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(Two stories follow: cover piece, 'Lose The Waste; Keep The Rose,' immediately below, and sidebar, 'The Year-One Payoff.')
By Chuck Nowlen
A top-to-bottom shop redesign based on new-wave business principles has tightened work efficiency, laid the foundation for continuous improvement and molded the staff into an empowered, change-oriented team at Old Dominion CARSTAR in Eugene, Oregon.
All this without sacrificing Old Dominion’s 33-year tradition of elite quality and customer service -- both symbolized by the rose that’s still either given directly to the customer at pick-up time or placed on the vehicle’s driver’s seat.
“Our motto is that we’re in the business of taking care of people, and through our process, the vehicle gets repaired impeccably,” says Patty McConnell, Old Dominion’s president and majority owner, who first started the rose giveaways 17 years ago.
“This whole changeover has been a process, and at times it’s been very challenging for us. At the same time, I’d say it’s been a true highlight of my career. We’re actually a team here now, and we’ve gotten to a point where everything’s kind of a part of an integrated, more predictable system that can also change when it needs to. Actually, even the rose has become a part of that system now.”
“Predictability” was definitely the watchword for Vice President of Operations Dustin Caldwell, McConnell’s son, who spearheaded the makeover last June after 11 years in the shop’s trenches handling everything from detailing and parts to sales and production management.
But predictability was a crapshoot under the old system, in which technicians worked on each vehicle by themselves in separate repair stalls from start to finish -- stopping, starting and getting help from others in a costly, continuously helter-skelter fashion. Caldwell describes the old system as “organized chaos” and “a spaghetti mess.”
“My father (who founded Old Dominion) took a lot of pride in craftsmanship. He always said, ‘No shortcuts,’ and that has always been a part of what we do -- we set the bar very high here,” Caldwell notes.
“But I kept looking at the way we were doing things and thinking to myself, ‘There’s got to be a better way.’ It seemed like we were always trying to fix immediate problems but never getting on top of them. There just seemed to be so much wasted time and effort.”
And that, says Caldwell, was a recipe for failure in the new era of insurance companies’ HMO-style direct repair agreements, manic cost-consciousness and escalating competition that make every wasted penny more and more critical every day.
So when Old Dominion changed its paint vendor to PPG Automotive Refinish and heard about PPG’s Throughput Performance Solutions program, which provides management training on cutting costs, boosting repair speed and improving quality, Caldwell jumped at the chance.
As Caldwell learned, TPS is derived from several modern business theories – including Lean Principles, Six Sigma and the Theory of Constraints – that emphasize a continuous production-line work system, cutting waste and eliminating variations in the work process.
When all of its elements are taken together, the TPS vision aims to actualize the Japanese management term, “parakiesen,” which means “a culture of continuous improvement.”
Some 100 shops have participated in TPS in varying degrees to date, says Rich Altieri, PPG Automotive Refinish’s senior manager for business solutions, and “well beyond 90 percent” have documented performance improvements, especially after follow-up with TPS consultants. Other similar programs are also offered elsewhere, although they are rarely as comprehensive as TPS, Altieri says.
“The truth is, the best way to do it is to get someone who really understands the process and can walk you through it according to what is going on with your own shop,” he adds.
“One misconception is that this kind of approach is for only the top four or five percent of the biggest shops out there. In fact, we’ve had very small shops that have really produced improvements. You just have to remember that follow-up is crucial – you have to stick with it and work things through.”
In Old Dominion’s case, it meant analyzing and refiguring the production process from beginning to end, dismantling and rebuilding the entire shop, getting every single employee reading from the same page and starting over.
The result, one year into the new business model: A carefully integrated production-line system in which each vehicle is first comprehensively evaluated, then assigned to one of three repair routes – one for those with light damage, another for medium damage and a third for heavy damage – to keep the process constantly moving.
Keeping the lines active
Along each route, the repair sequence is always the same: evaluation, disassembly, production, paint booth, reassembly and detail – and no vehicle leaves one area until even the most minute task there is taken care of. A rolling parts cart follows each vehicle through the system, stocked only with the supplies calculated at the front end to be needed.
Another fundamental change: Each of Old Dominion’s 25 employees is now a key player in maintaining and improving every step of the process. Every Wednesday, for example, managers conduct formal brainstorming lunch sessions in which technicians offer suggestions for system adjustments. Among ideas that have been put into practice: having appraisers use digital cameras to photograph vehicle damage, then emailing the photos to insurance carriers, accelerating the claim-approval process.
Technicians are also a part of measuring production efficiency through a new set of standards that are monitored on a monthly, weekly and sometimes daily basis, including “touch time,” the number of hours spent per day on each car. Old Dominion has doubled its average touch time to 3.3, compared to an industry average of 1.8. (Other key improvement areas are detailed in the sidebar story below, “The Year-One Payoff.”)
“We knew we needed to sell the new model to the people who would actually be doing the work, rather then telling them, ‘It’s my way or the highway,’” Caldwell explains.
“There were months of meetings and seminars, and we took some of our technicians to shops where similar systems have been put into place. The first step in something like this has to be changing the company culture: establishing that sense of urgency in each and every employee, and answering the key question in all of their minds – ‘OK, why are we doing this?’”
Unfortunately, but predictably, the new system also meant some excruciating growing pains, particularly for the first six months, when at one point, the new-system’s learning curve resulted in a 20 percent drop in monthly sales.
Adding to the problem was the fact that seven of the company’s 25 technicians refused to buy into the new way of looking at things and left the shop early on. Staff turnover alone ate up the lion’s share of the $100,000 the 14,000-square-foot Old Dominion had budgeted for the entire changeover. Initially, Caldwell and company had expected that almost all of the money would be used instead for shop reconstruction and new equipment.
“Looking back, we probably should have budgeted about twice what we did,” Caldwell recalls. “The expense we didn’t anticipate was employee turnover.”
Altieri emphasizes that all shops are different, so managers considering similar changes shouldn’t assume that TPS is a one-plan-fits-all proposition.
“Everything depends on your sales volume, the existing culture of the company, the mix of work that you do and many, many other things,” he says. “So, no, one shop should definitely not expect to just copy what somebody else did and expect the same results. They also should expect some big obstacles along the way that they’ll have to overcome.”
Looking back, for example, Old Dominion’s initial staff exodus was devastating at the time, but it turned out to be a blessing in disguise, McConnell says.
“We’ve now got people who are all much more team-oriented,” she notes. “And, again, I’ll repeat that we try to integrate even so-called little things like the customer’s rose as a part of the process.”
“Detailers, for example, tend to be entry-level,” McConnell explains, “and compared to other areas, they sort of tended to be at the bottom of the totem pole around here in the old system. So one thing we did was give responsibility for handling the rose part of our system to our detailers. And you can see how much that has empowered them and helped them take genuine pride in what we’re doing. Our detailers just beam when they give that nice new rose to the customer.”
Six key areas where the system has improved
#1. Work scheduling: Big picture, small details
The problem: Under Old Dominion’s old system, a single technician took charge of each vehicle’s repairs, passing it along to co-workers as needed -- and as possible. But costly work interruptions inevitably sprang up, and vehicles often stagnated in the work area for days. This made work scheduling difficult and unpredictable, resulting in wasted time and effort, which was reflected in chronically low touch times.
The solution: These days, the first step for each vehicle is a comprehensive repair evaluation, followed by a “visual map” code that is etched in water-based ink directly on the windshield as a guiding reference for anyone who works on it. The visual map details exactly what needs to be done and when, what supplies will be required and how many technicians will be needed. “So once it hits our line, we’re always working on it,” Dustin Caldwell explains. “In the past, it might take a week to get a car apart, repaired and ready to paint. Now our touch times are much higher because we’re able to schedule the work better and more predictably.”
#2. Last-minute “issues”: Reducing the “surprise” factor
The problem: “With the old system, it seemed like once or twice every day, there would be some kind of last-minute issue that came up that we hadn’t foreseen,” Caldwell says. “That can drive you a little crazy because it costs you time and money. And when it means a vehicle’s not ready when you told the customer it would be, for example – well, that tends to drive your customers a little crazy, too.”
The solution:The initial comprehensive repair evaluation, visual map and integrated work flow have meant that last-minute issues “have dramatically dropped off,” according to Caldwell. “Now, we’re probably only talking a half-dozen last-minute issues in any given month. When you compare that to two or three a day, I’d say that’s pretty significant.”
#3. Supplies inventory control: Using only what you need
The problem: With six technicians working independently, each work area once had to be stocked with the same $6,000 monthly compliment of sealers and other supplies – just in case. That meant an average $36,000 supplies inventory outlay every month with no reliable way of monitoring how efficiently the money was being spent.
The solution: “Now, we are able to use just the supplies we need on every job, and only the amount that is needed is put out on the floor,” Caldwell says. “We are now able to minimize the amount of inventory that is actually used. It’s something we can control and plan for to a much greater extent than before.”
#4. Paint shop efficiency: ‘You gotta feed the monster’
The problem: “The paint booth determines your flow, and if you can only paint two cars a day, that’s not doing you much good,” Caldwell notes. “Under our old model, the painter paints a replacement door, then the body guy grabs it and puts it together – and then, all of a sudden, maybe he notices that the color doesn’t match. So then he has to take it all apart, send it back to the painter, and then we have to put everything back together all over again. That’s a big waste of time.”
The solution: “Our new (business) model takes that repeating-ourselves element almost totally out of the system. If the paint color doesn’t match, the door doesn’t go to reassembly – period, which gives us much better control over quality because you can check and recheck everything at every stage.”
#5. Process corrections: A roadmap to efficiency
The problem: In everything from work flow to paperwork, the day-to-day reality under the old system, says Caldwell, “was basically running around putting out fires all day, and nothing ever really fundamentally improved in the process because we didn’t have a system to allow it.”
The solution: “Value stream mapping,” in which each key production process – from work estimates to supplies ordering – is systematically broken down into a sequence of required steps. The result: A tangible schematic that can be continuously evaluated by both technicians and managers for improvements. “Parts ordering, for example,” Caldwell says. “That process started out with something like 52 steps that you have to go through for every parts order. Over the last few months, we’ve been able to trim those 52 steps down to 35 or so. And that was basically the result of writing it all down in the first place.”
#6. Team-oriented company culture: ‘A new lease on life’
The problem: For years, it was “organized chaos” at Old Dominion, both on the work floor and in the front office. “We also were asking each technician to do a lot of paperwork and administrative things, but our employees weren’t really used to even being taken seriously before the change,” Caldwell recalls. “At the same time, management wasn’t really used to giving up control, either, so there wasn’t that team culture that’s absolutely essential – especially when you’re trying to change.”
The solution: Caldwell knew that he had to sell every employee on the new system before subsequent week-to-week team-building innovations like technician brainstorming lunches were going to work. His most important move: creating a company “guiding coalition” consisting of himself, Production Manager Patty Wilcox, Office Manager Anne Hankin and Business Manager Stephen Nessly, who attended external seminars and conducted months of internal meetings aimed at building a continuous-improvement team mindset. Says company President Patty McConnell of the results: “The whole process has given us a new lease on life. It’s challenged each one of us to reevaluate both ourselves and the way we interact with each other. There’s much more of a team atmosphere everywhere now.”
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