions (if they are proven wrong at a future date, I guess I’ll only have myself to blame):
- Lean initiatives and renewed interest in production processes have contributed to the overall increase
- Some insurers (unfortunately, only some), are adopting a lean mentality to cut out administrative waste that slows repairs
- The top performing repairers are bootstrapping the overall average higher. I know we have some clients with averages much higher than shown, even with customer pay repairs in the average
I am interested to see what further analysis would provide. What are the average units per day of the top 10% of performers? If you segment insurer and customer pay, what are the respective averages? Does the average vary from one geographic region to another? Please let us know what you think, or what you would potentially like to see, and we may be able to include it in future articles.
My final assumption is that the repairers who figure out how to continually increase productivity will be the winners … not just for their insurance partners, but also for their business. I don’t think I will need to eat any crow on that one!
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Posted by Mike Gilliland on Tue, Jun 29, 2010 @ 01:43 PM
If you were to ask many collision repairers what Key Performance Indicators or KPI's they track, the likely responses are either:
- Severity, cycle time, and CSI, or
- We don't have to track KPI's; our insurance partners give them to us.
When I hear these responses, I have two comments. First, KPI's supplied by insurers provide insight into how well you're doing for them, while your own business could be going into a death spiral without your knowledge. There may be some similarity and overlap but an "insurer specific" KPI is not your KPI, it's theirs! Second, it's your business; you need to take the time to ensure that you're getting a reasonable return on your investment!
OK, I know the above comments are extreme. Most repairers have some business KPI's, but I'm trying to make a point. Repairers, in general, spend far more time measuring insurer related KPI's than they do monitoring the KPI's impacting the overall health of their business. Tracking numerous insurers' KPI's can suffocate your business. I propose that the business KPI's should get at least the same, if not greater, focus and this will therefore simplify your business enormously.
Repairers and insurers do have a common goal ... repair the vehicle as quickly and efficiently as possible; any gains in business performance should therefore positively impact insurance partners. We've seen, within our client base, that a daily focus on improving repair business KPI's can substantially influence performance against longer term insurer KPI benchmarks.
The business KPI's you should measure vary by shop. The top two or three opportunities for improvement could be on the production floor, in administrative processes, or financial management. Some thoughts to consider when defining your internal business KPI's are:
- "K" means Key - a few key indicators. If you have more than 5, it's just a list.
- Attainable - they must be attainable and track progress against a target daily.
- Leading - use leading indicators so you can affect change proactively.
- Change - KPI's will evolve and change over time as you meet your targets.
I fully realize the importance of ensuring your insurance partners' needs are met. I'm not suggesting that they should be ignored; actually, it's quite the opposite. I believe you serve your insurance partners better by focusing on several key areas that improve your overall business performance. As they say during the safety briefing before take-off on an airplane, "please put on your own mask first, before assisting others".
I will discuss the KPI topic in more detail in future articles. We'll also share some specific areas where we've seen collision repairers make substantial progress. Please let us know if there are any areas you would like us to review, thanks.
Posted by Mike Gilliland on Mon, Oct 19, 2009 @ 11:35 AM
Business Intelligence (BI) is becoming more widely known and discussed within the collision repair community. Several industry technology vendors have also released products or services with the word "Intelligence" incorporated within their solutions name. That leaves one to ponder... what is Business Intelligence?
A workable definition of BI was provided in a January 2005 Technology Evaluation report. "BI is an umbrella term that combines architectures, applications and databases. It enables real-time, interactive access, analysis, and manipulation of information, which provides the business community with easy access to business data. By giving this valuable insight, BI helps decision makers make more informed decisions and supplies end-users with critical business information on their customers or partners, including information on behaviors and trends."
To summarize in simple terms, BI makes the right information available, in the right format, to the right person, at the right time.
Collision repairers are driven by numbers, from financials to production efficiency ratios to insurance partners key performance indicators so the concept of Business intelligence appears to be a natural fit. The next question, can it be delivered to collision repairers in a technologically and financially viable solution?