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KPI: Cycle-Time

KPI: Cycle-TimeCycle-Time

 Cycle Time, the golden-standard by which collision repairers are measured from both the customers as well as insurer’s point of view. Currently the standard CT is 10-days; in other words, it takes ten-days from keys-in-hand to seeing tail-lamps to repair a vehicle (bumper scraps to train-wrecks, all repair times get averaged).

This is undeniably one of the most vital key-performance-indicators (KPIs) to measure; getting this right will increase production throughput and earnings.

To define Cycle Time (CT) I must first state that Cycle Time is often perceived in two measures, production biased and customer biased.

DEFINITION:
Production Biased Cycle Time: The average number of calendar days elapsed from the date the vehicle was received at your business, to the date the repairs were completed.
Formula: Date Received / Repairs Completed

Customer Biased Cycle Time: The average number of calendar days elapsed from the date the vehicle was received at your business, to the date the customer took delivery. This is also commonly referred to as keys-to-keys.
Formula: Date Received / Date Delivered

Production CT is the traditional (read: “old school”) method of calculating the average calendar days for auto repairs. Since a shop cannot control when a customer will take delivery of their vehicle, this method calculates the part of the repair cycle a repair shop has most control over. Or so it seems – read on. This is a key measure for KPI management.

Customer CT is a more contemporary measure, and one that, when managed well, is more focused on the vehicle owner receiving a positive customer experience. Managing this measure has a direct impact on CSI. From an insurance perspective, this measure also has a direct impact on loss-of-use (LOU) severity (insurance lingo for rental expense) as well as having a proportional, although indirect impact on bodily injury severity. In a nutshell – this is the Cycle Time measure both the customer and insurer “feel” and is most important to control.

So which measurement should you use? I say measure both!

Analyzing the variance in Cycle Time between Production and Customer biased formulas could target process waste in your business that you can eliminate and be working more “lean.” More specifically (in LEAN terms), it could identify SMED waste – the time wasted in between jobs; like ending one job and getting onto another – or processes, like the transition from a quarter panel repair to door-skin replacement. When analyzing the differences you should ask yourself, “Could we have done anything differently to get the customer back into their vehicle sooner?” Often the answer is yes.

Here are some ideas you could use to cut Cycle Time: blueprinting repairs, change from the in-Monday/out-Friday schedule madness, proper technician allocation, transparent SOPs, deliver the car to the customer’s home or work (drive or tow), pick up the customer at home or work, open early or stay open late on advertised day(s) of the week, or change how you schedule the intake of vehicles.

These KPIs are easiest to measure when working with a management system. Ed Rachwal from Designer Systems confirmed Cycle Time could be easily measured on Mitchell ABS and ABSe. For businesses operating without a management system, these measures have been difficult to calculate. Autobody Consulting Group has copyrighted tools enabling their clients to measure and manage these most important KPIs.

Managing Cycle Time effectively is a great way to increase CSI, and being proactive in marketing your Cycle Time ratio to prospective or existing business partners just might bring more cars to your door, too!

You are not alone in setting repair Cycle Time expectations. Here is an interesting story about CT from a different perspective. Not too long ago while in a meeting with a major Massachusetts insurer, Cycle Time was the very topic of concern with several of my clients. At some point it became apparent to me that the insurer never looked inward at their systems to see if they had any control of cycle time. “And why would they,” you ask? (Funny – they asked the same thing).

Knowing what I know of the process, I had a hunch the insurance company had some (albeit, to a small degree) influence on setting the initial CT expectation with the vehicle owner and rental company. Here is what I noted – when an insurance adjuster receives a damage analysis report from a staff appraiser or repairer (network or otherwise), they do the same math to calculate rental days as most body shops do to rough-calculate the anticipated repair days [total hours ÷ some number = expected rental days].

Armed with this information the adjuster simply informs the vehicle owner of the number of days the rental vehicle is covered for, often adding a day for good measure. In doing so the seed is planted with the vehicle owner of the perceived repair cycle time!

After hearing this scenario, the insurer admitted they never looked at the process from this perspective and assured us they will evaluate it in the near future. What I haven’t told you yet was that the time of these extraordinary cycle time lapses coincided with some of the worst weather this area had experienced. In this case the cycle-time “perception,” being set by the claim adjuster didn’t account for the extraordinary increase in claim volume my clients were dealing with – indeed, an honest oversight.

Let’s be realistic. Insurance companies are huge and nothing happens fast, so nobody’s holding their breath for this change to occur. However, having a broader understanding of the process will make all parties work a little smarter in the future.

 

By: Chris Sheehy – Auto Body Consultant at Autobody Consulting Group LLC www.AutobodyConsultingGroup.com

´╗┐Autobody Consulting Group, a business operations, administrative, production, estimating, management, marketing, and social media consultancy serving auto body collision repair businesses and vendors to the autobody industry.

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Comments




  • From- CollisionHub.com


    By- Les Blizzard


     


    Chris, Great blog.

    I think Bill hit several nails in the CycleTime coffin squarely on the head.
    As a shop owner, it is hard to sit across the table and listen to the DRP manager talk to you about your CT while having your comments about delays CAUSED by that Insurance companies policy ignored and knowing that it isn't going to change on their side. They ask for better cycle time at the same time they are requesting more use of products and proceedures that are counter productive to improving CT. Talk about sending mixed signals!
    I have come to the realization that the insurance industry wants improved CT for the cost benefits to them, but only to a point that it doesn't cost them in other areas....I can live with that.

    As a shop owner, I feel that I can do a better job at improving CT than I have in the past.
    I am not going to use any excuse, even the ones above, for failing at continually improve my customers experience including the amount of time I keep them out of their transportation.

    It is MY fault, if I continually have part delays or incorrect parts.
    It is MY fault, if there is a delay because I started the repair process with a poor repair plan.
    It is MY fault, if an employee makes a bad repair or decision because they haven't received proper training or instruction.
    It is MY fault, if repairs are delayed because of not having the correct equipment.
    It is MY fault if the customer PERCEIVES the repair taking longer than it should, even if we did good in reality.
    It is My fault if I continually disapoint my customer just because of the insurance company that happens to be paying the bill.

    As repairers, we are in control of many more things than sometimes we want to admit. Because if we admit it, then we have to take responsibility. And we have to come up with more efficient ways of doing things. That is, in my opinion the best part of our job. What an exciting challenge we have.

    I have used many of the suggestions that Chris has given in the earlier comment and I can tell you the satisfaction received from the challenge of continually improving Cycle Time is well worth the effort.

    Les

    CSheehy, 5 years ago | Flag
  • From- CollisionHub.com


    By: Me(Chris Sheehy)


     


    I know many auto body repair businesses have similar views and experiences as Bill - what say you?

    Bill, thanks for the dialogue!

    CSheehy, 5 years ago | Flag
  • From- CollisionHub.com


    By- Bill Fowler, in response to Me(Chris Sheehy)


     


    Chris,



    It is not my intention to lay all the responsibility for protracted cycle times at any one person's feet, but it very frustrating to be judged on cycle time when the shop rarely has unilateral control of the process.
    Our industry is frequently compared to that of the medical industry and it may seem like a ridiculous analogy to make but can you imagine a doctor having to consult and deal with an insurance company in real time during a procedure? How would he ever get anything done?
    I can see it now....Mr. Smith is in the doctor's office and the need for "supplemental repairs" appears. A call is made to the insurance company and the doctor deals with the computer answering machine for 10 minutes only to be sent into the claim representative's voice mail. The procedure has to be put off for a couple of days waiting on a return phone call and an answer. Then he has to wait for someone who knows very little about what he is actually doing to come in and verify that the procedure is actually needed. The patient is rolled into the hallway while waiting on an answer and the next patient is rolled into the room. Problem is, the debacle Mr. Smith was in is repeated......over and over and over.
    Pretty soon the hallway is full of patients waiting to get back in the room but the doctor is obliged to finish with the patient he currently has before him. Sounds pretty silly doesn't it? It's real life for many of us in the collision repair industry.

    CSheehy, 5 years ago | Flag
  • From- CollisionHub.com


    Response to Bill Fowler, By- Me(Chris Sheehy)


     


    Bill – thanks for your insightful reply, you hit the mark with your points – can’t disagree with any of them. And you’re right in saying that we (repairers) have “no control” over many of these variables – but not all.

    There are some things we can do operationally that will influence cycle time, even in the face the elements you mention; and in doing so lessen the impact these uncontrollable’s have on our overall performance standards.

    You mentioned Parts; and I’ve seen this exact scenario many times – damaged parts, wrong parts delivered, listed parts which aren’t available (I made a call on that today). I get this one…
    While we have no control over other people’s mistakes, I suggest tracking the # of parts delivered wrong, damaged, or that were listed but are NA when you call for them. By sharing these findings with your vendor(s) you will have a better ground to discuss the severity of these incidences with them. If this exercise still doesn’t resolve the problem, share this data with your new vendor and let them know of your expectations and service commitments up front. A good parts “flow” absolutely impacts cycle time.

    Colors-from-hell, that’s going to happen. I’ll assume you have factory trained & certified painters operating in a well lit work environment, you are staying brand-true, your air lines are desert dry, and your jobber’s tech-staff has dialed the pressure down on your paint gun nozzle. If these elements are in check – sometimes; blending may be the only – and best - answer. This seems to segue into your comment of not being paid for the work you do. This is an industry problem and one for which I will not answer today – many people have tried before me and the problem still exists. Instead, I’ll focus my attention on what I can change – and I know I can’t change that. Salesmanship is quite often the difference between getting paid – or not getting paid for what we do, and sales skills training will help close the gap. Still doesn’t mean you will get paid for everything you do – but in my experience; it will get you closer most of the time.

    Staff or Independent estimate quality – I’m not going to solve that one today either. BUT, there might be SOME things you can do to get better performance from these estimators for vehicles written at your shop. 1. Always prepare an estimate and give it to them when they come to your business. You’re providing them another perspective, and for each item they add to their estimate because of the information you provided them – that’s one less “lesson” on estimating you need to teach. 2. Ask permission to disassemble the vehicle for the purpose of allowing the staff (or IA) better access to the damages. This will definitely reduce cycle time. 3. Make certain the vehicle is in the BEST environment to write the estimate. Make certain the area is well lit, there is a stepping stool to see roof damage, a floor creeper to see chassis damage, and provide nice strong flashlights. (I used to have an instant coffee & hot cocoa maker in the estimating bay with a snack box full of tasty stuff – I made them want to spend time there :-)

    As for the rest of your points – you’re right. The only advice I have is to keep the customer informed when milestones happen (i.e. called the insurer requesting an appraisal, insurer estimator was here today, estimate received from insurer, and internal process milestones, etc. . .) If an outside influence is impacting your CSI, consider providing a simple timeline report of these milestones and give it to your customer when they pick up their vehicle. This way they can see your cycle-time and the out of control variables that affected the actual cycle-time.

    Thank you again for commenting to my article. My reply to you in no way answers all your concerns, but I hope you find some of the suggestions worth perusing and I hope they move the needle some – let me know if there is an “ah-ha!” moment here for you.

    Chris

    CSheehy, 5 years ago | Flag
  • From- CollisionHub.com


    By- Bill Fowler


    It has typically been my experience that cycle times are adversely affected by a number of factors that the shop has little or no control over. As examples:
    1. Aftermarket parts in the database that don't actually exist.
    2. Damaged parts
    3. Wrong parts
    4. Color from hell
    5. Labor performed for which there is no consideration....like priming and blocking, color sanding and polishing, the "we don't pay for that" things
    6. Deficient and inaccurate estimates provided by insurer
    7. Lag time from supplement request submission to resolution and approval
    8. Payment not issued by repair completion date
    One insurance company I deal with regularly has gone to a 48 hour response time to supplement requests. The original estimates are rarely accurate and there are typically 3 supplements generated on every job because of part price differences and ommitted labor operations. If this insurance company happens to have an adjuster in my shop handling a supplement on another vehicle, they WILL NOT handle another vehicle while they are there. They wait the aforementioned 48 hour period.
    While waiting on supplement approval or for an adjuster to show up to write an estimate, we move on to other work. When it takes 3 to 4 days for an adjuster to show up to write an estimate, are we supposed to drop what we are doing just because the customer has been in a rental during that period? Dead time costs us all.
    I find myself many times spending more time trying to get correct paperwork and insurer approvals for repairs than I do repairing wrecks. Efficiency isn't a factor on just one side of the equation. I don't get paid till I see taillights so I don't want a vehicle tied up any longer than necessary.

    CSheehy, 5 years ago | Flag

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