November 17, 2012
Title: Don’t leave money on the table!
Subtitle: Many bodyshops are slow to profit from continuous improvements to productivity-enhancing purchasing, estimating, accounting and workflow management software.
Bodyshops face greater challenges and opportunities today than at almost any time in the last two decades. Heightened competition, pressure from insurance companies shrinking the number of outlets they do business with and increased pricing pressure, are forcing collision and repair managers to look at new ways to boost productivity.
According to once industry veteran, one of the best is to tighten back-office workflows. “Bodyshops that aren’t using the right management information systems and software are leaving money on the table…it’s as simple as that,” says Mike Jerry, general manager and vice-president (Canadian operations) at Mitchell International, who has been helping collision and repair shops computerize their workflows for close to ten years. “The people that I meet daily are among the best craftsmen anywhere. However once they put a sign up they become businessmen. Doing that profitably is a whole different ball game.”
Jerry should know. He grew up in a family-run bodyshop and has seen how paperwork can bog down operations. Yet while most outlets have already implemented software modules to speed up purchasing, accounting, word processing, billings, communications and other functions, new options are increasingly becoming available.
However not everyone is taking full advantage of them.
“When I walk into a bodyshop I always ask staff who their most profitable client is and I inevitably get the name of their largest,” says Jerry. “However large volume clients often ask for big discounts. If you don’t have an effective job-costing software package, to estimate profit on each job, you may actually be losing money on large volume accounts.”
Mitchell International markets more than 50 software modules ranging from purchasing to repair and work order programs to estimating, billing and production functionalities. The company also supplies close to 30 of what Jerry semi-jokingly calls “Apps.” These are partner applications such as accounting packages (from vendors such as SAGE 50 (Simply Accounting), QuickBooks and Dealer Management Systems), which integrate with Mitchell products. Sales of Mitchell products are made using a “software-as-service” (SAS) model where usage is billed monthly depending on which modules customers choose.
Other companies such as EZpartorder.com, which bills itself as an “electronic purchasing agent,” designed for collision repair shops, specialize in just one main application. The EZpartorder.com purchasing system enables you to generate orders from your estimating system using your own supplier list and to then confirm data such as pricing and delivery dates, and to review pending orders and parts status.
Data is stored on EZpartorder.com servers, which the company describes as “secure” and can be accessed at any time. Electronic purchasing systems are said by many users to be particularly attractive because they enable collision and repair specialists to spend more time with their customers, and less with suppliers, all while maintaining productivity in the procurement process.
Advances in estimating software
According to one industry veteran, some of the greatest software advances have been made in packages which assist in the completion of collision and repair estimates. “When I started in the business in 1979, many shops were doing estimates by hand,” says Rick Tuuri, a software expert at Audatex. “It was a laborious process that involved searching out part numbers and calculating labor time manually and then adding it all up. These days it’s much easier.”
The latest estimating systems operate seamlessly. The estimator merely enters the Vehicle Identification Number of the car being repaired and a three-dimensional graphic of it appears. He can then manipulate the part representation, turn it around and so on, to get a better view of the individual elements and how they fit together, so that he can identify which ones he needs to order. The estimator then clicks on those parts, and the estimating program provides a list of Original Equipment Manufacturers or aftermarket producers that supply it. The program also estimates the amount of time it takes to replace the part(s).
The estimator then has the option of either accepting or rejecting the suggestion. The software then sends copies of the estimate to insurance companies, vehicle owners and other related parties and can export the data to other workflow tracking programs that follow up progress.
That said, the collision and repair estimating software market is also extremely competitive and providers such as Audatex need to constantly innovate to stay ahead. For example during the past few years, the company has introduced a variety of improvements designed to turn its products into critical applications. These include the three dimensional graphics capabilities noted above and the identification of color coated substrates on parts drawings, so users can tell at a glance what materials they are made of.
Audatex’s latest advance is AudaVin, a software plug-in, that enables users to tap into selected manufacturers’ data bases to access data that is unavailable using traditional VIN searches. These include special navigation, premium or other packages included in the sale, as well as other options such as radios, brushed aluminum trim and the like. So far Audatex has managed to sign up BMW, Audi and Mercedes into the program. And according to Turri, the company is expected to make further announcements in this regard shortly.
Are small shops being left behind?
One of the biggest challenges that the rise of information-based workflows has created, has been the pressure that they are putting on small shops to keep up. Unlike major players, one, two and three person garages often cannot afford to dedicate someone full-time to handle the paperwork and IT implementation burden, not to mention the cost of the software itself.
However according to Tuuri, software providers are now coming up with increasingly flexible and scalable solutions that can accommodate a growing number of players.
The degree to which collision repair shops introduce these innovations will continue to be decided at the outlet level. However according to Mitchell International’s Jerry, one thing is clear: industry competition is increasingly being won (or lost) not just in shop floors, but in back offices as well. “You can’t manage what you don’t measure,” says Jerry. “So at a certain point, it is less important just what information system you use, as long as you are using one of them.”
Sidebar: Common management information system software applications
- Parts ordering
- Accounts receivable
- Accounts payable
- Work orders
- Repair orders
- Inventory management
- Jobs costing
Highlight this quote in a text box:
“Bodyshops that are not using the proper management information systems are leaving money on the table…it’s as simple as that.”
Mike Jerry, Mitchell International
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Peter Diekmeyer Communications Inc.