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Mike Gilliland

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Are You and Your Team on the Same Page?

Posted by Mike Gilliland on Wed, Feb 18, 2015 @ 08:59 PM

leadership, strategy, collision repair

It’s probably been a couple months since you updated the annual business plan, reviewed the annual budgets, and set goals for the year. You created a nice plan, probably felt a sense of accomplishment, but now what? How often do you reference it? Maybe more importantly, has the team you’re relying on to help even seen it? Most repairers have at least one production meeting per day to get everyone on the same page; doesn’t it make sense to put a similar discipline in place when it comes to the operation of the overall business?

 A few years ago I joined a CEO mentoring group for young technology companies; it was expensive, but most good things are. A mandate to participants was implementation of Verne Harnish’s  One-Page Plan. It addresses the common problem where companies struggle to communicate the broader business objectives to their people in a relatable way. It’s extremely difficult to convert long term goals into actionable tasks that can be achieved quarterly, monthly, weekly, and even daily. The One-Page Plan is a template to do just that; its part strategic plan and part communication tool.  In short, it’s a one page document that captures longer term goals, reverse engineers them into short terms activities, and assigns accountability to the people that need to perform them.

 I won’t go into the inner workings of the One Page Plan as there are abundant reference materials that will do that. If you can relate to the problem it addresses, I highly recommend evaluating its use. If you decide to implement it, be forewarned, it will require discipline and may not stick on the first attempt. My guess is that your daily production meetings took a while to catch on too … but can you imagine running your shop without them now?

 

In our own use we’ve modified the template to fit our specific needs, but the overriding goal is preserved. Get the entire organization going in the same direction and install a rhythm of daily, weekly, and monthly checkpoints to keep it on track.  The One-Page Plan has become a touchstone for all of us at AutoHouse. We can always do better, but with everyone moving in the same direction, I’m confident we will.

Tags: Key Performance Indicators, Productivity, Collision Repair Industry, Performance

Competition - act like you have a 10% chance of survival

Posted by Mike Gilliland on Thu, Apr 12, 2012 @ 10:55 AM

I was recently at the PPG MVP Spring conference and one of the key note speakers commented “in order to compete we must be better today than we were yesterday”. You can interpret that comment in several ways: today vs. yesterday as a conceptual time line, or literally….we must improve every single day. In business, we all need to compete; do we do it on a conceptual basis, or are we competing daily?

My professional experience is split 50/50 between the collision industry and the technology industry, so I tend to view ideas from both viewpoints. I draw on experience from both, and what surprises me most often are the parallels between them and what can be learned about competition from the other. My interpretation:

Speed of Change

Technology – The technology industry changes rapidly, both from a technical and business perspective. Companies can go from valuations of zero to millions, even billions, in the span of a couple years. Technology companies don’t reject change, they embrace it. Change is woven into the foundation of their businesses.

Collision – The collision industry is undergoing dramatic changes. Some repairers choose to embrace change and look to the opportunities it creates, while others choose to ignore it and hope it goes away. As they say…”hope” is not a business strategy, so the non-changers may face a difficult future.

Efficiency            

Technology – Technology companies are hit and miss when it comes to efficiency initiatives, at least from an internal workflow perspective. Some see it as a competitive advantage, others don’t. I believe the same reluctance to adapt exists in the technology industry. It’s easier to identify inefficiencies in a visual process (e.g. a repair on the production floor) than in a conceptual one (e.g. a software development project), but the end result is the same – waste.

Collision – You could substitute “lean” for efficiency if you like; leading collision repairers and suppliers have embraced lean and, in turn, made it an industry wide buzz word. Repairers that are willing to admit that the old way is not necessarily the only way and are able to tweak processes to gain efficiencies are beginning to reap the rewards through lower costs and more predictable businesses.

Competitive Landscape

Technology – As you would expect, the technology industry is extremely competitive. Few companies get funded, fewer survive, and fewer still succeed. To illustrate, Angel investors (early stage investors) look for a potential return of 30:1 at exit before they will invest money. Angels typically hold 10 investments (that due diligence says meet the 30:1 opportunity), hoping 1 of them produces the 30:1 return. A couple more meagrely survive, but most will die.  If 1 out of 10 (that got funded!) succeeds, that is extreme competition.       

Collision – The collision repair landscape is not as competitive as the technology landscape… yet. With crash avoidance technology and driverless vehicles on the horizon, is a survival rate of 1 in 10 completely out of the question? Probably a little premature but if you plan on passing the business onto the next generation you may want to get the competitive juices flowing now.

Takeaways from the collision to technology industry comparisons: 1) Collision repairers need to accept change as a constant; resistance is either futile, or fatal. 2)  Technology companies should learn lean principles. Just because waste is not easily identified does not mean it isn’t there. 3) Collision repairers need to compete harder. The success rate may not be as miserable as the tech industry’s but the number of collision repairers continues on a downward trend with no end in sight.

In a prior blog post I suggested that the performance differentiator was a collision repairers’ state of mind vs. a more tangible asset or influence. Pursuing daily improvement is a mindset that improves focus and instills a sense of discipline and urgency in the business. Let’s view it from a pure investment perspective: if you were investing your money in a collision repair business and the ROI was pick the winner or lose it all, who would you invest in?

Tags: Trends, Collision Repair Industry, Competitive Advantage, Crash Avoidance Technology, Performance

The Performance Differentiator ….want the secret?

Posted by Mike Gilliland on Wed, Feb 29, 2012 @ 06:00 AM

What drives performance? Over the past year we’ve been trying to answer this question for completely self-serving reasons.  

The first thing that came to mind is money; my thinking is those who want to be more profitable will focus on ensuring their business performs up to its full potential. In the past year I’ve had discussions with repairers where, with a little effort and leadership by management, profitability could improve. Some of the reasons offered on why they are not pursuing the opportunity are that “there is money in the bank and the customers are happy” and “it’s difficult to get my team to change”. Though profitability is always a topic of conversation wherever collision repairers meet, I have to assume it’s not that bad and it’s not causing that much pain since a lot of repairers won’t make the effort to improve it. So, I don’t believe money drives performance, at least not yet. Maybe it will when the pain gets unbearable.  

How about performance based insurance relationships? These seem to be having an influence on some repairers and definitely focus attention due to the financial penalties that may be incurred if the KPIs are not met. To others, the feeling is that the targets are arbitrarily set by the insurers above what is achievable, so they are dismissed as “that is just the way they do business…we can’t do anything about it”. The repairers that have embraced these relationships may be on the right track to increasing performance but need to ensure they take a holistic approach to performance vs. a “fast track” approach for a specific insurer. Though these types of performance relationships may increase awareness of performance numbers, I don’t believe they drive sustainable performance across the repairers’ entire book of business.  

It has to be competitive pressure then, right? Competition is real but it doesn’t seem to drive performance; it drives price cuts. For those repairers who are not willing to make the effort to focus on performance to improve profitability or to meet insurance partners’ targets, it is a lot easier to discount price. I don’t believe competition influences performance today, but I can envision the day when performance may be the competitive advantage… if I consistently fix cars 33% faster that my competitors, do we really need to negotiate on price?

So what drives performance? After a year of trying to answer the question, my opinion, from comparing good performers, to average, to poor….. is it’s a mindset.  The good performers get up every day and want to get a little bit better and are willing to make the effort to ensure they do. In the end, I believe that that mindset will succeed. To borrow a golf analogy “it’s 90% mental and the other 10% is in your head”.  

We have a client that has the mantra “either you’re making progress or you’re making excuses. You can’t do both”. Occasionally, I think all of us need to look in the mirror and ask….what are we making?

Tags: Key Performance Indicators, Profitability, Collision Repair Industry, Competitive Advantage, Insurance Partners, Performance

A Productivity Snapshot

Posted by Mike Gilliland on Wed, Jul 28, 2010 @ 07:18 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:

  1. 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,
  2. 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:

 productivity trends

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!

Tags: Key Performance Indicators, Productivity, Trends

The Profitability Question

Posted by Mike Gilliland on Tue, Jul 13, 2010 @ 09:59 AM

There seems to be increasing conversations concerning the profitability of collision repairers and most of these discussions raise far more questions than they provide answers. It’s not surprising that this is the case considering the state of the industry today. Some repairers are embracing new ideas and processes, while others are reluctant or resistant to change, using the age old strategy of hoping that if they ignore the problem long enough it will go away. I believe there is hope for the reluctant. Every market has an adoption life cycle and some shops will be late comers. I don’t have much hope for the ignorant however, since I don’t believe this will be a problem that will go away.

So what is repairer profitability, and what does it need to be to have a healthy repair industry and encourage re-investment into the business? At the recent CCIF conference there were several presentations regarding industry sustainability and profitability. The highlights were:

  1. Questions raised regarding the accuracy of data provided by several organizations working on industry reports to try to gage where the industry is today.
  2. A presentation given on a lean repair process, suggesting that up to 15% waste (cost) could be eliminated from typical collision repair processes.
  3. A panel of collision repairers, discussing sustainability, were suggesting that insurers need to increase compensation to repairers. Decreasing parts GP% was cited as an example to reduce margins.

As a few associates and I reflected on the conference topics over dinner, it was fairly apparent the take-aways were discouraging. As an industry, we don’t really have reliable information to assess profitability and sustainability, and we are wasteful with resources; we may be improving but there is a long way to go. We need to increase profitability; I don’t believe insurers have an appetite or can make a business case for increasing compensation until the prior points are addressed. In the meantime, it’s all about maximizing resources and efficiencies.

The good news is that many shops are focused on process improvement and better utilization of resources. The challenge comes with the information we are given; will we be able to get credible and statistically valid information on repair businesses? At AutoHouse Technologies, we are reviewing our ability to provide a repairer side industry trends report. At a minimum, this would provide +/- % of gross profitability, profit center mix, payer analysis, etc. Stay tuned for this and if you have any suggestions or comments on the topic we would be happy to hear from you.

Tags: Profitability

Key Performance Indicators- Suffocating or Enabling Repairers?

Posted by Mike Gilliland on Tue, Jun 29, 2010 @ 11:43 AM

If you were to ask many collision repairers what Key Performance Indicators or KPI's they track, the likely responses are either:

  1. Severity, cycle time, and CSI, or
  2. 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.

Tags: Key Performance Indicators

Converting Business Intelligence to Collision Intelligence

Posted by Mike Gilliland on Mon, Oct 19, 2009 @ 09:53 AM

Every morning as you walk into your facility you are met with a tsunami of information, usually (if you are like me) all you have available to fend off the advancing wave is a 3/4 empty coffee cup. You'll definitely fill your cup, but as the wave passes and dissipates you know there is a lot of valuable information that you did not capture and you have an uneasy feeling in your stomach that maybe you missed something important.

This scenario is not a unique to collision repairers, most types of businesses experience it, but it is compounded by the fact that in most collision repairs there are 3 party's involved, yourself, the vehicle owner, and the insurer. In an earlier article we concluded there appears to be a need for Business Intelligence within our industry but how we convert a fairly complex technology into usable "Collision Intelligence" that provides real value to shop operations needs to be determined.

Here at AutoHouse, we believe we should start with your most pressing concern. What is going on today and are we potentially off the rails? If so, can I resolve the problems we've identified before they have a negative impact on my business?

We've identified 3 areas of interest:
 1) Administration - ensure the proper information is captured during the administrative process and flag exceptions for resolution.
 2) Finance - report where there may be potential profit leaks and identify potential areas to improve cash flow.
 3) Production - take a snap shot of production and the incoming and outgoing pipeline so you can prioritize and adjust as necessary.

We think there is potential value to be delivered through Collision Intelligence but in the end our clients will decide. We welcome your comments, critical feedback and general thoughts on the subject.

Tags: Business Intelligence

What is Business Intelligence?

Posted by Mike Gilliland on Mon, Oct 19, 2009 @ 09:35 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?

Tags: Business Intelligence, Key Performance Indicators