During the course of my career I've been very fortunate to tour thousands of shops in different parts of the world. Consequently,
I've been able to explore the minds of some of the very best operators in the collision industry. Years ago, I asked Don Long,
a friend, confidant, and at the time the owner of a large repair facility in Southern California, what the "secret formula"
was to production scheduling and fixing vehicles more efficiently. His response at the time amused me. He answered, "They
don't wreck 'em when we need 'em, so we fix 'em when they wreck 'em."
I knew that on the surface Long was right, but there had to be more to it than that. There were always hidden wisdom in his
words. You just had to probe further and listen intently to get the answer. The veiled message was this. Control as much as
you can, but do not get "wrapped around the axle" with the issues you can't control.
So, what can be controlled in the collision repair process and what can't? The answer to that question also is the source
to continuous improvement. Many of us have tinkered with this source in a variety of ways: 5S, blueprinting, work teams, pay
plans, shop layout and countless other innovations. Some have achieved tremendous operational gains for these efforts. A friend
and colleague of mine, Michael Giarizzo Jr. of DCR Systems, started with a blank sheet of paper to design and simplify collision
repair in a revolutionary fashion by using lean manufacturing methodology. The results were an unprecedented collision model
providing some incredible results.
Many operations today simply do not have the desire, ability or cash reserves to completely overhaul their current model and
start from scratch. However, they have another option, namely, controlling their level of work in process (WIP). WIP in a
majority of shops is too high and masks or creates inefficiencies in their processes and additional expense for the business.
Let's look at how you can measure your shop's WIP and adjust it to create the most profitable mix of work.Fantastic formula
In today's tough economic times, your first response to addressing WIP probably is, "I wish work in process was my biggest
concern!" Regardless of how much work you have, maximizing the results for the effort you put in is always your most prudent
goal.
One notion that amuses me is the "in Monday – out Friday" principle. Most shops schedule in most of their work for Monday
mornings with the primary goal of getting this work out the door on Friday evenings. I've never been able to understand why
a majority of shops can deliver more cars on the last day of the month or a day before a holiday, when those days don't fall
on Friday. Why can't we treat each day like it is the last day of the week or month?
Ideally, we should be able to load the same number of jobs into production as we deliver each day, while maintaining a relatively
even amount of work in process. The problem in the collision industry is that we are faced with many challenges that do not
allow for a "perfect world" scenario. Still, we can create a realistic work picture and go from there.
The definition of WIP can vary from one organization to another. For our purposes, think of all the jobs you have on site
as WIP. WIP is inventory that you invest in from the time a vehicle becomes a repair order until the time payment is received.
The investment is not only in production labor, parts, paint and materials. You also invest heavily in administration expense,
along with equipment, computer technology and the real estate the job occupies when it is on premises. Important here: The
shorter the WIP time span, the higher the return on investment.
A while back I had the opportunity to work with a top university and some academically gifted individuals of a much higher
intelligence than me. I asked these scholars to look at my data and theories to see if they could help me.
The first step in most academic approaches is to prove theories and solutions in mathematical form. Fortunately the folks
I was working with took pity on me. Their answer wasn't a long list of statistical formulas. In fact, the formula for optimum
WIP was simply this:
