For years, Brian Boreo and his staff at Milosch's Palace Chrysler Dodge Jeep Ram experienced a backlog of parts, low cycle time and $30,000 worth of inventory sitting around at any given time. It tied up capital, Boreo, the shop’s manager, says, and that capital was too thinly spread out over the 260 cars the shop saw per month, which were either getting done slowly or sitting on the lot.
That’s why, in early 2016, Boreo decided to make a change and embraced managing absed on “work in process” (WIP), which is defined as any vehicle that’s in the shop or a repair order that has parts on it. That key performance indicator (KPI) has been instrumental in reducing unnecessary inventory, increasing touch time to five hours per day, decreasing key-to-key cycle time to nine days, lowering start-to-completion cycle time to 4.8 days and increasing revenue to $6.6 million. Boreo describes how his team did it.
Speed is always the name of the game, and in the past, to try to speed up the repairs, we would preorder parts for all the cars that we were going to work on in the upcoming week and stock them in a stock room. As the vehicles would not show up or be put off to the following week, this stock room became uncontrollable. What we also found is that when we really looked into it, we almost always had a second order when the car got here. What we needed to do instead is develop a process to get every car done quicker, rather than focusing on each individual car and not considering the big picture.
When we began this, we knew we would have to make substantial changes. We worked with our paint company, which has a program that looks at logistically what happens to a car throughout the repair cycle. The old-school way we used to do it is to get the car in, write an estimate, get insurer authorization, order the parts, disassemble and inevitably do a supplement. We started by considering stopping points, such as the second parts order, which we realized was adding up to three days on the overall delivery time.
We don’t want to have cars sitting on the lot so we needed to next determine how many cars we can effectively get in and out per day. We started looking at how many cars we do in a month and divided that into days. We started with 10 cars as our WIP. That meant we scheduled 10 cars in per day and 10 cars out per day. Now, since reducing cycle time, we’ve increased that to 13.7 cars per day.
The changes we made to our repair process are all upfront. We now bring the vehicle in, do a preliminary estimate up front, get the vehicle washed and then brought into disassembly for repair. An estimator goes through the entire vehicle with a technician, a parts employee and with a painter, and indicates exactly what needs to be done on the car. We then map the car very specifically and make sure parts are mirror-matched. After mirror-matching, we give the car to a technician and he doesn’t stop working on that vehicle until the car goes to paint. Then it’s the same process going backward.
We also made arrangements with all of our vendors that we get next-day delivery whenever possible. That freed up all that money from pre-ordering parts, but not only that, when the car comes in, instead of the parts guy ordering those parts, ordering the additional parts, and the parts coming in, we’ve eliminated all of that process. He now makes one parts order and he uses that other time to mirror-match and to make sure that they’re right and not damaged.
Now, If it’s a BMW and we know it’s going to be three days, we schedule that customer three days out. The two should get here the same day. The parts and the car arrive at the same time.
Once we kicked it off, the important thing is that you need to be fluid with it. You need to be able to change. Every morning to this day, at 9 o’clock, we go through every car in the shop. It takes 15 minutes. We go over any obstacles that can stop us from getting a car done by a predetermined date. Once per week on Wednesday, we pull the numbers of where we are. We notice any numbers that are going down and we dig into that to find out if it’s a legitimate reason or not. Reviewing it with everyone keeps us focused and on the same page.