Repair vs. Replace The Illusion. Many Years Ago … In a Lost Land Cycle Time Was King of the Magic World Cycle Time Was King of the Magic World.

Repair vs. ReplaceRepair vs. Replace

The Illusion The Illusion The Illusion The Illusion

Many Years Ago … In a Lost LandMany Years Ago … In a Lost Land

Cycle TimeCycle TimeWas King of the Magic WorldWas King of the Magic World

Cycle TimeCycle TimeWas King of the Magic WorldWas King of the Magic World

Kingdom ConditionsKingdom Conditions

High Volume of SupplyHigh Volume of Supply Scarcity of Quality TechniciansScarcity of Quality Technicians Supply Chain StrongSupply Chain Strong

High Volume of SupplyHigh Volume of Supply Scarcity of Quality TechniciansScarcity of Quality Technicians Supply Chain StrongSupply Chain Strong

Many Magicians ThoughtMany Magicians Thought

Higher Labor Gross Profits MeantHigher Labor Gross Profits Meant Higher Total Gross ProfitsHigher Total Gross Profits Higher ProductivityHigher Productivity

Higher Labor Gross Profits MeantHigher Labor Gross Profits Meant Higher Total Gross ProfitsHigher Total Gross Profits Higher ProductivityHigher Productivity

Younger Magicians ThoughtYounger Magicians Thought

Cycle Time Could Be Reduced if …Cycle Time Could Be Reduced if … More Parts ReplacedMore Parts Replaced

Gross Profit Per Hour IncreasesGross Profit Per Hour Increases

Gross Profit % DecreasesGross Profit % Decreases Throughput IncreasesThroughput Increases

Cycle Time Could Be Reduced if …Cycle Time Could Be Reduced if … More Parts ReplacedMore Parts Replaced

Gross Profit Per Hour IncreasesGross Profit Per Hour Increases

Gross Profit % DecreasesGross Profit % Decreases Throughput IncreasesThroughput Increases

1.51.5UndersideUnderside

3.13.11.31.3486.90486.90HoodHood

160.00160.00PaintPaintMaterialsMaterials

1.81.8Clear CoatClear Coat

MUParts PU Other

The Magic of Replacement

2004 Buick LeSabre

Unit Rate Example $40.00

Paint and Materials Example $25.00/PU

1.51.5UndersideUnderside

3.13.11.31.3486.90486.90HoodHood

160.00160.00PaintPaintMaterialsMaterials

1.81.8Clear CoatClear Coat

MUParts PU Other

Magical Analysis of Replacement

486.90 52.00 256.00 160.00

Total Cost - 954.90

Repair vs. Replace - 63% Replace vs. Repair - 158%

Cycle Time Analysis of Replacement

Gross Profit % Gross Profit $

Parts $486.90 30.00% $146.07

Metal Labor $52.00 60.00% $31.20

Paint Labor $256.00 60.00% $153.60

Materials $160.00 25.00% $40.00

$370.87

38.84 %

Metal Labor Efficiency 150% = .87

Paint Labor Efficiency 200% = 3.2

Materials Only Paint Related

$370.87 ÷ 4.07 (.87 + 3.2) = $91.12 Per Hour

Replace over RepairReplace over Repair

Lower Cycle TimesLower Cycle Times Lower Skill LevelLower Skill Level Lower Material CostsLower Material Costs Less FailuresLess Failures Increase SalesIncrease Sales Better DiscountsBetter Discounts Increase ThroughputIncrease Throughput

Lower Cycle TimesLower Cycle Times Lower Skill LevelLower Skill Level Lower Material CostsLower Material Costs Less FailuresLess Failures Increase SalesIncrease Sales Better DiscountsBetter Discounts Increase ThroughputIncrease Throughput

Higher TicketHigher Ticket Lower GP %Lower GP % Planning IssuesPlanning Issues Staffing NeedsStaffing Needs Supplier IssuesSupplier Issues

DeliveriesDeliveries Unpredictable LKQUnpredictable LKQ Unpredictable AftmktUnpredictable Aftmkt

Higher TicketHigher Ticket Lower GP %Lower GP % Planning IssuesPlanning Issues Staffing NeedsStaffing Needs Supplier IssuesSupplier Issues

DeliveriesDeliveries Unpredictable LKQUnpredictable LKQ Unpredictable AftmktUnpredictable Aftmkt

Advantages Disadvantages

Management Magical Improvements

Gross Profit % Gross Profit $

Parts $486.90 35.00% $170.42

Metal Labor $52.00 65.00% $33.80

Paint Labor $256.00 60.00% $153.60

Materials $160.00 40.00% $64.00

$421.82

44.17 %

Metal Labor Efficiency 150% = .87

Paint Labor Efficiency 200% = 3.2

Materials Only Paint Related

$421.82 ÷ 4.07 (.87 + 3.2) = $103.64 Per Hour

Times ChangedTimes Changed

Frequency DecreasedFrequency DecreasedWork Volume DecreasedWork Volume Decreased

KPI’s ChangedKPI’s Changed

Frequency DecreasedFrequency DecreasedWork Volume DecreasedWork Volume Decreased

KPI’s ChangedKPI’s Changed

1.01.0UndersideUnderside

3.13.18.08.0HoodHood

147.50147.50PaintPaintMaterialsMaterials

1.81.8Clear CoatClear Coat

MUParts PU Other

The Illusion of Repair

2004 Buick LeSabre

Unit Rate Example $40.00

Paint and Materials Example $25.00/PU

1.01.0UndersideUnderside

3.13.18.08.0HoodHood

147.50147.50PaintPaintMaterialsMaterials

1.81.8Clear CoatClear Coat

MUParts PU Other

Basic Analysis of Repair

320.00 236.00 147.50

Total Cost – 703.50

Repair vs. Replace - 136% Replace vs. Repair - 74%

Cycle Time Analysis of Repair

Gross Profit % Gross Profit $

Parts

Metal Labor $320.00 60.00% $192.00

Paint Labor $236.00 60.00% $141.60

Materials $147.50 25.00% $36.88

$370.48

52.66 %

Metal Labor Efficiency 200% = 4.00

Paint Labor Efficiency 150% = 3.93

Materials More Materials Consumed

$370.48 ÷ 7.93 (4.00 + 3.93) = $46.72 Per Hour

Repair over ReplaceRepair over Replace

Maximize GP %Maximize GP % Lowers Ticket CostLowers Ticket Cost Scorecard PointsScorecard Points

Maximize GP %Maximize GP % Lowers Ticket CostLowers Ticket Cost Scorecard PointsScorecard Points

Increased CostsIncreased Costs Defects - WarrantiesDefects - Warranties Skill Level IssuesSkill Level Issues Staffing IssuesStaffing Issues Less ThroughputLess Throughput Creates BottlenecksCreates Bottlenecks

Paint DepartmentPaint Department

Increased CostsIncreased Costs Defects - WarrantiesDefects - Warranties Skill Level IssuesSkill Level Issues Staffing IssuesStaffing Issues Less ThroughputLess Throughput Creates BottlenecksCreates Bottlenecks

Paint DepartmentPaint Department

Advantages Disadvantages

Are We to Work Together ?Are We to Work Together ?

Common Areas to Common Areas to

Work TogetherWork TogetherCommon Areas to Common Areas to

Work TogetherWork Together

Common GoalCommon Goal

Vehicle Owner FocusedVehicle Owner Focused Restore Vehicle Back to Pre-Accident ConditionRestore Vehicle Back to Pre-Accident Condition

Work to Keep Costs in ControlWork to Keep Costs in Control Allow For Necessary OperationsAllow For Necessary Operations Perform Necessary OperationsPerform Necessary Operations Use Common SenseUse Common Sense

Vehicle Owner FocusedVehicle Owner Focused Restore Vehicle Back to Pre-Accident ConditionRestore Vehicle Back to Pre-Accident Condition

Work to Keep Costs in ControlWork to Keep Costs in Control Allow For Necessary OperationsAllow For Necessary Operations Perform Necessary OperationsPerform Necessary Operations Use Common SenseUse Common Sense

Common UnderstandingCommon Understanding

Take a Holistic Approach to KPI’sTake a Holistic Approach to KPI’s Not Focusing Only with Blinders OnNot Focusing Only with Blinders On

Consistency of Performance TargetsConsistency of Performance Targets

Lack of Understanding and Consistency …Lack of Understanding and Consistency …

Leads to Nothing But Bad Things …Leads to Nothing But Bad Things …

Take a Holistic Approach to KPI’sTake a Holistic Approach to KPI’s Not Focusing Only with Blinders OnNot Focusing Only with Blinders On

Consistency of Performance TargetsConsistency of Performance Targets

Lack of Understanding and Consistency …Lack of Understanding and Consistency …

Leads to Nothing But Bad Things …Leads to Nothing But Bad Things …

Replacement Percentage

Labor IndirectDirect

Labor Skill Level

Paint Department Efficiency

PaintMaterials

Costs

CycleTime

GrossProfit

Per Hour

Hydraulics of the Magical KPI’s

Every Action Causes an Equal and Opposite Reaction

Common GroundsCommon Grounds

Fraud DefinitionFraud Definition Abide by State LawsAbide by State Laws

Incorporate CIC GuidelinesIncorporate CIC Guidelines Write it RightWrite it Right

Work Together on Definitions Solutions

Fraud DefinitionFraud Definition Abide by State LawsAbide by State Laws

Incorporate CIC GuidelinesIncorporate CIC Guidelines Write it RightWrite it Right

Work Together on Definitions Solutions

Definitions to DefineDefinitions to Define

Metal Labor Repair UnitsMetal Labor Repair Units To 180 Grit …To 180 Grit … Not New Undamaged Panel ConditionNot New Undamaged Panel Condition

Additional Materials RequiredAdditional Materials Required Not Paint and Materials … Body MaterialsNot Paint and Materials … Body Materials

Information SystemsInformation Systems Allow More Repair Than Part CostAllow More Repair Than Part Cost

Metal Labor Repair UnitsMetal Labor Repair Units To 180 Grit …To 180 Grit … Not New Undamaged Panel ConditionNot New Undamaged Panel Condition

Additional Materials RequiredAdditional Materials Required Not Paint and Materials … Body MaterialsNot Paint and Materials … Body Materials

Information SystemsInformation Systems Allow More Repair Than Part CostAllow More Repair Than Part Cost

Definitions to DefineDefinitions to Define

Paint Labor UnitsPaint Labor Units New Panels = New Panel UnitsNew Panels = New Panel Units

New Undamaged Panel ConditionNew Undamaged Panel Condition

Paint Labor UnitsPaint Labor Units Repair Panels Repair Panels

Need Additional OperationsNeed Additional Operations

Paint Labor UnitsPaint Labor Units New Panels = New Panel UnitsNew Panels = New Panel Units

New Undamaged Panel ConditionNew Undamaged Panel Condition

Paint Labor UnitsPaint Labor Units Repair Panels Repair Panels

Need Additional OperationsNeed Additional Operations

Definitions to DefineDefinitions to Define

Blending Base Within a PanelBlending Base Within a Panel Paint Labor Units Paint Labor Units

Repair Panels Repair Panels • Need Additional OperationsNeed Additional Operations• Affects Paint MaterialsAffects Paint Materials

Blending Base Within a PanelBlending Base Within a Panel Paint Labor Units Paint Labor Units

Repair Panels Repair Panels • Need Additional OperationsNeed Additional Operations• Affects Paint MaterialsAffects Paint Materials

Directions Not to TakeDirections Not to Take

Repair Operation Cost ShiftingRepair Operation Cost Shifting Bundle R&I to Improve RatioBundle R&I to Improve Ratio

Front Bumper CoverFront Bumper Cover Add Hours to Include Part CostsAdd Hours to Include Part Costs

Door SkinDoor Skin Hood (Used)Hood (Used)

Repair Operation Cost ShiftingRepair Operation Cost Shifting Bundle R&I to Improve RatioBundle R&I to Improve Ratio

Front Bumper CoverFront Bumper Cover Add Hours to Include Part CostsAdd Hours to Include Part Costs

Door SkinDoor Skin Hood (Used)Hood (Used)

Directions to TakeDirections to Take

Work TogetherWork Together Improve TrainingImprove Training

Repair is a Lost ArtRepair is a Lost Art Smart RepairsSmart Repairs

Work TogetherWork Together Improve TrainingImprove Training

Repair is a Lost ArtRepair is a Lost Art Smart RepairsSmart Repairs

Understand the Hydraulics of KPI’s